IRS Offers Several Ways To Pay Off Delinquent Tax Debt
It's no secret that millions of taxpayers struggle to pay their taxes. The IRS is unyielding when it comes to collecting money they think is theirs, so if you're facing back taxes owed the federal government highly advises seeking assistance as soon as possible before they resort to aggressive measures like taking money out of your bank accounts and seizing wages or property.
The IRS offers several different installment agreement payment plans to help taxpayers pay off their tax debt. These plans include:
Guaranteed Installment Agreement
This plan is available to taxpayers who owe $10,000 or less in taxes. The taxpayer must agree to pay the debt in full within three years and must have filed all required tax returns. No financials are required.
Streamlined Installment Agreement
This plan is available to taxpayers who owe $50,000 or less in taxes. The taxpayer must agree to pay the debt in full within 72 months and must have filed all required tax returns.Generally, you do not need to provide financial information to the IRS.
Partial Payment Installment Agreement
This plan is available to taxpayers who owe more than $50,000 in taxes. The taxpayer must agree to pay a portion of the debt over the statutory period which remains on the account, generally within 10 years of date of assessment and must have filed all required tax returns. Full financial disclosure is required and most likely a lien will be filed.
Extended or Flexible Payment Plan
This plan is available to taxpayers who owe up to $250,000 in taxes and are unable to pay the debt within 72 months. The taxpayer must agree to pay 100% of the debt over a longer period of time, up to 120 months. No financial information is required, however, a lien may be filed.
Currently Not Collectible
This plan is available to taxpayers who are unable to pay their taxes due to financial hardship. The taxpayer's account will be placed on hold for a period of time, during which the IRS will not take any collection action. Interest and penalties continue to accrue. Financials are required and a lien may be filed.
Offer in Compromise
This program is available to taxpayers who are unable to pay the full amount of taxes owed and are unable to pay through an installment agreement. The taxpayer may be able to settle their debt for less than the full amount owed. Many times, for a fraction of what’s owed. There are strict eligibility requirements and full financial disclosure is required.
Taxpayers should consult with a tax professional to determine the best payment plan for their specific situation.
Before you enter the daunting maze of IRS regulations, consult a Tax Relief Expert at our office. Schedule your complimentary consultation to assess your situation and compare your options for tax relief today!
Failing to address IRS tax debt can be a costly mistake. Interest compounds daily, similar to credit card debts, and the amount owed often doubles every several years due in part to penalties and interest. Now is the time to take charge of your finances by addressing this head-on before it spirals out of control. The IRS Installment Agreement can be a great option for taxpayers who can’t pay the IRS off lump sum.
Our firm has the expertise and skill to navigate the IRS and help you resolve your tax issues, even if you have unfiled returns from multiple years. Through an Offer in Compromise which is IRS's debt settlement program, we may be able to settle your entire tax debt- including penalties and interest for up to 85% off, if you qualify! Our team can guide you through this process and we invite anyone who wants professional advice on dealing with their taxes to contact us so that they can find a permanent solution for their problem.
How to Prepare for an IRS Audit
Filing taxes can be a daunting process, but for some it's much more than that - tax audits. This stressful situation involves having the IRS put your tax return under a microscope to see if you reported all your income and to see if you overstated your deductions and expenses. The IRS’s main goal in an audit is to assess more tax, penalties and interest. It’s an intimidating experience that most Americans dread facing!
An IRS audit can cause even the most squeaky-clean of taxpayers to become fearful and anxious when faced with defending yourself to an auditor. It's understandable why the majority feel powerless in this situation. You also have to understand, and get comfortable with, in the eyes of an IRS auditor, you are guilty until proven innocent. Navigating the tax code on your own is not a good place to be.
Tax audits don't have to be a source of fear as long as you've remained compliant with all the rules and regulations. The best way to ensure peace of mind is to work with an experienced Tax Resolution Specialist who represents clients in such matters and has a good track record. Contact our firm for a complimentary no obligation consultation to assess your situation.
An IRS audit can be a very time consuming and intrusive exercise that can include a visit from the auditor. Audits can also be conducted remotely. This method, known as a desk audit, involves sending documents through fax or mail to evaluate accuracy and compliance with established law.
