In 2011, the Internal Revenue Service (IRS) came out with the Fresh Start Program, aimed toward giving late-paying Americans a path to paying off their tax liabilities.
The Internal Revenue Service (IRS) has recently been more willing to working out late tax payments. If you find yourself in the situation of late tax payments, you need to be sure to address this quickly and up front.
With the Fresh Start Program, the IRS focused specifically on these changes:
- Making it easier for taxpayers to obtain lien withdrawals after paying a tax bill.
- Increasing the dollar threshold when liens are generally issued, resulting in fewer tax liens
- Creating easier access to Installment Agreements for more struggling small businesses.
- Withdrawing liens in many cases where a taxpayer enters into a Direct Debit Installment Agreement.
For taxpayers, it’s wonderful that the IRS is offering more options for Americans who are finding it difficult to keep up with tax payments. But this doesn’t mean that if you fall behind, you can just be stagnant. Make sure to take the following steps to resolve your debt as soon as possible.
Always File Your Return
If you owe money that you are unable to pay in one lump sum with a return, you should still file the return anyway as this may reduce some of the penalties. Even if you cannot pay the taxes but still file a return, you will have significantly lower penalties than if you had not filed the return.
IRS Problems Get Worse with Time
It is crucial to be proactive about any IRS issues you have. While the IRS will not immediately look for you for delinquent tax penalties, it is still important that you tackle these issues as soon as possible. Often it will take months before the IRS begins their collection efforts.
IRS collection efforts often first start with just letters, but as time goes on, the IRS will become more aggressive. They may use tactics like wage levies. With this tactic, the IRS will contact your employer and advise them that you have delinquent tax liabilities and any of your wages should be paid to the IRS, rather than to you. This can harm your reputation and hurt you financially as well.
Consider an Installment Agreement
With an installment agreement, taxpayers will pay the amount due over a period of time. An offer and compromise involves the taxpayer paying one lump sum of an amount less than the amount that is actually owed. The likelihood of the IRS accenting an installment agreement or an offer and compromise depends on your financial condition. If you have the money or assets to pay the amount, the IRS will neither accept an installment agreement nor will they compromise.
When you submit a request to the IRS for a payment plan, you will more likely succeed if you:
- Let the IRS know you’ll pay the debt off within five years. Within two years is ideal.
- Have a monthly payment that is equal to or higher than what the government thinks it can garner from you from a negotiated agreement initiated by the IRS.
- Introduce a regular tax payment to the IRS that is tied to existing IRS criteria.
Make Your Payments
Failing to make on-time payments to the IRS can hurt you financially. If you violate terms of your payment arrangements, the IRS has the right to seize property you own, including bank accounts, mortgages on your home, and more. But if you contact them and make them aware that you are struggling to make payments, you will likely be able to work through the issue. Always being upfront and proactive with the IRS is crucial and can benefit you significantly.
Get Professional Help – but be cautious
Seeking a professional representative can be of great help when negotiating favorable compromises or installment agreements with the IRS. But keep in mind that some firms, like 1-800 number firms, may take a client’s money and perform minimal to no services. While several of these firms have been prosecuted, it is important that you are still aware that they exist. If you truly would like to find a professional representative, talk to two or three potential firms near you and make sure they have significant experience in IRS tax controversy and collections. This is crucial when it comes to finding a good firm for resolving this issue.
Bottom Line
The new programs being rolled out by the IRS do not mean that the IRS is more passive in their collection efforts. Rather, they are giving Americans more options to get back on track with tax payments. Always remember that it is better to act sooner than later, and it is crucial to communicate with the IRS throughout this process. If you are not sure how to negotiate with the IRS, you should consider contacting a trusting tax relief expert. They are aware of the techniques and can guide you through the process. If you are considering speaking to a tax expert, check out taxrise.com. They are one of the top leading companies and their professionals have great reviews.
