You might have little issues when trying to pay your tax which can come as a result of hardship or an audit, this can be overwhelming at times. The situation might be aggravated when the IRS sends you to collections as a result of continuous non-payment of your tax.
Making your tax payment in full and on time is the best thing to do when it comes to issues with IRS. There are certain steps you can take prior to the collections process in order to avoid proceedings when this becomes impossible.
- 1. Make an Offer in Compromise: This offer allows you to be able to settle your debt with the IRS for less than what you owe. You will need to fill out a form 656, provide information on your net assets and show records of your cash flow being less than the total amount of debt owed. When approved for an offer in compromise, you’ll need to be prepared to pay for the settled amount in full at the time of the
- 2. Communicate and Pay as Much as You Can: Endeavor to keep an eye open line of communication with IRS. When you can’t make payments, this is one of the best things you can do. Make payments for as much as you can when you file your return, and then continue to pay as much and as often as you can while keeping up communications with the IRS.
- 3. Request a Payment Plan: An amicable way between you and the IRS is to pay what you owe. .So that you can settle your payment within a predetermined timeline; they will determine the amount you will need to pay monthly. Try as much as you can to make payments on time immediately a plan has been reached in order to prevent you from default on your payment plan.
- 4. Take out a Loan: Depending on how much you owe and how much interest you’ll end up paying, taking a loan to pay the IRS may be an option for you. Be sure to compare interest rates and fees between payment plans with the IRS and repaying on a private loan, however. It may make more sense to set up an installment plan with the IRS instead. If none of these options are possible, however, and the IRS has begun collections proceedings, try these tips to deal with IRS collections.
- 5. Apply for Taxpayer Assistance Order: You can apply for TAO if you are able to show that the collection presents a significant hardship on you and your family financially. This will stop the collections process and acquisition of levied property but it will not release you from your tax liability.
- 6. Check Your Statute of Limitations: Your taxes actually have a statute of limitations – 10 years from the date that your original tax assessment was made. When your taxes owed have exceeded this time period, and you’re facing collections, you can request that your taxes be dismissed due to the time that has passed.
- 7. Seek a New Audit: You can request for a new audit to be conducted if you are facing collection proceedings due to an audit and you never received notice of an audit.
- 8. Ask for “Innocent Spouse” Relief: If you are not aware of the item or cause the tax liability as a spouse, you have the opportunity of requesting for “innocent spouse” relief and be released of liability.
It is imperative that you take action as soon as possible regardless of the route you take. When you don’t address IRS taxes owed or collections, you can face severe consequences such as federal tax liens and levies on your property.