Tax problems are extremely worrisome. The taxpayer may experience panic and feel overwhelmed by a tax notice from the U.S. Internal Revenue Service (IRS). It is important to remember that a tax problem indicated by the tax notice will not go away on its own. The taxpayer must take action!
Some problematic situations that arise between IRS and taxpayers include unfiled tax returns, previously unpaid taxes, or results of IRS-initiated audits. Regardless of the situation, though, taxpayers can choose to solve their tax problems and leave nagging worries about taxes behind!
Many taxpayers know they have unresolved tax issues but sometimes an IRS notice arrives without warning. The tax notice typically presents a payment date for liability the IRS says the taxpayer owes. If the taxpayer cannot pay the amount or disputes the amount the IRS says is owed, it is essential to take steps to avoid additional interest or penalties. The taxpayer may need resources above and beyond the tax preparer or CPA.
The taxpayer’s first step is to read the IRS tax notice. Many people say that tax notices are difficult to understand. For example, the IRS notice may simply cite a tax year and the amount the taxpayer is presumed to owe. The specific reason for the tax notice issuance is not provided. However, the taxpayer is likely to see what amounts to a bill and payment due date. Quite often, the taxpayer does not have a full month to pay this IRS bill.
The taxpayer’s first step should involve a review and comparison of any information cited in the IRS notice with his or her tax return(s) filed for the year(s) referenced. A call to IRS may be warranted to clarify why the tax notice was issued. Contact details are listed in the upper right corner of the IRS notice. The taxpayer should note the day and time of contact, the IRS agent with whom he or she spoke (along with the agent’s number and identifier) and conversation details.
The taxpayer should not request a verbal tax resolution or make any kind of settlement offer during the call. Although the taxpayer may need to consider an IRS tax resolution if he or she cannot pay an amount IRS says is owed, professional tax resolution services may be required.
According to Top Tax Defenders, if the taxpayer believes the taxes are owed but cannot pay, it is possible to request a payment plan. An IRS payment plan allows the taxpayer to make monthly payments stretched out over an agreed period. This simple debt resolution means that IRS cannot attach the earnings or financial assets while the taxpayer is making regular payments. IRS also cannot accelerate the payment plan. Unfortunately, though, any penalties and interest the taxpayer owes will be included in these monthly payments.
The taxpayer should begin by tallying the total amount of unpaid taxes. If the amount owed is less than $25,000, it is possible to use an IRS online form to apply for an extended payment agreement when the taxpayer believes he or she owes back taxes.
If the amount is greater than $25,000, it is best to consult professional resources. Taxpayers owing more than $25,000 must submit to a more complex procedure. In this case, the taxpayer is likely to want to protect his or her interests. A decision to negotiate IRS payments may be necessary.