Don’t ignore the letter
Ignoring the IRS or any State is the worst possible thing you can do. The situation won’t go away.
While you should write back as soon as possible, you or your audit representative can ask for more time to gather the paperwork and forms. A two-week extension is not an unreasonable request for your IRS agent.
If you earn more than $10,300 as a single person living in Denver or $20,600 for married couples filing jointly, you may face individual tax problems. You may also need to file a tax return if you have health coverage provided by the Affordable Care Act. If not, you may run into problems with state and federal tax agencies—and your future finances.
Keeping current and compliant on your taxes takes a great deal of time and effort, and we often see well-intentioned taxpayers fall behind because they’re overwhelmed by how much they owe or the prospect of dealing with the IRS. But becoming delinquent on your taxes may result in collection efforts or penalties levied against you and your family.
Should you owe more than $52,000 to the Internal Revenue, they have the right to suspend and or/not renew your passport. Some states, if you owe more than $10,000 can suspend your driver’s license and professional license. Call us first! Call First Call Tax Advocates 718- 400-9250 or toll-free 833-568-8999
Settling taxes for less is possible but is not an option for everyone. Being able to settle for less is determined mainly by the taxpayer’s ability to pay, future ability to pay, situation that caused the liability, errors made by the taxpayer or possible errors made by the taxation authorities. Below are some methods that may be used to settle for less.
- Offer in Compromise: This method allows taxpayers to settle for far less than the total amount owed if they meet the strict guidelines and complete the paperwork 100% correctly.
- Partial Payment Installment Agreement: Allows the taxpayer to make small monthly payments towards the debt. The debt may be forgiven if it is not all paid back before the collection statutes expire.
- Uncollectible/Hardship: The taxing authorities can stop collection actions until the taxpayer’s financial situation improves. The debt may be forgiven if their situation doesn’t improve before the statute expires.
- Penalty Abatement: If the taxpayer has an acceptable reason for not staying in compliance with tax laws there is a possibility that they may waive penalties that were charged.
- Amending tax returns: Many situations come up where the taxpayer may have made errors with prior filings or the tax authorities filed on their behalf which caused them to owe more taxes than they actually did. In these situations an amended tax return will be filed to lower the tax liability.
Be wary of tax companies that promise they can settle taxes for less because there is no way of them knowing for sure before knowing your complete tax and financial situation.
How Tax Authorities Can Collect Your Back Taxes
If your tax bill goes unpaid and you don’t make arrangements to pay your debt before the due date, the first step in the forcible collection of your debt is a tax lien on your local property, which is how the IRS protects the debt.
A lien is a legal claim against your real estate, personal property and financial assets, filed via a public document known as a Notice of Federal Tax Lien. The lien alerts your creditors and finance companies that the IRS has a legal right to your property to the extent of tax you owe and remains in effect until the taxes are paid in full or other arrangements are made. Liens can damage your credit and make it impossible to move forward in your financial life.
Once a federal or state tax lien is filed, you may also face the possibility of a tax levy to legally seize your property and assets to satisfy your debt. A levy can freeze your bank account, garnish your wages or seize your assets, including your retirement accounts, state and federal income tax returns and stock accounts, and property, such as your home, car or boat.
If your company faces a levy or lien, it’s important to deal with your tax problems as quickly as possible to minimize the impact on your finances.
Federal, state and local authorities can also assess penalties for failing to pay to your taxes. The penalties increase your tax bill, making it even more difficult to catch up on back taxes and stay on top of current tax obligations. Taxing agencies have more than 100 possible penalties they can assess, some assessing up to 75 percent of the tax amount you owe. And a variety of enforcement techniques to collect them.
The best way to avoid tax penalties is to file your taxes on time and set up a payment plan if you can’t pay them right away. You will almost always end up paying more when you don’t file on time. Plus, if you only focus on what you already owe, you will never stay current. And if you only focus on your current taxes, then you’ll never address what’s past due.
Expertise to Resolve your Personal Tax Problems
First Call Tax Advocates offers you the right expertise, experience and integrity you need to deal with delinquent taxes. Don’t wait one minute longer to get in front of your tax problems. We guarantee the information and tools you need to keep your finances running smoothly. Call is first. Call First Call Tax Advocates Corp today! 718-400-9250