What to Do if the IRS is After You

binary options europe

The U.S. Tax Code is a bloated, complicated mess. At roughly 3.8million words in length, Americans spend a ridiculous amount of time and money trying to understand tax law and meet their tax obligations on time. Some publications and organizations have conducted tests, showing that different tax programs and even different tax professionals doing the same return have come up with different results — showing how difficult it is to know all the rules and to interpret them correctly.

It’s easy to make a mistake, even when you are making your best effort not to and are using the right tools and even enlisting professional help. Unfortunately, the Internal Revenue Service doesn’t just shrug off mistakes. You will still have to take steps to pay the tax you owe and may even be on the hook for fines and other penalties. Here are a few ways that tax professionals can help when you find yourself on the wrong side of the IRS:

Submit an Offer in Compromise


Maybe you submitted a return and made a mistake, and now you owe a lot of money that you can’t pay. Or maybe you knew that you owed the money with the original return, but you just didn’t have the funds to pay what you owed. You may have failed to file the return because of that, or you may have filed the return without making the payment. Whatever the reason, now you owe big, and you are facing a lien on your property and other consequences.

A tax professional can help you submit an offer in compromise, which can allow you to pay less than the original amount and still satisfy your debt. You have to meet eligibility guidelines to get approved for an OIC, and it can be hard to convince the IRS that this is your only option for paying them. A tax professional can improve the chances that your offer is accepted, helping you to put the debt behind you faster.

File an Audited Return to Reduce Your Debt


It’s easy to make mistakes — even if another tax professional is the one who made the mistake. By working with a new tax professional, you may be able to correct the previous mistake and reduce what you owe. A new tax professional can audit your return and find you additional credits or deductions, helping to lower what you owe. Your new tax professional may also be able to find mistakes in math or other errors that can reduce your liability.

In some cases, you may be able to wipe out your tax debt completely with a thorough audit. In some cases, you may just be able to minimize it enough to make it more affordable to pay.

Help You Qualify for Innocent Spouse Relief


You may not have made the mistake at all. Maybe your spouse filed your return and made the mistake — maybe even intentionally so. Maybe your spouse hid assets or committed some other fraud. Unfortunately, you are still on the hook for those penalties because you are married. You can’t just claim ignorance and get a pass.

Well, you sort of can — but only if you go through a formal process to apply for Innocent Spouse Reliefand provide some proof. Again, it’s hard to get approved, so you really need to work with a tax attorney or other tax professional to submit your application and to make the strongest case possible. Otherwise, you could end up in serious financial and legal trouble. You could even be facing criminal penalties!

The Tax Man is a huge pain, but he’s one that you can’t avoid. You can try, but you’ll always end up the worse for it. Instead, you need to make your best effort and work with tax professionals wherever possible to meet your obligations. If you end up facing a huge tax debt or some sort of legal trouble with the IRS, a tax professional may be able to help you minimize your debt or avoid penalties. In the meantime, here’s hoping that politicians and other policymakers do what they can to fix the bloated tax code and bring it back to something more manageable.

The views and opinions expressed herein are the author’s own, and do not necessarily reflect those of EconMatters.

© EconMatters.com All Rights Reserved | Facebook | Twitter | YouTube | Email Digest

Get binary options demo accounts for free and start trading

Powered by WPeMatico