There are plenty of problems that don’t require help in reaching a solution. Some issues, though, are inherently more complex. When you’re facing a tax debt, it’s important to have a clear understanding of what you’re getting into by resolving it yourself.
Although there may be several ways to go about obtaining an IRS resolution, there’s likely only one way that’s right for you. Choosing the correct path can be complicated by a few fundamental hurdles that appear only after you get started. Carefully consider whether these impediments will compromise your tax resolution goals, rather than stumbling over them after it’s too late.
Any IRS notice you receive which requires a response must be addressed quickly. A notice of assessment, for instance, typically includes a request for payment within 30 to 90 days of being sent out. Although money may be your initial, primary concern (more on that in a moment), perhaps the most compelling factor to consider is how long you have to respond. Failure to address your IRS notice by the deadline will only lead to further, more aggressive letters. Since time is against you, it may not be advisable to scramble on your own in determining whether the notice is accurate, how you need to respond and what additional steps may be required.
A notice requesting payment usually entails a demand for full payment. If the IRS has determined that your liability is $11,000, they will ask you to satisfy the entire balance by the assigned deadline (again, usually within 1 to 3 months). Remember, the IRS’ position is that the sum owed should have already been paid; in other words, you’re already behind. The good news is that most IRS balances can be resolved with a payment agreement, or possibly a settlement offer. The trick is knowing which plan you qualify for and which one is going to be financially optimal. An additional financial factor to take into account is that your tax balance is already generating penalties and interest; the longer you to take to pay, the more expensive it’s going to be.
In addition to all of the things you should do when you have a tax debt, there are plenty of missteps to avoid. Choosing the wrong resolution, for instance, can lead to a loss of both time and money (precious commodities when you’re dealing with the IRS). You also have to be careful not to volunteer information that isn’t necessary in order to get a resolution approved. While you should not mislead the IRS in any way or attempt to omit information, providing a detailed account of your finances can be to your disadvantage. In so doing, you’re leaving scarce room to negotiate a lower monthly payment agreement. Finally, when you’re resolving a tax issue, you have to have the big picture in mind. Are there additional IRS issues that you’re unaware of? What action do you face beyond notices in the mail? These are questions that can quickly be answered with a greater level of experience.
You may not have the time or resources to effectively resolve your tax issue. Much like addressing vehicle repairs necessary for you to get back and forth to work, it may simply make more sense to consult with a professional. Most initial consultations with a licensed tax professional include a proposed resolution, a detailed and up-to-date record of all existing IRS issues, and information regarding what collection action you can expect. As with any other consultation, you don’t necessarily have to enlist the individual’s services, but you can make an informed decision about how to move forward. Whether you resolve the tax problem on your own or accept help from a tax pro, understanding that there is little room for error is essential to your success.