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Thursday, May 10, 2012

Handling IRS Tax Problems

When you are faced with IRS tax problems, it is easy to panic, but there are options to help you work out a solution to the problem if you know where to look for help. Nobody would intentionally get into problems with the IRS. Most people find that they owe taxes because they didn’t have enough money taken out of their paychecks to cover the taxes they owe. Sometimes that is because they claim too many deductions, and sometimes it happens when a person makes much more money than they expected to make in a year. Whatever your reason, it is very important that you understand that your tax debt is not going to go away, and postponing the inevitable is often the biggest mistake people make when they are faced with this situation. I know that is easy to say when you are not faced with the problem of owing the IRS money, but if you realize that they WILL work with you, you will be better off.

I think it is also very important to understand that if your IRS tax problems are substantial, or you believe there is an error in the amount of taxes you owe, the best plan you can have is to hire a competent, experienced tax attorney. Experienced tax lawyers have the degree of expertise and know how to navigate the maze of tax laws and procedures much better than the average lay person ever will. If you find yourself lost in the maze of tax debt, and your efforts to find your way out on your own have failed, you need to find a lawyer who can help you. 

If hiring an attorney to help with your taxes is your last option and you want to determine if it is really going to be necessary, simply contact the IRS. Ask about a payment plan for the taxes you owe. If you agree with their assessment of the amount you owe, and you can afford the payment plan to repay them, then your tax problems are solved. If you cannot afford the payments, or you disagree with the amount they have determined that you owe, there are a couple of things you can do.

One potential solution is working out an offer in compromise with the IRS. Not everyone qualifies for this option, but if you do, it can substantially lower the amount you owe. Whether or not you qualify will depend to a large degree on whether or not you can financially afford to repay the debt in your lifetime. If, after assessing your finances and your future earnings potential, it is determined that you do not have the ability to repay the debt, the IRS can substantially lower the amount you owe, and work out a payment plan you can live with based on the lower tax debt. Again, in some cases, it is very beneficial to have an experienced tax lawyer to handle this procedure for you.

An option that some people have used is to allow the tax debt from the previous year to build up interest and let the refund from the current year pay the IRS tax debt they owe. This can be a risky proposition, and you should consider it only if you are sure you are going to be able to withhold enough to cover the debt. You can also ask in court that the penalties and interest be refunded depending on your financial situation, dependant on the courts determination or your situation.


  1. “Whatever your reason, it is very important that you understand that your tax debt is not going to go away, and postponing the inevitable is often the biggest mistake people make when they are faced with this situation.” You have a good point. It is definitely not a good step to put off tax problems if you can solve it now. In addition, in hiring a tax attorney, it would help to first know the background of the lawyer (i.e. how long he has been practicing, how many similar cases he handled before, etc). Also, check for feedback regarding his/her firm. Good and bad reviews can help you determine if their services are worthy of your time and hard-earned money.

    Sunday  Hindman

  2. Yes, that’s right. When faced with an IRS issue, simply contact the IRS first. Don’t panic right away. You might end up making a mountain out of a mole hill. There are issues that can be easily resolved, but some really end up as financial nightmares. To avoid the latter, know how to approach the IRS.

    -->Winston Sutton

  3. Being able to start fixing the problem right away and not owing too much from the IRS can help an individual qualify for a compromise offer. The good thing in acting early is that, the situation is a lot simpler than if you disregard the problem and only start resolving it when it has gone worse.

    Kathy Gregory



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