The complexity of tax code, in addition to poor economic conditions, causes scores of people to have tax problems each and every year. The good news is that for every tax problem, there is a solution. The IRS is usually rather accommodating when dealing with individuals who are up-front and honest about their tax problems.
Although the IRS has created many solutions to handle a wide variety of problems, the main problem that taxpayers face when attempting to resolve their tax problems is that the IRS website is very confusing and difficult to navigate. Additionally, getting a hold of the IRS representative needed to help you with your specific problem can be even trickier. For that reason, BackTaxesHelp.com provides detailed do-it-yourself guides to help you resolve your tax problems on your own, as well as the opportunity for troubled taxpayers to connect with a tax professional
who can help you resolve your unique tax problem.
The solution that you choose to take care of your tax problem will depend upon your individual tax and financial situation. Below, you can view a list of various tax problems broken down by category. Find your particular problem and navigate further into our site to discover the various solutions to help you handle that problem.
Unfiled Tax Problem
Depending on the situation, unfiled income taxes may lead to both major and minor problems. Regardless of your situation, however, it is always best to file your taxes as soon as possible. Here are some of the problems that may stem from having unfiled taxes:
- Unfiled Taxes with Taxes Paid in Full: Having unfiled taxes with taxes paid in full is usually not considered to be a major tax problem. Most of the time, you will simply run the risk of losing any tax refund that you may be owed.
- Unfiled Taxes Help: If your unfiled tax problem is more complex – such as owing multiple years of both unfiled and unpaid taxes – it is typically a good idea to seek the help of a tax professional. A tax professional can analyze your situation, file unfiled returns with maximum deductions, and set up an appropriate tax payment plan if necessary.
Having unpaid taxes can lead to several different types of tax problems. Immediately upon realizing that you have unpaid taxes (if you have not already come to some form or settlement or agreement), the IRS will begin its collection system
. As soon as the collection system begins, the IRS begins to charge penalties and interest
. As time goes on and taxes remain unpaid, the IRS collection actions become increasingly more aggressive and create additional tax problems. The IRS will continue to take collection actions either until taxes are paid in full or until some other type of arrangement/settlement
is made. Here are some tax problems that result from the IRS collection system – in order – for individuals who have unpaid taxes (note: IRS may not use all of the methods mentioned below).
- Tax Lien: A tax lien is the first major collection action that the IRS takes against most taxpayers. The lien gives the IRS legal claim to your property in order for them to secure payment of the taxes that you owe. (Read more on the different ways through which a tax lien can be released.)
- Tax Levy : A tax levy is the most harsh of all the IRS collection mechanisms and is typically used when the taxing authority believes that all other options have been exhausted. Usually, for a levy to be released, either taxes must be paid in full or some other form of tax settlement must be have been reached with the IRS. There are three major forms of tax levies used by the IRS. Here are descriptions of each:
- Wage Garnishment: Wage garnishment is the most common type of tax levy used by the IRS. When a wage levy is implemented, the delinquent taxpayer’s employer is obligated by the IRS to deduct a certain amount of money from each pay period to go toward the employee’s unpaid tax liability. To stop wage garnishment, you must either come into full compliance with the IRS or cancel out the effects of the wage levy.
- IRS Bank Levy: An IRS bank levy can be devastating to most taxpayers since once notice of this type of levy has been received, little can be done to stop the IRS from seizing one’s bank account funds. Typically, if the IRS seizes funds once from a bank account, it is very likely they will seize funds from that account again in the future. However, it is important to note that bank levies can be stopped. Even if you cannot pay the IRS in full, there are other ways to prevent the IRS from seizing your bank account funds again in the future.
- Asset Seizure: Once all other options in attempting to collect your outstanding tax bill have been exhausted, it is very possible that the IRS will begin to seize your physical assets.
