How to Handle IRS Collections
The IRS collections process begins when you submit to the IRS your tax return, without the amount due yet. The IRS will be the one to determine how much you owe them by sending you a bill. This first notice will contain explanations of the amount due as well as a request to receive full payment. If you choose not to heed to the IRS mails, others will be sent to you, and this time, there will be applicable penalties and they will be worded in more threatening tones. On the positive light, since notices are in a specific order and format, you can research for these from the IRS to gain more information and understand what each implies. Generally, receiving a number of notices means that you have IRS problems that need to be attended to.
If you believe that the IRS committed errors in the computation of your taxes, you can send them a letter or even make a phone call and request for a discussion of your bill. They are always open for a discussion that will eventually lead to making necessary adjustments in your taxes should it be found out that there were indeed miscalculations in the computation. For instance, if you already paid the bill and they continue to send out notices, you simply need to provide them proof of payment such as copies of a canceled check. Just ensure that you never send any original documents so will always have support data on your IRS payments.
If the bill reflects the correct tax due and you are required to pay the full amount, several payment options can be used. If you cannot afford to completely pay for the tax due, you may request to have a payment plan arranged for you. In this agreement however, you will be paying for the debt over time and still incur the applicable interest for any unpaid balance or be penalized until you finish paying off the whole amount.
If, at the present, you are truly unable to make even a single payment, it may be possible to request the IRS to put off their collection efforts for a given length of time. During this time, you would be classified as currently not collective. This will, on the other hand, still cause you penalties and interests that will most likely accrue. This actually just worsens the problem.
OIC, or Offer in Compromise, is a solution most coveted by tax payers. Although the requisites and qualifications are strict and difficult, an offer in compromise will enable you to pay significantly less than the amount you owe in full, and the remaining portion will be forgiven. Although statistically you are likely to be denied in your application for Offer In Compromise, submitting such request will be worth the while as this would effectively end your IRS problem, at least until the next year.
In conclusion, the IRS actually provides a number of options in dealing with IRS issues. Some of them are as simple as calling your nearest IRS office while others involve employing the services of a tax lawyer. These alternatives are all in the premise that even though you are indebted to the government, you are still entitled to a fair and just treatment. Just remember to be conscientious in responding to IRS notices to avoid having more severe collection procedures enforced upon you.
Filed under Blog by on Oct 29th, 2009. 