It’s entirely possible that you have absolutely no reason to suspect that you have a tax debt. On the other hand, how do you really know? While there may be no legitimate reason to fear IRS collection activity, it’s not unusual to be a little paranoid about it happening to you.
If you stay current on your taxes, you’re probably safe to dismiss your suspicion as so much paranoia. But there are a few questions you should definitely ask before you get to that point. An oversight with the IRS can haunt you for years, so you’re smart to ensure there’s no cause for alarm.
Your first consideration is whether or not you’re up to date on all of your tax returns. In other words, have you filed for every year you were required to do so? Unless there was a year that you fell below the income threshold, chances are you should have prepared a return each tax season. Next, have you received any IRS notices? Typically, you will receive notification when a return is missing or a balance is due. Assuming you’re caught up on your filing and you have gotten no letters from the IRS, you can move right along to the next item on your checklist.
Every so often, the IRS is unable to find a taxpayer to inform him or her about a problem because the address they have on file is not current. It’s not uncommon for individuals to go a year or more without receiving their IRS notices, simply because they forgot to update their address. The bad news is that if you find yourself in this situation, you quickly realize what an expensive mistake this can be. When you finally do get your IRS notice, your balance will be loaded with penalties and interest. These accrue monthly. You may breathe easier if you confirm that both the IRS and post office have your current info.
Occasionally, you may wonder about your credit score. It’s good to take a look at this every now and again, and not just when you want to buy a car or take out a loan. The IRS will issue tax liens in certain cases of delinquency; this lets other creditors know that they take first priority when it comes to receiving payment. A tax lien can severely damage your credit and, to make things worse, it’s a matter of public record. This means that creditors, and anyone else who cares to look, can see your indiscretion.
If all else fails and you want to be absolutely certain that a tax debt isn’t lurking in the shadows, you can always contact the IRS directly. In the event that a problem does exist, they will be able to quickly give you the specifics. If your worst fears are realized, you’re not without options.
Any tax issue should be handled immediately and without error, but can usually be addressed in a way that meets your financial means. You may want to contact a tax resolution company before taking action, to learn what your best course of action will be. If necessary, a licensed tax professional can intervene on your behalf and resolve the issue directly with the IRS.