Got Tax Debt? Tips That Can Help

By now the chips have fallen where they may. If you find yourself owing the IRS money on back taxes for this past year or previous years, the financial burden is certainly creating stress in your life. Unfortunately, the IRS is relentless in pursuing tax debts so there is no getting away from the letters and phone calls. And you can bet that when the IRS says they will take legal action against you, they plan to do just that. Fortunately, there are some things you can do to deal with this financial problem once and for all. End the letters, the phone calls and the stress.
 

Do Not Ignore the IRS

You can ignore your husband or wife, you can even ignore that strange rash appearing on your leg (though I don't recommend it), but you simply can't ignore the IRS. Remember, this is the agency that took Al Capone down when nobody else could. I'm guessing you are no more savvy and resourceful than Al Capone was and you too will lose if you go up against this government branch. The IRS has the power to seize your bank accounts and any property you have in order to obtain the money that you owe. You could also have your wages garnished until you have repaid all of the money that you owe in back taxes. On top of that, you could also be responsible for the fees and costs associated with these actions. By ignoring their collection efforts, you are only opening yourself up to more trouble, expense, woe and even legal action.

Instead of ignoring the IRS, take a deep breath, count to ten and pick up the phone. Most of the time, the IRS is willing to negotiate the debt so you can make monthly payments. You may even be able to settle with the IRS and have some or all of your total tax debt forgiven. You can only do this, however, if you suck it up and communicate with them before things get out of hand.

Do You Need a Tax Settlement Specialist?

You have probably heard and seen the commercials about tax attorneys and specialists who can reduce your IRS debt and work with the government to get you a settlement. Before you run right out and hire one of this companies, you need to understand what they are really about. Tax Settlement Sepcialists really just offer to file an Offer In Compromise (OIC) on your behalf. The truth is only 25% of OICs are successful and those are only the people in the most dire circumstances.In the eyes of the IRS, if you can afford to pay some of what you owe, you can afford to pay all of it.

Do You Need a Tax Attorney?

Only you can decide if you need a tax attorney. If you followed all the rules, but just fell behind financially, you can probably handle the negotiations on your own. But there are parts of the tax code that are not entirely clearn on how the tax law should be interpeted. This is when a tax attorney or enrolled tax agent can be the most help to you.

Pay Your Taxes Regularly

Most times when someone ends up owing taxes, it is because they did not follow the guidelines for paying throughout the previous year. This could be because they filled out their paperwork wrong at their job or they did not make regular estimated payments to the government with their small business. If you own your own business or if you are self-employed, you are required to make tax estimation payments quarterly.

You should estimate the amount of money you plan to make for the year and then calculate the amount of taxes you will owe during the tax year. You should have a separate bank account for your income and for paying taxes. Every time you receive a payment, set aside between one-quarter and one-third of that into your second bank account for paying your taxes. Send this to the government every three months. This will greatly reduce the amount you will owe at the end of the year. You may even end up getting some money back depending on how your business did that year.

Pay  It Off

The best way to effectively deal with your IRS debt is to pay it off as soon as possible. The IRS charges high interest rates and penalties for being late on your yearly tax payments To makes things worse, these are compounded Get motivated and find ways to make extra income to apply to your tax debt. However, while earning extra income, be sure to set aside the proper amount so you don’t end up in the same situation next year!

The IRS is relentless is pursuing a tax debt. It is our responsibility and our duty to pay our taxes whether we disagree with paying them or not. If everybody refused to pay their taxes, there would be no government programs, roads, or the services that benefit us all.