Filing taxes is a complex process and the IRS seeks to ensure accuracy by auditing income tax returns. These examinations may be focused on certain deductions, particularly if taxpayers have claimed for more than what their reported incomes suggest - but this does not necessarily indicate any wrong-doing or misconduct. The IRS can also select your return to be audited for no reason at all. These are referred to as “random” audits to ensure compliance with the tax laws.
Taxes are a fundamental pillar of our society and the government strives to ensure that everyone is compliant. To this end, random audits from both Federal and State authorities may be conducted in order to verify taxpayers' income as well as expenses incurred throughout the year; making sure all taxation payments due remain accurate.
Preparing for a tax audit should be an ongoing process. To avoid any problems, ensure that all deductions taken are backed up with proof and every receipt is kept on file along with the return - you never know what may arise in the future! It's important to remember: only declare items which can easily be defended - your documents are a crucial piece to your defense. Ensure each tax record remains safely stored away for at least seven years as per IRS regulations.
Protect your finances and future by taking the time to review your tax returns before signing off, even if you have a professional do them. A thorough examination of the documents will not only help ensure accuracy in filing but also offers an invaluable opportunity for you to gain knowledge on taxes - safeguarding against potential penalties or interest charges related to inaccuracies down the line.
Tax audits can be intimidating, but with a little foresight and the right representation it doesn't have to cause stress. Staying organized throughout the year is key for having peace of mind when tax season rolls around. Finding an experienced professional who understands your individual needs will help make dealing with the audit as painless as possible.
Take the worry out of representing yourself in front of the IRS, which is like going to court without a lawyer. Let our expert team lift this from your shoulders and navigate the IRS on your behalf. Schedule a no-obligation consultation to explore your options and get on track towards permanently resolving any worries you have over having to meet with and defend yourself in an IRS or State income tax audit.
What is a Federal Tax Lien Notice & What Should You Do If You Receive One?
Ignoring your obligation to pay taxes can lead the federal government to conduct severe legal action against all of your existing assets, current and future income and assets you acquire in the future; this form of punishment is called a federal tax lien.
If you've received a certified letter indicating that the federal government has placed an unwelcome Federal 'tax lien' on your assets, this article can provide insights into what it means and how to remedy the issue.
What is a Federal Tax Lien?
When a taxpayer falls behind on their federal taxes, they are at risk of having an official public notification filed against them. This document is known as a Notice of Federal Tax Lien and can cause serious consequences for the individual's ability to enjoy any financial security.
A federal tax lien is an official document filed with the county recorder’s office (usually where the taxpayer lives or conducts business) and the secretary of state's office (if it’s a corporation or partnership) notifying the general public that a taxpayer has an unpaid federal tax debt.
Lien vs. Levy
For the unaware taxpayer, it is important to understand the difference between liens and levies. People will use them interchangeably, but they are very different. A lien grants the government legal rights over all of your property. This does not mean they are going to sell your property but it does make it difficult for you when the government has an ownership stake in your assets. Especially if you are looking to sell them, like real estate.
Anything you sell, the IRS will receive its cut before you receive anything.
A levy, on the other hand, is the physical seizure of income and assets. The IRS is the only creditor on the planet that can garnish your income and remove money from your bank account without a court order.
This may affect your credit.
The consequences of an IRS filing a Notice of Federal Tax Lien are significant. This lien is public record, and eventually may show up on one's credit report which can severely impact their ability to secure further credit in the future as well as lower their credit score.
The effects on your assets.
A federal tax lien restricts your ability to utilize and monetize any existing or future assets - from real-estate, stock investments, automobiles, etc. This means that the IRS is first in line for proceeds if you were to sell any of your assets, before you receive any cash.
The affects on your business.
Protecting your business from financial troubles is important, and a lien can be especially damaging. It attaches to all of your property — including accounts receivable –which could seriously impact the normal day to day operations of your business, leaving you further in debt than before.
Thinking about filing for bankruptcy?
Although filing for bankruptcy may offer relief from debt, it's important to note that your tax obligations and Notice of Federal Tax Lien still remain in effect. To ensure financial freedom, take steps to address any existing unpaid taxes before planning a successful future.
