What Can the IRS Do to Collect Back Taxes?
Opening the mailbox and finding a letter from the IRS is frightening, but what happens next can be even scarier. The IRS wields incredible power, and if they claim you owe additional taxes, they have many different options for forcing you to pay.
When the IRS claims you owe additional money, they will act quickly, and that could leave you reeling and trying hard to preserve the money you need to pay your bills, feed your family and keep a roof over your head. If you are employed, the IRS can reach into your paycheck, forcing the company you work for to withhold part of what you are owed - garnish your wages - until the tax debt has been paid in full.
The IRS can also hold onto any refunds and government payments you would otherwise be due. If you have been waiting for that big fat refund check to arrive, you are going to be out of luck if you owe money to the IRS.
As if all this were not frightening enough, the IRS also has the power to levy your bank accounts, including the funds you need to run your business and your life. Those bank account freezes and taking your money could leave you without the cash you need, putting you in a real bind. It’s shocking to wake up and find that the IRS has cleaned out your bank account. It’s an emergency. How do you pay your rent or mortgage, buy groceries and keep your utilities turned on?
Your home could even be at risk if you owe money to the IRS. The IRS frequently files tax liens that attach not only to your home but any other real estate or personal property you own. In some instances, the IRS has sold taxpayers’ homes. The threat of this kind of action has compelled many taxpayers to cough up the money the IRS says they owe, even if they think the IRS is wrong.
As you can see, the IRS has wide latitude and plenty of power. If you disagree with the amount the IRS says you owe, or if you simply do not have the money to pay the bill, you need to act fast. Ignoring the problem will only make it worse. You cannot simply pretend that you never pulled that fateful envelope out of your home mailbox.
The tax code and IRS regulations are complex and have far more pages than the Bible. Many of those IRS code provisions and regulations are difficult to understand and mind-numbing for the ordinary taxpayer. With IRS problems, you cannot afford to leave anything to chance. You need professional help to fight back.
When fighting the IRS, you need the help of a professional, and that is where a tax attorney comes into play. You can fight back on an even playing ground by working with a professional.
Our law firm focuses on tax resolution and helping people who owe the IRS or state $10,000 or more. We’ve seen taxpayers get blindsided every year by a huge tax bill and often fall behind on their taxes for years on end. If that’s you, we can help. Contact our law firm today to discuss solutions for dealing with your tax debt.
Common Tax Relief Programs the IRS Offers
The old saying that nothing is certain in life except death and taxes has never been truer or more frightening than now. In the current environment, nothing will get your heart racing quite as fast as opening the mailbox and finding a letter from the IRS saying you owe money or are being audited.
When the IRS comes calling, you might think that there is nothing you can do. You may worry that you will have to liquidate your assets, sell your car, or even put your home on the market to pay what the IRS says you owe.
The good news is that you may not have to pay that total amount, and before you write that big check, you should check out the alternatives first.
The IRS knows that taxpayers fall behind on their taxes. You are supposed to immediately pay the total amount it says you owe. However, they also know that when the tax bill arrives, many people find themselves in a situation where they can’t pay the total amount owed. The IRS has programs in place that can reduce the amount you owe or make paying the tax bill a little easier.
Note: As a tax law firm, we always recommend that you reach out to a professional who knows how to negotiate with the IRS on your behalf. Our tax attorneys can navigate the IRS maze so that you have nothing to worry about. If you owe back taxes, our firm can aggressively negotiate with the IRS for you and potentially settle your tax debt. Call us today.
With that said, here are some of the most common tax relief programs the IRS has to offer - and how you can access them.
Payment Plans
Otherwise known as installment agreements, one of the most common ways taxpayers pay their back taxes is by setting up a payment plan. This type of program is a popular one, and for a good reason - it can significantly reduce the stress you feel as you deal with an unexpected tax bill. Payment plans will prevent the IRS from taking more drastic action against you.
There are pros and cons to this approach, and it is important to explore your other options very carefully. With a payment plan, you will need to pay the entire amount you owe, but you can stretch the repayment out over months or even years. However, keep in mind that the IRS will continue to charge interest on the remaining balance, so this option will require you to pay more than the amount you owe. You also will have to keep making monthly payments to the IRS until you’ve paid off your tax bill.
Offer in Compromise
Another program the IRS has is known as an offer in compromise, or OIC. This option allows eligible taxpayers to settle their tax debts for less than the IRS says they owe, and that means you could save money if you qualify for this program.
The offer in compromise is not right for everyone, and it is important to work with a tax relief professional if you are exploring this kind of solution. Don’t believe those late-night T.V. commercials. They make it sound too good to be true, and what they are telling you is too good to be true. This is a program where you do pay money to the IRS. If you have significant assets, the IRS may not be willing to settle on terms that you like. The IRS does not have to agree to an offer. It’s discretionary. It will only settle your tax debt on terms it finds favorable. That said, if you are strapped for cash, an offer in compromise could be the way out of your tax trouble. A real tax professional can make a difference between a rejected offer in compromise and one that is accepted.
IRS Hardship Program - Currently Not Collectable
The IRS hardship program is another option for taxpayers who are financially unable to pay what they owe to the IRS. If you are genuinely strapped for cash and worrying about your tax debt, you should check out the hardship program, but you should not try to work with the IRS on your own. You will have to prove to the IRS that you either cannot pay your monthly expenses or don’t have any money left over to pay the IRS after paying your monthly expenses (at allowable amounts under IRS standards).
You should be aware that the IRS hardship program does not relieve you of your tax debt. It simply delays taking action to collect the tax debt so long as you can prove you can’t afford to pay and meet basic living expenses accordingly to IRS standards for food, clothing, shelter, and other necessary expenses.
The hardship program has some very specific requirements, and if you make a mistake when applying, you could find yourself locked out of the process when you really should be in hardship status. By working with a tax lawyer, you can increase your odds of success and possibly save yourself a lot of money in the process.
What is the best option?
As you can see, the IRS does offer several programs that can reduce the amount you owe - or even forgive your tax debt altogether. If you are eligible for one of these tax relief programs, you could find yourself breathing a lot easier. However, the IRS is not likely to give you the information that makes the ultimate difference – the nuances that a tax professional knows. We have spent hours and years learning them and applying them for the benefit of our clients.
As a taxing authority and agency, the IRS is not there to advocate on your behalf. That’s not its job. The IRS’ job is to fairly administer the tax laws and collect money owed to the government. A tax attorney’s job is to represent your best interests considering all of the facts, circumstances, applicable law and gather the evidence to prove those facts. Think of it this way. The umpire does not go up to the plate to bat in a baseball game. He calls balls and strikes. That’s what the IRS does. An attorney steps into the batter’s box and hits the pitch (facts and applicable law), regardless of whether it’s a fastball, curveball, or slider.
For all of those reasons and more, it is important to work with a tax attorney to deal with whatever is your IRS problem. Whether it is debt from years of unfiled taxes, a discrepancy in the amount reported and what the IRS says you owe, or anything else, a tax attorney can make a difference. They have important specific training, education, and experience. Their knowledge, skill, and ability can make a huge difference - and save you a lot of money in the process.
Knowing about the tax relief and favorable resolution options the IRS offers is the first place to start, and that education can be a huge point in your favor. Now that you know what types of programs are available, it is time to take the next step, so pick up the phone and call us, a tax attorney, today.