Has the IRS started collections proceedings against you? Have you received an Intent to Levy notice or a Notice of Federal Tax Lien? If so, ignoring these notices is the worst thing you can do.
Contrary to popular belief, the IRS is happy to work with you to resolve a tax issue if you are willing to follow the agency’s established procedures. Here are the steps in a typical IRS collection situation.
- IRS Notices: The IRS starts the collections process by sending notices (or multiple notices) informing you of your unpaid taxes. Do NOT ignore these notices. You have specific time frames in which to respond to the IRS. By ignoring these notices, you risk missing important deadlines, which may harm your ability to resolve your tax issue. Respond to the IRS to confirm that you have received these notices and are working to respond to its requests. If you feel intimidated contacting the IRS, Somerset CPAs and Advisors can represent you and respond to the IRS notices on your behalf.
- Compliance: Make sure you are up-to-date with all your tax filings. If you face an issue with your personal taxes, make sure your past tax filings have been filed with the IRS. If you are self-employed, make sure your estimated taxes payments are current. If you are facing an employment tax issue, make sure your employment tax payments and payroll tax return filings have been completed. If you are behind on any of your tax filings, get the unfiled tax returns submitted as soon as possible.
- Options: The next step is to investigate which resolution options works best for you. While these options are initiated by the taxpayer, they can be confusing. Retaining the services of a CPA firm like Somerset CPAs and Advisors can be very helpful. The most common resolution options pursued are:
- Installment Agreement: This is a monthly payment plan set-up with the IRS to resolve the tax debt. The agency offers a guaranteed installment agreement for people who owe less than $25,000.00, a streamlined installment agreement for taxpayers who owe between $25,000.00 and $50,000.00, and regular installment agreements for taxpayers with more than $50,000.00 in tax debt.
- Offer-in-Compromise: In this situation, you offer the IRS a reduced amount of money to settle the outstanding tax debt. An offer amount in an offer-in-compromise is not a negotiation but an objective calculation based on your ability to pay the taxes owed. It is a good idea to retain the services of a tax professional experienced in preparing Offers-in-Compromise to property calculate and prepare the offer for filing.
- Innocent Spouse: This scenario allows one spouse to get relief from a tax debt for which he or she is jointly and severally liable. You must establish that under all facts and circumstances, it would be unfair to hold you liable for the underpayment of tax. This occurs often with tax debt in a divorce.
- Resolution: Resolution with the IRS is achieved, and avoid IRS scrutiny in the future.
Somerset CPAs and Advisors routinely helps taxpayers resolve their IRS collection issues and avoid them in the future. If you have any questions about IRS tax problems or other issues, please feel free to contact Patrick Wanzer at 317-472-2188 or e-mail him at .