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Getting the Whole Story About Your Tax Debt

Posted By:  |  June 2, 2016  |  0 Comment(s)

 

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Questioning everything you’re told is a good policy for most encounters you’re likely to have during your lifetime. Adopting an inquisitive nature can help ensure that you face potential challenges with the benefit of being fully informed. When you’re confronted with a tax debt, asking all the right questions can be essential to getting a complete picture of both your obligations and your options.
It can be difficult to remain calm when you receive a notice from the IRS, especially if it indicates you have a balance to pay. Nevertheless, if you’re able to avoid the inclination to panic, you can begin by addressing your notice with a healthy sense of scrutiny. There are a number of questions to ask before simply writing a check for the full amount that is purported to be due.

Is the Assessment Accurate?

The IRS is not infallible. While you may very well owe precisely what your notice indicates, you can’t afford to take it at face value. Your IRS assessment will include details regarding the timeframe and circumstances which led to the reported discrepancy. Your first course of action should be to check your own tax records to confirm whether your notice is accurate. If it isn’t, you’re given the opportunity to respond with documentation that would counter the IRS’ assessment.

Does the Entire Amount Need to Be Paid Immediately?

Assuming that your notice is accurate, you may be legitimately concerned about how you’ll pay the entire sum at once. Remember, an IRS assessment is for a balance that is already past due. This means that payment is expected in full, immediately. However, paying hundreds or thousands of dollars at one time may not be within your financial means. While the IRS won’t necessarily provide you a full list of alternatives to a lump-sum payment, you have a number of options that can allow you to affordably resolve your balance.

What’s the Best Way to Handle a Tax Debt?

Depending on your financial circumstances, there are a number of ways to consider addressing your tax debt. Because penalties and interest accrue monthly on any delinquent liability, it’s definitely in your best interest to pay as quickly as possible. If you need more time, you may request an installment agreement; this enables you to satisfy your balance in monthly payments, spread out as far as five years. Alternatively, you may not be able to afford anything. If even making a monthly payment toward your tax debt would present you with a financial hardship, you may qualify for Currently Not Collectible status. This prevents the IRS from taking collection action until your financial situation improves.

Is It Smart to Look for a Tax Professional?

Dealing with the IRS can be time-consuming, which is not ideal when you’re trying to quickly reach an agreement over how it will be handled. Additionally, obtaining an optimal resolution requires a certain amount of finesse. While you may have the time and inclination to handle this yourself, it may not be to your advantage.
Licensed tax professionals specialize in assessing your debt, your finances and your history with the IRS in order to negotiate the best possible terms for your resolution. The consultation to learn about your options typically comes at no charge, and may be helpful in understanding every aspect of your IRS concern. Finding the right person who knows every question you should be asking is an excellent first step in solving your tax problem for good.

 

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