Do You Owe Back Taxes? Why You Should Stop Panicking & Start Planning
If you owe back taxes to the IRS, some amount of panic is understandable.
After all, the Internal Revenue Service has the power of the federal
government in its corner, something no other debt collector can claim. They
are considered the most brutal collection agency on the planet.
It is easy to freeze up and just do nothing when you owe back taxes to the
IRS, but hiding from or doing nothing about your tax debt will not make it
go away. In fact, ignoring the taxes you owe will only worsen the situation since interest and penalties can really add up. You also risk having your paycheck garnished (the IRS does not need a court order to do this) or
your bank account levied. The IRS can also file a Notice of Federal Tax Lien, making it impossible to obtain a car or home financing.
So instead of panicking about your tax debt and hoping the problem will go
away, you need to take some proactive steps. Now is not the time to panic
and hide – now is the time to start taking action.
Some of these steps you can do on your own if you’d like, while others will
likely require the intervention of an experienced tax resolution expert. Here
are some proactive steps you can take to handle your tax debt. If
you need help resolving your IRS tax problem, contact us here. We help people with IRS problems every day.
Confirm the Amount Owed
When you owe back taxes, one of the first things you should do is make sure
you really owe the money. The IRS has been known to make many mistakes, and the agency is far from foolproof. Contact the IRS or have us do an IRS transcript analysis to determine the amount the IRS claims
Seek Out Deductions You May Have Missed
At the very least, you may not owe as much as you think you do, and every
dollar you can remove from the bill is one more dollar in your favor. Now is
the time to scour your past and current tax returns, looking for deductions
and tax credits you might have missed.
Unless you are a seasoned tax expert, you will probably need some
professional assistance to make this happen. If you are already working
with a CPA or tax expert, you can ask to look at your past tax returns
but only a tax resolution expert, who helps people like you for a living, can
protect your income and assets as you go through the process.
Suppose you missed a few deductions and tax credits along the way. In that case, your tax
professional can file amended returns on your behalf, lowering the amount
of tax debt you owe – and possibly eliminating it altogether. However, you
usually can’t go back more than 3 years to amend returns.
Look for Special Programs You May Qualify For
The bad news is the IRS wants its money and has the power to collect it.
The good news is the tax agency also offers several programs tax filers can
use to make the repayment process easier. In some cases, the IRS may even
be willing to settle for less, possibly much less, than the total amount of
back taxes you owe.
These programs are not available to everyone, and if you have the resources
needed to pay your back taxes, the IRS is unlikely to give you much of a
break. But if your resources are limited, the tax agency may decide that a
small amount of tax repayment is better than none at all.
The first step in the process is finding the programs for which you might
qualify, and that will probably require the help of an experienced tax resolution expert. Most CPAs do not have this experience. Negotiating with the IRS is not easy, and you may need help to drive the best
bargain and reduce your back taxes. In the end, it may be well worth paying
a tax relief expert to negotiate on your behalf, especially if you end up with
a much lower tax bill.
It is easy to panic when you owe back taxes, but you should not let fear get
in your way. The longer you ignore the problem, the worse it is likely to get,
and the sooner you act, the better off you and your finances will be. There
is a solution to every IRS problem.