01/29/2025
21 Ways to Get Help for Your IRS Tax Problem and
Get Your IRS Debt Resolved, Reduced, or Forgiven, Part I
Owing money to the IRS can put tremendous tress and pressure on individuals and families alike. In this 3 parts post, I will give you some insight on how to manage and alleviate this situation.
Are you behind on filing your federal income tax return or paying your federal IRS taxes in the last year or more? If so, you’re not alone. More than 24 million taxpayers in the U.S. have either failed to file a tax return or are behind in paying their IRS taxes due, and that was before the pandemic hit.
If things have been tight financially, it can be easy to ignore the task of filing and paying your federal taxes to the IRS. You might think that you can get caught up “next year” when things get better. Only, unfortunately, they don’t get better. You skip tax filing again. And maybe again.
Initially, you might think you’ve gotten away with not paying the IRS. But in a year or two, they will catch up with you. While you procrastinate, the penalties and interest will build up to a dollar amount that is way more than what you would have owed if you had filed and paid on time.
Letters from the IRS will come eventually. If you let it go too long, they can take away your assets. By then, the penalties and interest will be so high that it will feel like an impossible situation to get out of.
Here are just a few of the powers that the IRS has to collect your debt:
• The IRS can freeze your bank account and clean out your cash.
• They can garnish your wages, meaning they can take away
your paycheck, plus they notify your boss of your IRS debt
which can be very embarrassing.
• IRS officers can take away your car, house, boat, and other big
assets.
• They can take your retirement fund and garnish part of your
social security payment.
• The IRS can restrict your travel by seizing your passport.
• They can take away your jewelry, including family heirlooms.
• The IRS can take away things like furs, art, and gun collections.
• If you’re self-employed, the IRS can notify your vendors of
your debt which can be professionally embarrassing.
Worse, if you’re driven to bankruptcy, there’s a chance it might not end there. The rules are complicated, but some of your IRS debt may not be forgiven if you declare bankruptcy.
Just the anxiety alone is not worth getting this far behind on your taxes. You may even be losing sleep over all of these IRS debt problems. Especially now, everyone needs to keep their stress level low and their immune system in tip-top shape to fight the virus. For some people in high risk health categories, this added stress could cause a more severe illness. And that’s the last thing you need because in a worst-case scenario, that can lead to lost wages and hospital bills on top of your IRS debt.
Owing the IRS debt can cause serious problems in your marriage too. There have been plenty of divorces when the two partners disagree on money issues. When IRS debt and your bad credit are added to the conflict, your marriage can be in real jeopardy.
Taking the First Steps
You owe it to yourself and your loved ones to begin the journey of coming clean with the IRS. A huge burden will be lifted from your shoulders and you will feel enormous relief when you take the first step toward getting your IRS issues resolved.
So, let’s see if we can begin to relieve some of that anxiety and help you solve your IRS problems. Let’s take a look at all of the steps and options that you have when you get behind in filing or paying your federal income taxes to the IRS.
Learning the Facts about IRS Debt Resolution
Here are some facts about resolving your debt with the IRS.
1. The IRS wants to work with taxpayers.
The IRS is actually on your side, in a way. The agency is typically eager and happy to collect old debts. It truly wants to work with taxpayers, but there are many, many rules you need to know about and a process to follow if you want a positive result.
2. Only 3 types of professionals can represent you in front of the IRS.
While you can represent yourself in front of the IRS. It might not be the best idea, especially if your debt is very high or you’ve ignored the situation for a long time.
There are only three types of professionals that can represent your case at the IRS:
1) CPAs, Certified Public Accountants. But be careful: not all CPAs
are experienced in IRS tax resolution
2) EAs, Enrolled Agents. Again, make sure the EA has experience
with IRS tax representation, representing taxpayers to the IRS.
3) Attorneys. Same story as above. Not all attorneys are tax
attorneys, and even not all tax attorneys have a bustling tax
controversy practice.
