Tax Tip: Top Things To Know When You Owe

It’s what most every taxpayer dreads: Despite your best efforts, you find yourself owing money to the Internal Revenue Service with an inability to pay the debt immediately. In addition to feeling stressed about the money you owe, you’re concerned with the consequences of delaying payment and what this might mean for your finances or your business. In addition, you’ve started to worry about actions the IRS might begin to take to ensure payment.

Our first piece of advice: Don’t panic. Take a minute to breathe and understand that you’re not the only person experiencing this problem. Thousands of U.S. taxpayers each year find themselves in similar circumstances. You’re not alone.

Our second piece of advice is to address the problem head on. Don’t ignore the notices you receive from the IRS, and don’t bury your head in the sand wishing this problem would just go away. It won’t – at least not without your attention.

At 20/20 Tax Resolution, we hear from folks just like you all the time. We understand the fear and frustration that comes with tax difficulties. In addition to staying calm and addressing the problem, here are some other things you should know when facing this challenge:

The IRS wants to work with you. Believe it or not, the IRS is not out to “get” you. Although the agency has some pretty powerful methods it can use to ensure payment, it typically saves such aggressive measures for taxpayers who ignore IRS communications or refuse to take steps toward a resolution. Enforcement actions like bank levies, accounts receivables levies, wage garnishments and asset seizures are rare and used typically as a last resort. By acknowledging the problem and working to make good on the debt, you won’t be subjected to these extreme actions. Plus, 20/20 has a variety of tools we can use to intercede and ensure that these extreme IRS actions are avoided.

Communicating with the IRS can be difficult. It’s no secret that working with any government agency can be challenging and time consuming. In the case of the IRS, the challenge is exasperated by the agency’s lack of adequate funding and personnel. If you are “going it alone,” be prepared to spend inordinate amounts of time, effort and frustration tracking down the right person to help you, waiting on hold for information and then deciphering the meaning behind complex tax policies and procedures. In order to alleviate these headaches, work with a qualified tax resolution provider. Since we work with the IRS on a regular basis, 20/20 is very familiar with the agency’s communications processes, and we know how to reach the right person to get the right information.

Delaying and avoiding the issue can cost you. As we mentioned previously, the IRS really does want to work with delinquent taxpayers. However, delaying moving forward with a problem (or attempting to avoid the issue altogether) will result in more interest and penalties accumulating on your total debt. When faced with taxpayer inaction, the IRS can become quite aggressive. It’s in your best interest to avoid any delay and begin working toward a settlement or payment process right away. Doing something is always better than doing nothing.

Your chances of a better outcome increase when working with a tax resolution pro. For a variety of reasons, some taxpayers opt to navigate the IRS system on their own. Many times, they’re concerned about their privacy, are ashamed to share the details with a stranger or just feel confident they can manage everything themselves. If this sounds like you, go back and re-read this article for all the reasons you should change your mind. Plus, here’s one more: Working with a qualified Enrolled Agent can reward you in several ways. Not only will your hassles, worry and frustrations be reduced, but in many cases your settlement or financial outcome will be better, too. In the case of submitting an Offer in Compromise, working with a tax resolution professional that’s familiar with the process and knows all requirements will significantly increase your chances of winning approval.

While reactions to owing the IRS can vary, it’s fairly typical for taxpayers to feel some level of worry and concern. However, understanding the above issues can help ease the minds of those in this worrisome situation. Above all else, remember that you’re not alone, and that owing the IRS is not a moral failure. Running a business and a family household (or both) can be difficult – and no one can expect everything to go smoothly all the time. At 20/20 we understand this, and we can help.