The IRS is the country’s biggest collection agency and can take drastic measures if you ignore their letters.
If you owe the IRS money don’t be surprised if you receive a letter from them. It’s very important that you respond to IRS letters.
Due to the pandemic, on March 30 the IRS temporarily suspended most of its collection activity including new liens and levies initiated by field revenue officers. However, the IRS has begun filing new liens and levies again.
Fortunately, if you owe more in taxes than you can immediately pay, you have several options. You can set up a payment plan by calling them or setting it up online.
Another option for people who can’t afford to pay is to have the IRS report your account as currently not collectible (CNC). This temporarily delays collection until your financial condition improves. However, keep in mind that penalties and interest will continue to accrue, and your tax debt will continue to increase.
If the IRS reports your account as (CNC), they may file a Notice of Federal Tax Lien to protect the government’s interest in your assets. Additionally, the IRS will review your ability to pay at a later date.
Another option is an offer in compromise (OIC) which is an agreement between a taxpayer and the IRS that settles a taxpayer’s tax liabilities for less than the full amount. This is also referred to as the Fresh Start Program. The IRS began Fresh Start in 2011 to help struggling taxpayers.
Generally, the IRS does not accept an OIC if they believe the liability can be paid in full as a lump sum or through a payment agreement.
Taxpayers may apply for an OIC and try to settle for less than the full amount owed. The OIC is formula driven. Your financial information is entered to calculate the amount of the OIC which will be accepted. However, if you don’t fill out the OIC form correctly, your applications will be returned.
There are many strategies which can substantially reduce the amount of an OIC that the IRS will accept. You may be able to get the IRS to accept an OIC. However, an expert licensed tax professional may be able to get the IRS to settle for substantially less by using strategies.
You should use caution if you decide to get professional help. There have been many large national tax resolution companies that have been shut down by the IRS for using unethical practices.
I’m the author of the book Fight the IRS and Win, Secrets of an Enrolled Agent. The book provides lots of valuable and easy to understand information for dealing with IRS problems. I am offering a free copy of this book for any of the readers of this newspaper who have problems with the IRS. See my contact information below.
David Zubler is a tax accountant and Enrolled Agent in East Tennessee, providing tax strategies and representing clients before the IRS and has over 25 years of tax experience. He is the author of four tax books and is the founder and president of Your Tax Care. The company provides business and tax education to the public at its website, YourTaxCare.com. David can be reached at (865) 363-3019 or contacted by email at email@example.com