What You Need to Know About Tax Debt

Problem with the irs

The power of the IRS to garnish wages and levy upon assets can be quite intimidating, especially for those with tax debt problems. Since the first federal income tax was adopted in 1861, taxpayers across the country have been caught in the unenviable situation of being unable to pay their taxes in full or, in some cases, at all. In such a situation, many feel overwhelmed, often neglecting to seek help with tax problems. Choosing not to deal with IRS back taxes owed, however, only leads to further debt and Irs problems. In this article, we’ll review the consequences of failure to pay taxes owed and provide a few suggestions about how to fix tax problems.

What’s the Worst That Can Happen?

It’s actually pretty serious. If you don’t submit returns or don’t pay in full, the IRS estimates your returns for you, not taking deductions into account. They then levy upon assets in possession of the taxpayer or assets in the possession of a third party, like a bank. They can take a portion of your wages directly from your employer, seize your house, or take from your personal account. Furthermore, they charge interest, making the amount seized much more than the amount originally owed.

How Can I Get Help with Tax Problems?

The Fifth Amendment of the Constitution prohibits the government from seizing citizens’ property without due process of law. This applies to IRS levies as well. Therefore, delinquent taxpayers are always given notice and a chance to make their cases before levies take effect. At that time, debtors can undertake steps to resolve tax debt.

For those needing help with tax problems who owe less than $10,000, it is possible to resolve tax debt without the help of a professional. Those who owe more than $10,000 should seek help before taking any of the steps we will outline. Before developing a strategy, it is important to file late and amended returns. Those who never filed taxes in the first place can still take deductions to reduce their liabilities. Those who filed and underpaid should have a professional review returns to determine if they are accurate and if there are any missed deductions. They will then help you file to amend a return.

The next step is to select a tax debt strategy with which to petition the IRS. There are only five options.

  1. Installment agreement This monthly payment plan for paying off the IRS can take a variety of forms.
  2. Partial payment installment agreement Though this strategy also involves monthly payments, it differs in that the amount paid is reduced.
  3. Offer in Compromise Through this program, debtors can settle with the IRS for less than what they owe after making a lump sum or short term payment plan.
  4. Not currently collectible This strategy is only available to those in extraneous circumstances. In this program, the IRS agrees not to collect on debt for about a year.
  5. Filing bankruptcy This extreme option discharges all tax debts.

Getting help with tax problems is about meeting with a professional who can help you to construct a plan tailored to your personal financial situation. Though IRS tax debt can seem insurmountable, there are professionals who can help. The most important thing is to tackle the problem before it worsens. More like this article.

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