The IRS Restructuring and Reform Bill of 1998 was a landmark law which put respect for the individual taxpayer back into the system. It forces the IRS to communicate with the public and grant taxpayers “due process” rights. When the IRS comes around to collect, sooner or later you are going to have to face the music. Playing games with the tax collector can have negative impact because the system is designed to make your life miserable.
Here are ten things to do if you owe back taxes to the IRS:
1. Do not ignore any IRS notices
Always respond to the IRS notices. Most people get into trouble because they ignore the computer-generated IRS notices. Some IRS notices are sent by certified mail. If you think you can ignore IRS notices by not going to the post office to pick them up, you are mistaken.
2. Never meet an IRS agent alone
Since IRS collection interviews are no picnic, you should have representation to wind up with much better results
3. Spend an hour with a tax expert before going to the IRS
Spending time with a tax expert will help you with preparation for your collection interview. A tax expert will tell you how to conduct yourself and make you aware of when the IRS revenue officer is attempting to take advantage of you. Always remember that the IRS revenue officer’s job is to collect money for the government.
4. The IRS must explain your rights during an IRS interview
As per the IRS publication entitled “The IRS Collection Process” revised in 2015, you have a right to be represented and that you have a right to be treated in a professional and courteous manner. If you don’t like the way you are being treated, you can stop the interview and ask to speak with a supervisor.
5. The IRS in not infallible
Recently the IRS was audited by the General Accounting Officer and it seems that their own house needs some cleaning. Usually, the IRS cannot keep track of how much you owe, especially if you have been making regular payments. The IRS makes mistakes so don’t take their word for everything.
6. You may be an innocent spouse
If you are widowed, separated or divorced and have tax problems due to actions of your former spouse then you are entitled to innocent spouse relief. This relief could result in the entire tax bill being written off against you.
7. You have due process
The IRS can no longer just take your business, seize your bank account, automobile, or garnish your wages without giving you any written notice and an opportunity to challenge what it claims. When you challenge the IRS, all the collection activity must come to a screeching halt. You can even take them to the court and they cannot collect from you until the judge issues a decision.
8. You don’t go to jail if you can’t pay
Though you can go to jail for trying to trick the IRS or cheating on your taxes, you cannot go to jail for owing taxes to the IRS and the inability to pay.
9. Recognize the power of the IRS
IRS agents operate under very few rules and have more power than anyone in the federal government. They can make your life pleasant or miserable. Most success in dealing with them comes from your communication in a prompt manner.
10. You have options when you owe to the IRS
There are several options for people who owe taxes to the IRS. If you owe and can pay in full, you should pay the taxes despite the pain. But if you can’t pay in full then your options include hardship suspension, installment payment arrangement, bankruptcy, and offer-in-compromise.
It is important to pay the taxes you owe to the IRS as non-payment can negatively impact your life. Consult an experienced Enrolled Agent for assistance with working out a plan as per your budget and needs while ensuring proper procedures are followed.