As a taxpayer, it is essential to make sure that you pay back what you owe the IRS. However, receiving any form of communication from the IRS stating that you owe them an outstanding balance can be scary.
The important thing to know is the IRS doesn’t always get that number accurate, and that is where a having a tax relief professional can help.
But until then here are eight immediate action steps to take if the IRS is after you.
Check Your Mailbox
Before we get started let’s make sure you actually do have the IRS coming after you for money.
Typically, the IRS will send a letter in the mail with details of the money you owe them. In fact, every year the IRS sends notices to people that owe them money.
So, make sure you are checking your mailbox often and if you do receive a letter… open it and read the details all the way through. The trash bin is the last place that you want to send a letter from the IRS.
Note: if you do not want to wait anxiously for a letter from the IRS, then pick up the phone and call them.
When the IRS Interviews You
The IRS may ask you to come in for an interview. Most of the time to discuss the audit in place or other tax reporting issues.
You can go to the interview and bring a friend with you if that would help. Most people would want a tax relief professional to speak on their behalf which can be very helpful and relieve the stress and pressure of the interview.
If you do end up having a tax relief professional help you, make sure that you share any documents and details with them so they can fully assist you.
I don’t recommend doing nothing at all as this can result in wage garnishments, tax levies and even losing your home.
If there is a significant amount that is involved, and you are sure the IRS has made an error it is ok to have a tax relief professional represent you.
In this case, go ahead and gather your receipts and accounting documents to show as evidence against the IRS claim.
IRS errors can happen, we are all human, and mistakes are an easy correction as long as there is proof to show you don’t owe what the IRS is claiming you owe.
Get Innocent Spouse Relief from the IRS
Depending on your situation, if you are a widow, divorced or separated and tax issues arise, one of the best ways to defend your rights as a citizen is by going for an Innocent Spouse Relief status from the IRS.
Go to the IRS and ask for Form 8857. This form will be sufficient along with writing down a closing letter explaining the entire issue in detail.
It is better to file for Innocent Spouse Relief at least eight months before the tax season begins since the entire process takes six months.
Settle With the IRS (You Won’t Win)
Once you have checked all the documents and now know officially what you owe the IRS, then it is best to settle and enjoy life again.
Many people do not pay what is owed to the IRS because they feel that it takes too much time and they don’t want to give up their savings.
The good news is: you can pay in installments to the IRS if you need to.
You may also contact the IRS on their customer support number.
Note: The IRS website has details on the different methods of paying, and it is easy to find the one that is most appropriate for you. Let us check the best options here:
a. Offer in Compromise Method:
In order to fully know the amount that you will need to pay the IRS by this method, you will need to share with the IRS an elaborate detail on how much money you make and the expenses that you have per month.
On deducting the expenses from the income, the IRS will calculate the cash flow that you can manage to pay them in installments.
b. Hardship Suspension:
If you have hardship in your life than you may be able to get on a hardship suspension.
You can utilize this time to find another job or try increasing your income to manage your expenses and even pay down your tax debt
Remember though that the IRS will not call you or bother you with emails, the time you are on a hardship suspension your interests are still adding up. So, when you return you will find more dues waiting.
Pay in Installments:
A good option that the IRS agrees to is paying your tax debt in installments. This is precisely why the IRS allows you to settle your tax debt in a matter of 36 months.
The late-payment penalty is usually 0.5% of the unpaid taxes as per a report. If you are unsure of how to talk and discuss this with the IRS officials, do not hesitate in seeking the tax relief help to handle this.
It involves a lot of discussions, paperwork and calculations.
Since the IRS has a diverse range of payment plans for the salaried, and for the salaried individuals, it is better to let the experts do the talking.
Filing for Bankruptcy:
The first quarter of the year is usually when most people file for bankruptcy. However, in 2017 there was a decline of 3% in filing for bankruptcy.
This was an improvement you may say. But it is still a far cry from a better state. Sadly, without proper planning, many Americans are going bankrupt by retirement as per a financial study.
The rate of seniors going bankrupt has gone up by 300% since 1991!
The IRS does not want you to go bankrupt because then they cannot seek any dues from you.
Learn How the IRS Works
Before embarking on a rant against the organization, you will need to know why they work in this manner.
They are way above other government organizations and can definitely and rightfully file a tax lien against you that may tarnish your personal and professional relationships.
They also can seize your property and sell it if you fail to pay them.
The good news is the IRS is always willing to discuss the plan for payment as per your choice.
Hire a Tax Relief Pro
When considering hiring a tax relief professional make sure you are clear with them about your case.
Once your tax relief pro is clear with your documents and your case, they can go and speak to the IRS on your behalf.
In short, the IRS has been a strong governing body that is working with the intention of collecting taxes.
The IRS will collect their taxes and dues, and they continue to levy the taxes following the newest law.
So, it is better to be pro-active than re-active, that way you can have peace of mind and not have to check the mailbox every day in worry waiting for a letter.