When a levy is enforced, it can result in the government seizing funds from your bank account or drastically reducing up to 75% of your net pay.
Next Steps
Paying off your tax debt in full is the most effective way to erase a federal lien. Typically the IRS will release the lien within one month of payment. But if you are unable to pay such a large sum, as most people are, at once don't lose hope - this is where a tax resolution specialist can help.
When it comes to the IRS, navigating legal channels on one's own is a risky endeavor. The best course of action for those facing tax issues is to seek out expert, professional help by calling an experienced and qualified tax resolution provider like us. With our expertise right by your side, your chances of achieving a positive outcome improve significantly!
How to Avoid an Expensive Tax Bill… & What to Do If You Receive One
Tax season can be a time of great anticipation for millions of Americans with dreams of a nice, big, refund check coming soon. Yet this year, many Americans may find themselves surprised and coming up short on their refunds.
Many taxpayers have been shocked to find that this year, instead of a big tax refund check arriving in the mail, they are being saddled with an unexpected bill from Uncle Sam. The combination of recent tax law changes and updated employer withholding tables has left individuals scrambling to figure out how to pay for their new IRS obligations due at filing time.
If you're worried about a looming tax bill, never fear: there are measures you can take to ensure that your taxes don't unexpectedly balloon. From budgeting tips to what do when the worst happens, these strategies will have your wallet breathing easy throughout the year!
The Earlier the Better!
Ignoring an IRS debt could ultimately result in serious consequences. It is in your best interest to be aware of any outstanding amount as soon as possible, providing time for tax planning and sourcing the necessary funds
Don't let late payments rack up and cause costly penalties and interest. Be proactive about filing your taxes so you'll have a good idea of what will be owed, if anything, that is needed to be paid on time.
Pay Attention to Your Paychecks
With the recent changes in tax law, your paychecks may have grown more generous - but don't get too excited! They could mean less of a refund or an unexpected bill when you file. Make sure to stay informed and plan ahead so unpleasant surprises won't come back to haunt you this filing season.
To prepare for tax season, it's important to monitor your paychecks and ensure that the right amount is withheld. If you see a decrease in federal taxes being taken out of each paycheck, adjust this with your employer immediately - even though it may mean taking home less every month. Doing so can help protect you from federal and state tax debts and penalties later!
Run Your Numbers Before
With just your final paycheck from last year and a few additional details, you can gain insight into what kind of tax refund or balance due to expect come filing season. It pays to take the time for preparation now so there are no unpleasant surprises later! However, please note that you should never use your 2022 final paycheck to prepare your return. You’ll need the actual W-2 from your employer in order to file a complete and accurate return.
To be prepared for tax season, compile all necessary records of your income, credits and deductions to estimate what you owe. Leverage the power of a reliable tax preparation software or use an everyday calculator with those numbers in hand to better understand your financial situation.
Know You Have Back Taxes or Will Owe A Lot?
Ignoring a tax bill isn't an option; the IRS will always come knocking. Settling it quickly can save you from further financial trouble, so don't delay. Your taxes may burden your wallet now, but they'll take hefty chunks out of your future if left unresolved!
Dealing with the IRS can be a daunting experience for many taxpayers. Even getting the IRS on the phone these days is nearly impossible. Without proper guidance, and expert help, attempting to negotiate your own tax problem is like going to court without a lawyer - not a wise move!
Struggling with tax burdens from the IRS or State? Our experienced team knows the IRS’s “ins and outs”, knows how to navigate the IRS maze and is here to assist you in finding a resolution that works best for your unique situation. Take advantage of our knowledge and expertise by booking an appointment with us today - take control of your taxes, and your life, before they become unmanageable!
What to Do if You Owe Back Taxes
Paying taxes is a fact of life, but when the amount is excessive, you may not have the funds to pay in full. Making a mistake on your taxes can be costly as well, and if you plug in the wrong numbers, the IRS will surely come calling.
Whether you owe money to the IRS due to an innocent oversight, a lack of funds, or something else, ignoring the problem will not make it go away.
Once you owe money to the IRS, the clock is ticking, and all the while penalties and compounded interest will be piling up. So what should you do if you owe back taxes? Here are some critical steps to take.
