At any given time, hundreds of thousands of Americans are struggling with tax issues. Both individuals and businesses frequently find they are delinquent in their taxes for any number of reasons. Individuals often receive notices they have underpaid their income taxes. Businesses encounter problems over payroll taxes and other taxes. While these issues arise over federal, state, and local taxes, it is the federal tax liabilities that cause the most concern for most.
This concern is well placed. The Internal Revenue Service has a range of powerful enforcement tools and it is difficult to fight their actions unless a taxpayer starts to do so early in the process. Whether a claim of tax liabilities is valid or not, the burden of proof is placed on the taxpayer. If no action is taken after an initial notification, the IRS will move through several stages of collection and has the right to eventually:
Seize cash and property
Garnish wages and salaries
Place liens on property and assets
Seek to file criminal charges in some cases
State and local taxing authorities also have various levels of collection enforcement capabilities and authority. If an individual or business receives a notice from the IRS or any taxing authority, it is important to seek professional counsel immediately. Even if a notice isn’t received, but taxes haven’t been filed or the taxpayer is aware of a pending problem, the most important thing to do is take advantage of the time available to act before the IRS begins its collection efforts in earnest.
While issues with any tax agency should be taken seriously, there is a bright spot in the bad news. Especially when dealing with the IRS, there are number of programs and actions that can be taken to help resolve tax debt and related issues. The Taxpayer’s Bill of Rights provides a number of protections for the average taxpayer. Additionally, there are IRS regulations in place to help both individuals and businesses take care of tax debts, in most cases without using the most aggressive collection methods.
The methods used to provide some flexibility to taxpayers with outstanding tax liabilities range from simple payment plans to a settlement of debts called an Offer in Compromise. One of the greatest challenges of settling tax debt is dealing with the taxes and penalties. These can quickly total up to more than the original taxes owed. One part of the process in resolving tax debt is working to have this interest and the penalties stopped and, in some cases, reduced or waived.
Using a Professional Accountant
Unfortunately, the programs in place to help taxpayers resolve their tax debts can be complex and difficult to understand. There are two additional issues when resolving such liabilities. These include:
Doing it right. Each element of the tax debt resolution process has specific requirements such as time frames, submission of documents, and qualifications. With even a small oversight or misstep in this process, the entire effort is wasted. This can cost the taxpayer thousands of dollars.
Subjectivity. Tax collectors have a great deal of discretion. Their job is to collect taxes as easily and quickly as possible. It is important to assist them in this process. Unfortunately, the average taxpayer doesn’t know how to do this.
Another bright spot in this whole issue is the availability of professional accountants to handle the tax debt problem. Experienced tax accountants understand the rules and the processes. Importantly, these accountants approach the problem without the emotions with which a taxpayer normally deals. These professionals can negotiate with the IRS agents more aggressively and effectively. In fact, they often have professional relationships with the agents helping them. Resolving tax debts with such an accountant handling the matter can save thousands of dollars, as much as 70 percent or more of the original assessment.
If the tax people call, the first wise step to take is calling a qualified tax accountant.