Unpaid Income Taxes And Back Taxes Due
Warning: If you have unpaid taxes, be prepared for the actions the IRS may take against you.
Congress has a big problem, it needs more money to spend. The IRS estimates there are $300 billion in unpaid taxes owed to the government by delinquent or fraudulent citizens. The amount of unpaid taxes equals $2,680 for every household.
Congress wants that money collected. In recent years, the IRS has ramped up its efforts to collect these unpaid taxes, and they have a broad range of power tools enabling them to do so.
What To Do About Your Unpaid Taxes
If you know there are taxes that you haven’t paid, and you agree with the IRS on the dollar amount of your unpaid taxes, the simple solution is to just pay them if you are financial able.
If you are not financial able to pay the tax debt in full, you need to find out what your other options might be.
For example, you may be able to negotiate a painless settlement for less than you owe. You may be able to take care of your unpaid taxes through a gradual, monthly payment plan.
With the help of a tax attorney, you may even be able to erase some or all of the penalties and interest connected to your unpaid taxes.
If you can’t pay your taxes, or if you want to dispute the amount of unpaid taxes you owe, be sure to at least file your income tax return. This is a basic requirement, and filing your return will help protect you from additional consequences, even if you have unpaid back taxes.
As a general rule of thumb, it’s important to keep the lines of communication open with the IRS. If you try to ignore their letters and calls, they will eventually take more extreme measures. But whenever you respond, you may have the chance to slow down the whole collections process.
For example, when you first come under fire for your unpaid taxes, the IRS will probably send you the standard “500 series” collection notices. If you need more time to respond to the IRS, a tax attorney can work to get you more time to respond before the serious collection efforts begin.
Likewise, you can respond politely to any telephone calls or visits. Ask for time to collect your documents or talk to your attorney. When you have an appointment with an IRS agent, you may possibly call in a few days before and ask to cancel and reschedule the appointment if you have a real need to.
You should seek the advice of a tax attorney before you try these tactics, because this is a very treacherous tightrope to walk on . You should never give the IRS information they don’t explicitly request. And you don’t want to expose yourself to additional legal consequences, or raise the ire of a collections officer by appearing to be untruthful or uncooperative.
If you don’t wish to challenge the unpaid tax amount, but you’re not able to pay it, a tax attorney can help you deal with the situation. At the very least, your tax attorney can probably negotiate a payment plan.
Better still, a tax attorney can help you file an Offer in Compromise (OIC). While this process is ongoing you are usually protected from the IRS collections efforts. This could protect you from levies, the seizure of your assets, and other consequences of unpaid taxes. In the end, a successful Offer in Compromise may significantly reduce your overall tax bill if you qualify.
If you wish to dispute the tax or a decision the IRS has made, you may have a few different choices, depending on your situation. You can file an IRS appeal if you were recently audited. Your tax attorney can help you file an Offer in Compromise to reduce your unpaid taxes, or you can take your case to tax court.
An IRS appeal may be a useful way to cut down your tax bill after an audit. The appeals officer’s goal is to reach a realistic goal and to close the case as efficiently as possible, and he or she may often cut your unpaid taxes significantly. An audit appeal may reduce your taxes, interest and penalties signifigantly.
Tax court can often lead to similar benefits. Simply filing a petition shows that you’re serious about challenging the IRS, and they often reach a settlement . In fact, 90% of all tax court cases are settled before the trial, and more than half of them bring some kind of tax reduction in the end.
The truth is you have a lot of useful tools to fight back against the IRS. That’s why you should contact a tax attorney to help you deal with unpaid taxes. Or at least be aware of what could happen if you don’t.
The Consequences Of Unpaid Taxes
If you’ve got unpaid taxes on the books, the IRS will eventually try to collect. This starts with a few letters that gradually become more threatening, and then the real trouble starts.
The IRS will usually file liens on your property as a first step. A lien is simply a legal claim to something of monetary value. At first this will only be a problem if you try to sell your property. But a lien paves the way for a levy, which is the main IRS tool for seizing your assets.
When your unpaid taxes sit too long on the books, the IRS may send you a Notice of Intent to Levy. This notice is essentially your final warning. At this point the IRS can seize your car, boat, or other vehicle. They can clean out your bank account overnight or garnish your wages, retirement income or accounts receivable.
The IRS may generally prefer not to seize your home or your retirement account, but they reserve the right to do so, and in certain cases they will.
If you receive a Notice of Intent to Levy, you should talk to a tax attorney immediately. But a much wiser path is to deal with your unpaid taxes long before it comes to this.
Given all the tools and options that exist, the odds are in your favor if you work with a tax attorney early in the collections process. With a good tax attorney, you can minimize the hassles of unpaid taxes, and put this chapter behind you.