Have you been hit hard by the Internal Revenue Service (IRS)? Threatening letters can be incredibly stressful—but they don’t have to continue.
Whatever your current tax issue, there are ways to resolve it. From back taxes to wage garnishments, fighting the IRS can be done with the right implemented strategy.
There are of course limitations as to what can be fought, but it is possible to prevent levies, relieve back taxes and stop those harassing phone calls right in their tracks—without breaking the bank. Let’s take a look at how.
First Steps after Receiving Notice From the IRS
If you’ve been issued a notice pertaining to delinquent taxes, your first order of action is to assess the penalty. What have you been fined for? What collection action are they threatening?
Pour over your records to see which tax year they’re penalizing you for and what went wrong to find your appropriate appeal process. Examine the notice and determine how and what you’re going to be charged.
How to Fight Late Penalties
The first penalty assessed to taxpayers is usually a failure to file penalty. If you don’t submit your income tax return on or prior to April 15th(this year the deadline falls on Tuesday, the 17th) you will typically be charged 0.5 percent of your unpaid taxes per month.
If your return is more than 60 days late, the minimum penalty is $135 or 100 percent of unpaid taxes, whichever is smaller. In the event that you don’t owe any taxes, you may not be penalized, but you will forgo any potential money that might have been returned to you.
The IRS takes tax obligations seriously, so the failure-to-file penalty may be difficult to get out of without enlisting the help of tax appeal professionals like Community Tax. These professionals know the ins and outs of tax resolution, and their advice can be well worth the investment you may pay for their services.
Currently living abroad but making sure you keep up with your duty to Uncle Sam? Keep in mind that out-of-country taxpayers have until June 15th to file their taxes and pay any taxes owed. If you know that you’re going to be late filing your return, all you need to do is request a free extension online using the IRS Free File service. It’ll give you a reprieve until October 15th without penalizing you with late filing fees, and save you the hassle from taking on this fight in the first place.
How to Fight an IRS Levy
If an IRS imposes a levy as a means to collect your tax debt, it means they can seize assets such as work wages and personal property. For those who received a levy because they were unable to pay off their debt, this penalty presents a double entendre: not only are they incurring additional late fees and interest charges, but the means in which they could settle the balance are being siphoned off. If this sounds like your situation, you may be able to fight collection efforts by qualifying for IRS Hardship.
In order for taxpayers to qualify, and individual must prove that paying their outstanding tax liabilities would create an unfair economic hardship. Each return is treated on a case by case basis, but some questions to ask yourself include: If the IRS collected your taxes, could you…
- Provide food for yourself?
- Pay your mortgage/rent?
- Retain utilities?
- Obtain transportation?
- Keep your job?
Submit a Collection Information Sheet Form 433 to apply, and if you qualify for Hardship, your account will be placed under “Currently Not Collectible” status. This means the IRS must cease any levy, wage garnishment, collection effort or fee assessment until your financial situation changes.
How to Find Back Tax Relief
Be proactive and fight off your outstanding debt before being threatened with a levy. If you just need the IRS to get off your back for a little while longer until you can pay your bill in full, simply request an extension using Form 1127, but be prepared to explain your undue hardship. Otherwise, set up a payment plan with the IRS in one of two ways:
- Installment Agreement—paying off your tax bill in monthly payments over a period of time
- Offer in Compromise—proposing an alternative amount to pay and settle your taxes
Depending on your issue, it is possible to fight the IRS. If you believe they made a mistake altogether and are wrongfully pursuing you, be sure to submit a formal written appeal to clear your name. Otherwise hire the help of an attorney who can stand up against IRS agents and get you the best settlement possible. Remember to mark your calendar and set a reminder for next year so you can pay on time and avoid this hassle from reoccurring!