3 Tips To Help You Settle Tax Debts You Owe The IRS
Owing back taxes to the IRS is not something that will simply disappear on its own. If you are in this predicament, you will need to take the right steps to clear up this problem if you want to get the IRS off your back. The IRS has the authority to garnish your paycheck and place liens on your assets when you owe them money. Here are some tips to help you get this problem settled.
File All Your Tax Returns
In many cases, people who owe the IRS money have tax returns they have never filed. If you fail to file a tax return, the IRS will file one on your behalf. When this happens, the IRS is not going to spend time looking for all your deductions and write offs. This is called a substitute tax return, and if this return shows you owe money, the IRS will send you letters and call you to try to get this money. More times than not, when a person files unfiled tax returns, the tax bills the IRS is sending you will disappear. This is because the corrected returns are accurate and allow you to write off allowable expenses. If you have unfiled returns, you should get them filed as soon as possible.
Amend Your Returns If It Would Be Beneficial
The next thing you may want to do is have a professional look over your past three tax returns if you have filed them. If you made some major mistakes in your returns, you may not owe as much money as your tax returns say. For example, if you forgot to include your dependents on your return, you could amend the return and add them to it. This could drastically change the amount of money you owe, and this could help you avoid paying for it.
The IRS allows you to amend a refund up to three years after the return was due. For example, if there are mistakes on your return that was due April 2013, you have until April 2016 to amend this particular return.
Set Up A Payment Plan
Once you have taken care of the first two steps, you should work out a repayment plan for any balance you still owe. If the amount is low enough that you can repay the amount in full, a payment plan would work well. If the amount is extremely high and is not an amount you are capable of repaying in a reasonable amount of time, you might be able to set up a plan that allows you to pay less than what you owe. This is called an offer in compromise (OIC).
To use this option, you may want to hire a tax attorney for help. Your attorney would help you determine if you are eligible for an OIC, and he or she would help you file the necessary paperwork. Another step in an OIC is determining how much money to offer the IRS, and this amount is typically determined by the value of your assets and your future income. If you make an offer and they IRS accepts it, paying the total balance you offer will settle the entire debt you owe the IRS.
Handling IRS tax debts is not easy to do on your own, but you can hire an attorney for help. By hiring an attorney, you will learn about all the options available, and you may end up settling the debt for a lower amount than you would have experienced if you had handled it on your own. To learn more, contact a tax attorney today, like one from Wiesner & Frackowiak, LC.