5 Tax Resolution Issues (and How to Solve Them)
Taxes and the IRS are synonymous with each other. If you encounter any problem with your taxes, you have to face the IRS. While it’s a standard process that aims to clear the issue, it can scare the wits out of you. You don’t want to be inconvenienced by going over your documents, correcting the errors, and so on.
That’s why it’s a good practice to know how to handle your taxes so that if you find yourself facing tax issues, you’ll be able to address them. You also have the option to let a tax resolution specialist take care of tax obligations on your behalf.
5 Tax Resolution Issues You Might Face
Let’s proceed by discussing the most common tax resolution issues and tips on how you can avoid them up front.
1. Tax Audit
The IRS may conduct tax audits randomly to ensure that taxpayers report their income accurately and pay the right amount of taxes. However, in some cases, a tax audit could mean IRS auditors have spotted an error on your tax return.
The IRS may question you regarding mathematical errors, too many losses or expenses, or even rounded-off numbers that may appear dubious. Tax audits will require you to present accounting documents like receipts, bank statements, ledgers, and the like.
Depending on what the IRS finds during the investigation, you may be up against back taxes, penalties and more fees, or even legal sanctions.
2. Tax Levy
Owing taxes to Uncle Sam may result in an ugly situation called tax levy, a procedure where the IRS freezes your bank accounts or takes your property. There’s also the possibility that you won’t be able to claim your full paycheck, as the IRS will have it withheld.
Another way that the IRS legally collects the money you owe is by suspending your tax refunds. If all else fails, even your social security benefits, business assets, or anything of value may go straight to the IRS. You have a chance to recover your assets only if you’ve paid your tax debts.
3. Tax Liens
If your property is on a tax lien, it means the IRS is making a legal claim on it to collect your overdue tax payments. Creditors may pay your tax liens, earning them the right to collect payments and corresponding interests from you. Otherwise, you can expect a tax levy to come next.
4. Unpaid back taxes
You incur back taxes if you fail to pay or fully settle your taxes in the year they were due. Besides your back taxes accumulating interest and penalties, you can expect legal actions from the IRS, including wage garnishments, tax liens, or tax levies.
5. Wage Garnishments
Wage garnishment is when the IRS collects a portion of your salary as payment for your tax dues without needing a court order. This goes on until your tax debts are fully paid, making garnishments one of the nastiest tax resolution consequences that could land you a bad credit history.
3 Steps to Solve Your Tax Resolution Issues
If you find yourself in the IRS hot seat because of tax resolution issues, ignoring the matter won’t help. Do the following instead.
1. Reach out to the IRS
Receiving a notice from the IRS about your tax obligations can send you in a state of panic, and understandably so. You begin thinking about what would happen next or how far the IRS would go to make you pay for your tax debts.
The wisest and most practical thing to do is contact the IRS as soon as possible to make arrangements to pay your tax bills. You have no reason to be alarmed if you’re not hiding anything, and the IRS is usually helpful if you’re trying to make amends for defaulting on taxes.
2. Know your payment options
If you owe taxes and are willing to pay them, the IRS can offer you a wide range of payment options, from deadline extensions to repayment plans. The IRS will be looking into your circumstances and your ability to pay. You could request to be put on an installment program, but if you could provide proof of financial difficulties, you may qualify for other more favorable options.
3. Hire a tax resolution partner
Some tax issues you can resolve on your own, but for more serious cases like back taxes that have piled up, it’s in your best interest to work with tax resolution companies. They have credentialed tax resolution specialists who can help you prepare the paperwork, identify your alternatives, or make an appeal to prevent tax liens and levies from harming your financial assets.
Tax resolution services are designed to help you handle various tax issues legally and professionally.
Be Tax Ready
Tax resolution issues are no simple matter. They can eat up your time, drain your finances, and cause undue stress if you don’t know how to handle them properly.
If you need assistance figuring out tax requirements, it’s best to let the tax experts do the work. Tax Samaritan offers the best-in-class service in tax resolution.
All About Randall Brody
Randall is the Founder of Tax Samaritan, a boutique firm specializing in the preparation of taxes and the resolution of tax problems for Americans living abroad, as well as the other unique tax issues that apply to taxpayers. Here, they help taxpayers save money on their tax returns.