A great question to ask anyone you hire is “What is your offer-in-compromise acceptance rate?”
3. You’ll probably need to get your bookkeeping caught up.
If you’re behind on your taxes, it can often follow that you are behind on your bookkeeping as well. Anyone you hire is going to need good numbers in order to work with you, so a good first step is to catch up on your bookkeeping. If you don’t have your records, a professional can help you re-construct them.
Often, tax resolution professionals provide bookkeeping catch-up services or services to re-construct your records. They’ll do the minimum you need in order to get you or your business in compliance.
4. You’ll probably need to organize all of your IRS mail.
Yep, we know you. It’s sitting in a stack somewhere in your home. If you haven’t opened the mail, start opening it up. It’s helpful for tax professionals to know what type of notice you received. In most cases, tax resolution specialists will know the letter by form number, and that will give them an idea of where to start with your case.
IF you’re too anxious, we totally understand. For some people, it can simply be too overwhelming to open a letter from the IRS. In that case, when you hire a tax representation professional, you can bring them into the office and that will be the first thing that they can take care of for you.
The Internal Revenue Service, state tax agencies, and local entities will send a letter if one of the following happens:
• You miss a payment deadline for payroll taxes due.
• You miss a deadline for filing payroll tax reports.
• You miss a deadline for filing your personal or corporate
income tax returns.
• You miss a deadline for paying tax due from your personal or
corporate income tax returns.
• You miss a deadline for filing and/or paying corporate
franchise tax due.
• An amount paid is short or over what the IRS or another tax
agency calculates as due.
• The agency notices a discrepancy on any of your tax returns
and needs an explanation.
• You have been selected for an audit.
• You fail to respond to previous correspondence.
Please note: The IRS will never send you an email about any of the above situations. They always send physical letters. If you get an email, it’s a scam.
Getting into Compliance with the IRS
You can’t ask to have any debt forgiven until you get into “compliance” with the IRS. So, the next step is to get into compliance. Here is what you need to do to get that done.
5. You should almost always file your past due tax returns, but there are some exceptions and filing needs to be done carefully so additional debt is not triggered.
Before any debt can be forgiven, the taxpayer needs to get into compliance. This means all past due returns must be filed. You don’t have to pay off all your debt at this time; we’ll talk about what you need to pay in the next item.
However, there are a couple of really big “if’s” when it comes to this step. In rare situations, filing can trigger more debt. Also, filing a particular way can also trigger more debt.
That’s why it just makes sense to get a tax resolution professional involved in every step of this process, so they can keep you out of more trouble than you’re already in.
6. Pay your current taxes.
While you don’t have to pay all of your old IRS debt, you do have to be paying in your current taxes. This is part of getting into compliance. You need to be able to show IRS that you can pay your taxes that are current.
This means that if you have a job as an employee, withholding is being withheld from your current paychecks. Or, if you’re an entrepreneur taking draws, that you are currently making your estimated tax payments.
Paying Off Your IRS Debt: Options
Here are the options you have for paying off your IRS debt. This is where it gets extremely complicated. Selecting the correct IRS tax resolution option from the ones listed below can be the difference between many thousands of dollars, not to mention success and failure.
If you still haven’t hired a tax resolution professional, we recommend you do so at this time. You’ll save hours and hours of time spent trying to learn about all of the rules and forms and processes involved. Plus, you’ll feel the relief knowing your issue is in good hands with a professional.
7. Pay off the entire amount, including penalties and interest
If you can afford to, just pay it off, you’ll save on legal fees; but if you’re a first-time offender, you may be paying penalties and interest that you might have gotten out of if you hired a professional.
If the IRS calculated your taxes, they may be overstated. And what if the IRS made a mistake? Or what if you could have gotten the interest waived? These are choices you’ll need to make for yourself.
We are on a mission to help business owners and high income individuals save big on their taxes. if you're ready to save big on your taxes this year, call us. 516-243-7397.
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