How to Fix Tax Debt Issues with IRS

By Guest Author | taxes | June 23, 2020

According to the IRS, since 2010, tax liens filed by the agency have decreased by more than 50%. However, by 2018, there were still more than 14 million open debt cases. This is a clear indication that, to date, taxpayers are still struggling to pay taxes.

Some of the major causes of tax debts are failure to settle the taxes on time, failing to file returns, errors during filling of returns, false tax beliefs, and tax identity theft, thus attracting debts with the IRS. Due to the tax debts, strict measures can be taken against you by the IRS. You can get passport restriction, levies, or even worse, a jail term. Fixing the tax debt with the IRS should be a priority to avoid getting in trouble with the taxman. But do you know how you can fix your tax debt issues with IRS? Let us give you some tips to help you stay on the right side of Uncle Sam.

Do not give your problem a blind eye

Having a tax liability is a clear indication that there is a problem. Therefore, it is essential to handle tax issues as fast as possible. Any further delays result in a ballooning debt that will get you in trouble.

Tip: You need to take the problem seriously but don’t fall for scammers who purport to be from the IRS

Find the root cause of the debt

You should try and figure out why you have a debt. This ensures that in the future, you avoid similar problems that resulted in tax liability. Tax issues can be complex. So, you are better off seeking professional help from a tax attorney.

Be genuine with the IRS on your tax issue

If you are experiencing financial hardship, don’t lie! It is okay to talk to the IRS about it. They might not let you off the hook, but there are ways out. For example, they can consider giving you offers in compromise, allowing you to settle your debt for a lesser amount than you owe them. However, you will not get an offer in compromise or get your debt cancelled if you have assets that give you significant income. If you cannot explain to the IRS why you were unable to settle the debts, they can label your case as not collectable. The good thing with this is that wage garnishment, tax levies, and liens are put hold on your property. It can buy you time to source out money to start settling your debt.

Figure out on how you can lower your tax or penalties

If statutes of limitation on the year you owe IRS debts are open, as in less than ten years from the date of assessment, you can seek to reduce your debt. This is, however, possible in certain circumstances. For instance, if the debt is from an audit or CP2000 notice, which is incorrect, you can request for reconsideration. Also, if you qualify for penalty abatement, you can ask the IRS for penalty relief. These factors can lower the amount of money that you owe the IRS subsequently. The statute of limitations is, however, a risky approach. If the strategy fails, your debts will be huge as the penalties and interest accrue over time.

Seek an instalment agreement

It is imperative to start figuring out your options for settling your debt. One way is through seeking an instalment agreement. It is easier said than done, though. The IRS is usually not ready to get into a deal with a skiver who hasn’t been able to handle payments. However, you can seek help from the experts in tax installment agreements who will negotiate with IRS. They are tax lawyers who know how to handle IRS issues. They can help you get the best instalment agreement that you can settle comfortably and on time.

Take steps to avoid tax identity theft

While most fraudsters use tax identity theft to seek a tax refund, some could use it to file false returns. This could attract a tax liability. That’s why you need to protect yourself from common tax identity theft. Keep your social security number secure and private. Choose strong and unique passwords for your financial sites and keep them private, as well as your financial information and tax documents.

You should also beware of phishing as a strategy for fraudsters to enquire about personal information for identity theft. The IRS will never enquire about your personal information online; they will send you a letter instead.

Wrap up

If you have a tax debt with the IRS, then you should solve it promptly to avoid severe penalties. Explore the options that you have in fixing your taxes to ensure that you get a fair deal. Do not hesitate to seek professional help from a tax lawyer to ensure that you don’t make a bad situation worse!