Nobody likes to take out a loan for back tax payments. A corresponding loan gives taxpayers the feeling of applying for a loan only for the transfer of the money to the tax office. However, since only a few people make reserves for a possible tax payment, in reality such loans often occur.
Does the tax office not pay installments?
Tax offices generally require immediate payment of a tax liability. As an exception, they grant a tax deferral if the taxpayer can prove that he has unsuccessfully sought a loan for the additional tax payment. In addition, finance officials typically approve installment payments for a limited period of six to twelve months. However, a prerequisite for accommodating the tax office is that the subsequent tax claim is not due due to deliberately incorrect or confidential information in the tax return, but due to an incorrect assessment of tax facts.
This is usually the case when the self-employed and freelancers have to make an additional payment following a tax audit. Employees who are not employed only receive a tax claim in exceptional cases, which mainly occur when spouses are assessed together. In addition, additional tax claims may arise for employees when they have started a freelance job for the first time. Tax offices formally differentiate between deferral and installment payments. This distinction is largely insignificant for the taxpayer, but payment in installments can still be agreed even after the refusal of an application for a deferral and is subject to lower requirements than a deferral. The interest for a deferral by the tax office is significantly lower than loan interest at a bank, and the calculation can be waived in whole or in part.
Pay attention to cheap loans
A small gain in time for borrowing to pay back tax can be easily achieved by filing an objection to the new tax bill. The suspensive effect only occurs at the express request of the taxpayer and with the consent of the tax office, but usually tax offices do not refuse to postpone the additional tax payment until a decision is made on the objection. If a loan has to be taken out for an additional tax payment, it should at least not be too expensive.
Through a careful loan comparison, the taxpayer ensures that he gets a cheap loan for his back payment. However, one difficulty with borrowing to pay tax debt is that entrepreneurs mostly rely on it, while many lenders only lend to private individuals. Another peculiarity of the loan to settle a tax claim is that the payment does not lead to an investment associated with added value. The application for a loan for the additional tax payment is also the only loan application, the rejection of which is associated with advantages for the applicant.