How you should treat your IRS tax problem depends on which type it is.
There are an almost endless number of variables that could require different actions. And therefore, it is important to consult with someone who is familiar with your particular scenario. However, there are a few problems that stand out as the most common, six of which are described in the sections below:
Problem #1: Facing The Risk Of Bank Levies and Wage Garnishments If you have filed your return(s) but have failed to pay your taxes, the IRS’s first step – in the pursuit of payment – is to send you letters of notice in the mail. After a few of these notices have been sent – and you have still not paid – then you’ll receive a final notice (IRS Letter 1058) giving you 30 days to pay, before the IRS takes enforcement action against you. These actions often consist of either a levy on your bank account or wage garnishments from your employer. To avoid these actions, it’s important to proactively seek an alternative arrangement. The earlier you do this the better, and you can begin by filing a request for a Collection Due Process Hearing (Form 12153). In this request, explain that you need to pay in installments, file for uncollectible status, or arrange some other solution. And even if you have received the final notice, a timely filing of this request can stop the IRS from taking any enforcement action until you’ve had your hearing.
Problem #2: Current Levies Cause Economic Hardship If you were not able to make alternative arrangements or request a hearing in time, then the IRS might already have contacted your bank or employer to proceed against you. However, while a bank levy or wage garnishment is taking place, it is still possible to get it released due to economic hardship. To do this, get in contact with your local Taxpayer Advocate – IRS representative – and ask them to issue a release from levy, and fax it to either your bank or employer. Explain to them that the levy or garnishment is causing a serious economic problem for you, and prove it by providing an income and expense statement of your personal finances (IRS Form 433-A).
Problem #3: Error In Tax Assessment Or IRS Procedures For any reason, if you believe there has been an error in the IRS tax assessment or procedures, you can file a Collection Appeal (Form 9423). This can be done up to a year after you have received either the Final Notice Letter or the Notice Of Lien Filing. And therefore, this is the proper course of action if your window for requesting a Collection Due Process Hearing has passed.
Problem #4: Multiple Years Of Unfiled Taxes There are many people who fall behind in filing their tax returns. And now because they’re so far behind, they fear the possible consequences of bringing it to the IRS’s attention. However, if the IRS has not acted upon your non-filing status for several years, that’s still a good thing. It means you still have an opportunity to file all of your back taxes before they take action, which has a major advantage. Because the IRS has seen this pattern so many times, they have a program that guarantees not to prosecute or pursue potential legal ramifications – assuming the non-filer takes their own initiative to catch up their filings and reconciles with the system. But otherwise, if the IRS finds you out first, they don’t make the same guarantees.
Can I Solve My IRS Tax Problems Myself? It is certainly possible to work with the IRS on your own. However, it’s important to recognize the responsibility of regular and timely communication with IRS, and you’ll need to get familiar with the proper procedures and laws that are applicable to your circumstances. As well, it’s important to know what type and what amount of an offer the IRS is most likely to accept. But this is where the professional firm has quite an advantage over the general taxpayer. Dealing with the IRS and waiting for their responses can take several months or even up to a year. And not to mention, with certain options, you’ll need to begin paying regular fees to them and portions of your debt, before your offer is fully processed and considered. Therefore, you’ll want to go into negotiation with the IRS giving yourself the best chance of getting the process correct, and submitting reasonable offer terms/amounts the first time.