Assess the Situation
Until you know how deep the hole is, you will not be able to start digging your way out. Before you do anything else, you should assess the situation, going through your old tax returns, reviewing communications from the IRS, and adding up what you owe the tax agency.
Once you have assessed the situation, you will be in a better position to make concrete plans. If you owe a lot of money, you may not be able to pay it off all at once, but with the help of a tax relief professional, you may be able to come up with a suitable repayment plan or you may be able to settle for less than you owe.
Review Your Budget
Owing money to the IRS is no fun, but you will have to resolve this one way or another. Hopefully, you can work out a more favorable payment plan with the IRS, one that might allow you to pay a reduced amount, but that will depend on your income, your allowable expenses, and your assets, if any.
It is important to review your monthly household budget carefully if you owe back taxes to the IRS. Every dollar you can pay back is one less dollar you will owe interest on, so think about where you can cut back and how you might be able to free up some cash.
Talk to a Tax-Relief Expert
The bad news is that you owe back taxes to the IRS. The good news is you may be able to settle the entire amount, including penalties and interest, for a fraction of what’s owed through the IRS’s offer in compromise program.
If you qualify for one of those programs, you may be able to settle your debt for less than you owe, but this is not something to tackle on your own. Work with a tax-relief expert, both to identify the proper programs and to make negotiating with the tax agency easier and more effective.
You can use the budget you reviewed earlier to identify sources of income and resources you have access to. Once that information is presented, the tax-relief expert can help you find a suitable tax compromise plan that just might save you a lot of money.
Take Care of the Problem sooner rather than later
Time is of the essence when you owe money to the IRS. Once those back taxes are assessed, the clock is ticking, and every day that passes will mean higher penalties, and compounding interest.
If you want to put your tax debt behind you once and for all, you will want to act fast. The sooner you start working on your tax resolution plan, the sooner you can take your financial life back.
To help ease the stress from your situation, we offer a free, no-obligation consultation with one of our tax resolution experts. You don't have to worry about confidentiality or cost because the consultation is free with zero gimmicks or commitments. Schedule an appointment with one of our tax resolution specialists today by clicking here.
Filing Taxes When You Owe Money: What to Do and What You Need to Know
The tax-filing deadline will be here before you know it and pretty soon, you’ll be gathering up your receipts and plugging in numbers. I know you’re hoping for good news, and praying for a big refund in the process.
If all goes well you won’t owe anything and you might even be getting back a nice refund. But, what should you do if you owe money? If you know you owe money to the IRS, you might be tempted to not file a return, but that is the worst thing you can do!
If you fail to file on time, the IRS will come after you until you do. Worse yet, the tax agency can assess up to 25% just in late filing penalties. Plus, interest will start piling up right away. Instead of not filing, here are the steps you should take if you owe money to the IRS.
Seek Out Tax Deductions You Can Still Claim
If you find that you owe taxes, all might not be lost. As long as the April 15th tax-filing deadline has not yet passed, you can still add money to an IRA, lowering your taxable income in the process. As long as you meet the income guidelines for a deductible IRA, this step alone could lower the amount you owe or even entitle you to a refund.
Pay As Much As You Can As Soon as You Can
Speaking of paying up, it is important to pay as much as you can as soon as you can. Even if you file for an extension, the clock will still be ticking on any required payments, and the penalties and interest can add up pretty quickly.
If you know you owe money to the IRS, paying it off should be your number one priority. That might mean squeezing your dollars extra hard or trimming your budget to the bone, but it beats paying penalties and high interest to the IRS.
Seek Professional Tax Help and Guidance
Owing money to the IRS is no joke, and dealing with the situation is not something you should try to tackle on your own. If you know you owe money to the IRS and cannot pay the bill in full, it is important to seek professional help and guidance.
A tax resolution expert can guide you through the process, helping you prepare, submit and negotiate a payment plan that works for you and the IRS doesn’t get to manage your monthly cash flow. You also may qualify for an offer in compromise, which settles your case for less than the amount owed, but it’s important to act as quickly as possible - you do not want your tax situation to get worse.
