Options for individuals who are dealing with tax debt

bigstock-IRS-tax-auditor-man-with-a-ste-52565035According to the Internal Revenue Service's website, in 2012, the agency received a total of 144,928,472 tax return documents. Given the significant number of tax returns filed each year, it's seems crazy to think that the IRS would be able to figure out that one specific individual failed to file a tax return.

In reality, however, the IRS has numerous complex and sophisticated means at its disposal for not only identifying individuals who fail to file a tax return, but also for calculating even minor discrepancies in the amounts of taxes an individual owes. In cases where the IRS determines an individual failed to file or erred when factoring the amount of taxes owed, an individual will receive an IRS notice outlining details of one's tax liabilities or perhaps a notice of an IRS audit.

Choosing to simply ignore an IRS notice will only cause a taxpayer to incur additional penalties and fines and ultimately lead to more problems. For taxpayers who wish to dispute a tax debt posed, steps should be taken to gather and present financial records to counter the IRS' claims. In cases where an individual assumes liability for outstanding tax debt, he or she would be wise to take steps to repay back taxes.

While the IRS is notorious for taking a tough and unwavering approach to dealing with delinquent taxpayers, above all the agency wants to recoup the maximum amount of money as possible. Therefore, the IRS does offer some options for how to rectify a delinquent tax bill, including a monthly payment plan or installment agreement.

For taxpayers who can and agree to pay the full balance of an outstanding tax bill, the IRS may agree to accept installment payments. It's important to note, however, that if the entire portion of a tax bill is not paid off within 120 days, additional fines and penalties continue to accrue.

For taxpayers who are not able to repay the entire amount of a tax bill, the IRS’ "offer in compromise program" allows taxpayers to negotiate the amount and terms for repayment. Acceptance of an offer in compromise is dependent upon a taxpayer's ability to pay; therefore this option is not available to everyone. Alternatively, an individual may seek a temporary delay or extension of time, during which additional fines and penalties accrue, but the IRS will not take action to seize property or garnish one's wages.

For Questions regarding your rigths when dealing with the IRS, click here.

Contact Robert J. Fedor, Esq.

Source: Debt.org, "IRS Repayment Options," 2015