No one likes to owe the IRS money, in fact many of us will find every loophole possible to avoid having to pay in to the IRS come April 15th. Maybe this year you weren’t so lucky and the IRS will be looking to collect money you don’t have.
In today’s economic climate many of us are cash strapped and looking to save wherever possible; paying in to the IRS is just one more debt to worry and stress about. The good news is that there are a few secrets the IRS doesn’t broadcast they have up their sleeves.
So before you shell out the last of your emergency savings on April 15th take a closer look at your situation and see if maybe, just maybe you can turn things around in your favor.
Offer in compromise
According to the IRS, “An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can’t pay your full tax liability, or doing so creates a financial hardship.”
Eligibility is determined by:
- Your ability to pay
- Income and expenses
- Asset equity
To see if you qualify, use their Offer in Compromise Pre-qualifier.
You can’t hide from the IRS, they will find you… eventually. Delinquent payments to the IRS may result in seized bank accounts or garnished wages. If you can’t pay in full, set up a payment plan.
Court is unlikely, but possible.
The IRS holds the cards when it comes to court proceedings, but they don’t want to take you court. A trial is expensive and unlikely when it comes to back taxes, but not impossible. Before going to court they will likely explore other avenues such as appeals court or a possible settlement.
The IRS is not perfect.
The people processing your taxes are human too, and yes make mistakes. If you feel there has been a mistake don’t think twice about filing a complaint, especially if the odds are in your favor.
Customer service is not their thing.
Yes the IRS gets a bad rep when it comes to customer service, so don’t expect a friendly voice on the other end. Instead be prepared and stay on top of things. Document every call, letter, or exchange with those you speak with. Trust me they are most likely not taking notes and are not going to be lenient on any deadlines. You need to do all of the work and stay on top of things.
I always say, “Don’t mess with the IRS.” Owing back taxes can be a scary, stressful situation; debt of any kind usually is. The key is to remain calm, go through the motions, and document, document, document.
Have you ever had an encounter with the IRS?
**Note: This is not to be construed as tax or legal advice. If you have questions concerning your situation, you should consult with your tax and/or legal advisor. There may be additional information that you can use on the IRS website.**
photo credit: minwoo