Hopefully, you will find a reason to smile when you file your taxes this year. Hopefully, you will find that you are due a refund, and you can begin making plans for the money that will soon arrive in your bank account.
If not, it is important to know what to do and which steps to take. If you owe money to the IRS, you need professional help and guidance, so call a tax relief expert right away to preserve your rights and your money.
Before you make a decision, let our firm see if we can help. We negotiate with the IRS day-in and day-out. We can potentially settle your tax debt for a lot less than you owe. Call us today to find out. Our tax resolution specialists navigate the IRS maze so you don’t have to.
What To Do If You Receive a Levy Notice From the IRS
The IRS is not one to mess around with when it comes time for repayment. They are the least forgiving creditor when it comes to collecting what they think is owed to them. The IRS will seize assets including bank accounts and property such as wages or real estate.
Contact a Tax Relief Firm
The IRS is known for tricking people into giving incriminating answers. You should not represent yourself as you may end up in more trouble. Find someone who knows how to help! Finding a reputable tax resolution specialist is your best option since the average tax preparer does not know how to deal with these situations.
The IRS is not your friend. They are the most brutal collection agency on the planet. They exist solely to assess and collect taxes and will do whatever it takes, when they think you have their money. They will also file a notive of federal tax lien. So, if you have a real estate transaction pending any proceeds from the sale of that property, over and above the mortgage amount, will be intercepted by the IRS to go towards your outstanding tax debt. A tax resolution professional will ensure to protect your assets and income from the long arm of the IRS.
Next Steps
The next step you will want to do is gather all of your financial documents and call our firm. We will help put together your case to the IRS and represent you to let them know that a levy will cause hardship for you and your family. We will need documented evidence that the levy will cause financial hardship for you, and if you can prove this, the IRS will release the levy. However, this is just putting a temporary band-aid on the situation, you will still owe the balance to the IRS. Once we get the IRS levy released, it just means the IRS will not garnish your income and will work with you to figure out a game plan to resolve the debt.
Make Payment Arrangements
We can negotiate a payment plan for your back taxes with the IRS. If you are entered into an installment plan, the IRS will release the levy notice.
Get an Offer In Compromise
More often than not, you can get your debt “settled” for less than what you actually owe. Oftentimes, for a lot less. This is what we call an offer in compromise. An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability via payments, or doing so creates a financial hardship. The IRS will look into your ability to pay, your income, your expenses, and your assets to determine if you qualify for an offer in compromise.
The IRS generally approves an offer in compromise when the amount offered showcases the most they can expect to collect within a reasonable period of time. If you do move forward with an offer in compromise, make sure you hire a tax resolution specialist to help you prepare, submit and negotiate an offer, and be sure to check their qualifications before working with them. In these situations, you want the best of the best to represent you before speaking to the IRS.
The IRS is no place for the faint-hearted. It’s hard enough filing your taxes on time every year, but if you ever find yourself in need of tax resolution services that can help permanently resolve problems with the IRS - reach out to our firm today! We will look into your situation and give you the best options for your specific case. Contact one of our tax resolution specialist today.
Do You Owe Money to the IRS But Can’t Pay? Try This.
When you owe back taxes and can’t afford to make any payments, then it may be time for a special tax status known as currently not collectible. This means that your debt is still considered valid even though there's no chance at recovery right now. When you’re approved for currently not collectible status, the IRS can no longer garnish your wages or seize any property.
Now, don't forget about these debts because the IRS is still looking for payment.
What is Currently Not Collectible Status?
The IRS will place your account in currently not collectible status if you can’t pay both back taxes and reasonable living expenses. You may request this by submitting the proper form with documentation that proves how much income you have left over that is available to make a payment, along with any assets that have been sold recently to cover mounting debts - like homes!
To qualify for the currently not collectible status, you will need to put together a case that you will present to the IRS. Gather copies of your bills, proof of your income (pay stubs, bank statements, alimony, etc), and your investments. It is important to document your inability to pay so that if the IRS determines you cannot afford your necessary expenses, it can grant you status.
When dealing with the IRS, it is best to have a professional in your corner. The IRS can be very intimidating and might ask invasive questions that could land you deeper into trouble than before if you do not know how to answer properly. Remember - they are not friends of yours; their job entails collecting what they believe you owe them so make sure any interaction stays as simple and effective as possible. That is why it is crucial to reach out for help from one our tax resolution specialists.
Temporary Solution
If your status is approved, it does not mean you do not have to file your current and future taxes. This status only applies to your back taxes that the IRS is looking to collect. The currently not collectible status is simply a bandaid to help you get back on your feet. That way you can put yourself in a better position to make a payment in the future. The IRS may review your status every year or two if it looks like there is potential for repayment. You will only be able to keep the status active if you still can not make a payment on your back taxes.
Statute of Limitations
The IRS is an institution that prides itself on being collections-oriented. They will try to collect outstanding taxes for only 10 years from the date they were assessed against you. Once the 10 years is up, the IRS can no longer collect the back taxes. This also applies if you have the currently not collectible status. If you do not have the status, or are in an installment agreement, or have an offer in compromise pending, the IRS can garnish wages and add more penalties to your case making things worse for you as well as your wallet.
In today's tough economic climate, many families are struggling to make ends meet. If you're worried about the IRS garnishing your wages or levying bank accounts, or filing liens against your property for non-payment of taxes you owe - then reaching out may give you some peace of mind.
Our firm will help explain all options available in order to relieve any anxiety associated with these situations because we know how intimidating this can be if nothing has been done before. There is a solution to every IRS problem. Connect with one of our tax resolution specialists to see if you qualify for the currently not collectible status, or any of the other IRS settlement options you may be eligible for and the best next steps for your situation.
The 2022 Inflation Reduction Act: How Will It Impact You If You Owe Money to the IRS
Working with the IRS has never been easy, and tax settlement agreements are always complicated affairs. If you are currently working to pay off your tax debt, you may wonder what the recently passed 'Inflation Reduction Act of 2022' has in store for you.
There has been a lot of back and forth about the Inflation Reduction Act and what it means to you. While the details of the agreement are still up in the air, there are a few concrete details you need to know about how this act could impact you as an American citizen. Here are some essential things to consider moving forward.
The "Army" of IRS Agents Are Not All Soldiers
A lot has been said of the supposed army of IRS agents who will soon be walking throughout the streets of America. There are some pundits and politicians who say, "the IRS will be hiring 87,000 armed agents to hunt down innocent taxpayers, relieving them of their hard-earned money in escalating waves of harassment."
The reality behind the army of IRS agents is much different and far less troubling than what you may be hearing. Most of the new hires will be administrative personnel, IT workers bent on upgrading old hardware, customer service representatives to answer the endlessly ringing phones, and so on. That does not mean there will not be new agents on the job, but the scope of the new hires is not a reason to panic, even if you currently owe money to the IRS.
Enforcement Efforts Will Ramp Up
Even though only a portion of those new IRS hires will be "on-the-ground agents," the overall goal of this bill for the IRS is to increase the amount of revenue they are collecting from taxpayers. There is reason to believe that the IRS will be more aggressive with its collection efforts because of the Inflation Reduction Act.
The nature of this bill has raised concerns that the IRS will have an increase in audits for small business owners and regular taxpaying citizens across the United States. Our government claims the IRS's efforts are geared more toward citizens in higher tax brackets; however, you can never be too sure since it does not clearly state that they will not target the "everyday" taxpayer. If you think you owe money to the IRS, this is the time to take it seriously to avoid any extra fees or, worst-case scenario, the IRS freezing any of your bank accounts and garnishing your wages.
If You Have an Agreement in Place Nothing Should Change
The IRS has been increasing its efforts against taxpayers even before passing the 'Inflation Reduction Act of 2022'. If you have been targeted by one of these actions, they are still looking for a suitable settlement with you and will not stop until the settlement is resolved.
Hopefully, you are working with a professional as you work with the IRS since the settlement process can get pretty complicated and working with a tax relief specialist ensures you can get the lowest settlement possible for your specific situation under the law.
If you are still working through the details of a settlement, you could find the IRS will try to drive a harder bargain. This could be especially true if the amount owed is over $10,000. Either way, working with a tax resolution professional is crucial since ignoring the situation will only worsen it. The longer you wait, the more expensive your situation will become.
Professional Tax Relief Guidance is More Important Than Ever
The recent passage of the Inflation Reduction Act has introduced a great deal of uncertainty among taxpayers, especially those who owe money to the IRS. If you are not currently working with a professional and relying on their guidance, seeking outside help will become even more critical.
That is why it is vital to work with a professional, so do yourself and your wallet a favor by connecting with tax resolution specialists like us. We specialize in helping people get their IRS and State tax problems settled and behind them once and for all!
What to Do If You Receive a Collection Letter from the IRS
You open up the mailbox, expecting the usual mix of bills and catalogs, but what you find is a collection letter from the IRS. It can feel like you are living in a nightmare that you can’t wake up from when you receive a collection letter from the IRS.
Even worse, that letter includes a demand for payment, which is the last thing you need to deal with. So what do you do now since you have received the collection letter from the IRS? The steps you take could make all the difference, and here are some key things to do next.
Take a Deep Breathe
It is easy to panic when you get a notice from the IRS, but getting scared will not get you anywhere. So slow your racing heart (if you can), take a deep breath, and try to calm your nerves.
You will need to think clearly to take on the IRS, and letting your emotions guide you is the last thing you want to do. You will want to have all your brain cells firing, so stop panicking and carefully think through the following steps.
Read the Notice Carefully
Not every notice from the IRS is terrible news, and some are merely a matter of mismatched paperwork or transposed numbers. Those relatively simple matters should not take much to resolve, and they may not even require you to pay any extra money.
Before you do anything else, take the time to read the notice carefully. Find out precisely what the letter says and what the IRS is proposing. Is the IRS claiming you underreported your income for the past year? Are they saying that you took a deduction you were not entitled to? Is the tax agency challenging your interpretation of a statute? The more you know about what the IRS claims, the easier it will be to defend yourself and, ultimately, save you money and headaches.
Pull Out Your Tax Return and Supporting Documents
As previously stated, some tax notices are merely the result of minor disagreements or inconsequential math errors, but others are more serious. Now that you understand what the IRS is stating, you will want to look at what you claimed when filing your tax return.
You can start by pulling out a copy of the tax return in question, making sure to get the right one based on the contents of the collection letter. Hopefully, you have a copy of the return saved on your computer or in your filing cabinet. If not, you can request one from the IRS or have a professional request it for you.
Now that you have your tax return, you can look it over in comparison to the collection letter, looking for any mismatches or erroneous entries. If the return seems good to you, the next step is to get out all the supporting documents.
Those supporting documents may include 1099 forms from your bank and brokerage accounts, W-2 forms from employers, and anything else you included on your tax return. If you took deductions against your income, you will also want to gather those documents and keep them handy.
Take Prompt Action
One thing is certain when it comes to fighting with the IRS - wasted time is wasted money. The interest and penalty clock starts ticking the moment the supposedly erroneous tax return is filed, and every minute you wait could be more money out of your pocket.
If you wait too long the IRS can, without a court order, garnish 90% of your net pay AND clean out your bank account. They can also seize your home and other assets.
The number one thing to do is act fast, which means finding and reviewing the applicable documents immediately. Once you have everything together, you can take the next and arguably the most critical step.
Find a Suitable Professional
Taking on the IRS is not something you want to do alone. You wouldn’t go to court without a lawyer and you certainly don’t want to go up against the IRS without expert representation. Even if you are confident filing your taxes and handling your finances, arguing with the IRS is not a DIY activity.
If you hope to limit the damage and reduce the amount, or the proposed amount they are demanding, you will want a professional in your corner. Working with a tax relief specialist could save you a lot of money in the end, along with countless hours of grief and stress. The sooner you seek professional help with your tax problem, the better, so do yourself a favor and do not wait.
IRS problems can affect all aspects of your life. The stress of not filing or paying your taxes could make you lose sleep. If you are looking for tax relief, we can help!
To help ease the stress from your situation, we offer a free, no-obligation consultation with one of our tax resolution experts. You don't have to worry about confidentiality or cost because the consultation is free with zero gimmicks or commitments. Schedule an appointment with one of our tax resolution specialists today by clicking this link.