It has become relatively common knowledge that the likelihood of being selected for an audit is low for a given tax year. However, if you take those averages and apply them to a taxpayer’s lifetime, you’ll see that a taxpayer is more likely than not to receive an audit in their lifetime. Furthermore, these percentages actually increase each year as IRS computers become more sophisticated. An audit usually results in the taxpayer owing more in taxes than the original assessment. Here are some common problems faced when dealing with an IRS audit:
- Handling an IRS Audit: All audits – even mail audits – can be intimidating. When handling an audit, it is important to provide only the information requested. Never provide more information than is needed, because doing so can trigger an audit on additional items or years that were never a point of concern with the original audit.
- Can’t Pay Amount Owed After an Audit: It is a common for an innocent error to be made with a tax filing, resulting in an audit and subsequently owing more taxes than had originally been anticipated. If taxes cannot be paid in full after an audit, there are a number of tax payment options available, depending upon unique one’s financial situation.
- Avoiding an IRS Audit: Based on audit statistics, there are several factors that can significantly decrease your chances of being audited. Knowing how to identify the typical audit red flags can help you significantly reduce your chances of being audited.
- Tax Audit Help: If you are being audited, it is generally better to handle the situation with a tax professional who isn’t directly tied to the tax return being audited. To prevent any further investigation, a tax audit expert will ensure that only the minimum amount of information is reported to the taxing authority. An expert can anticipate the type of questions that the IRS is likely to ask, and will know the maximum and minimum amount of information that should be provided so as not to provide the IRS with more details than necessary.
Tax Filing Mistakes
Taxpayers frequently make mistakes when completing and filing tax returns. The IRS regularly accepts amended returns to fix prior tax returns that were deemed inaccurate. A tax return filed with an error favoring the taxpayer runs the highest risk of incurring interest and penalties on amounts not paid in full with the original return. On the other hand, a tax return that erroneously favors the IRS will likely lead to a refund for the taxpayer once an amended tax return has been filed. Regardless of the type of error, it is in the taxpayer’s best interest to file an amended tax return as soon as an error is discovered.
- Filing an Amended Tax Return: Understand how to file an amended return, step-by-step. Filing an amended return after an error is realized is important to prevent a possible tax audit and to limit any penalties and interest than can arise by not paying the full amount of taxes owed when due.
- Amended Tax Return Help: Have a complicated tax return and are unsure of how it should be filed? Tax professionals can quickly determine the best method to amend your return and fix your current tax problem
Penalties charged for tax fraud are the most costly IRS penalties of all. Moreover, IRS computer systems become more sophisticated each year and are increasingly able to detect tax fraud with an algorithm. If faced with an IRS tax fraud investigation, it is generally a good idea to have a qualified IRS lawyer
on your side to help you understand the appropriate steps that you must take in order to minimize penalties and other IRS collection actions.
Here are some guides to help you resolve a tax fraud problem on your own:
- File an Amended Tax Return: If a tax return was filed with the intent to commit fraud, it is best to file an amended tax return before the IRS discovers it. Steep tax fraud penalties can be avoided if the tax return is corrected and paid up prior to the IRS catching any fraud.
- File Unfiled IRS Tax Returns: If, in an attempt to avoid paying taxes, you did not file your tax return, you should be aware that you are already accruing interest and penalties on the amount that you owe, whether you realize it or not. The amount of taxes owed is not assessed by the IRS until the tax return has been filed. Upon discovering an unfiled tax return, the IRS may file a return on the taxpayer’s behalf and/or assess tax fraud penalties. Therefore, you must file your tax return as soon as possible to prevent any further interest and penalties from adding up, and so that you can take advantage of any eligible tax breaks that will minimize your liability, a step that the IRS is unlikely to take when filing on your behalf.
- Pay Taxes Owed Plus Penalties: If a tax fraud penalty has already been assessed, it is best to pay the taxes and penalties as soon as possible. For as long as taxes remain unpaid, the IRS will continue to charge additional penalties and interest. As more time passes, the IRS may take collection actions – such as a tax liens and levies – in an attempt to seize the taxes that you owe.
- Consult a Tax Professional: Some tax fraud cases are far more serious than others, particularly if an individual is under criminal investigation for tax evasion. In most tax fraud cases, it is in the taxpayer’s best interest to consult a tax professional, who may be able to lessen penalties by filing an amended return, or significantly reduce penalties by proving that the error was not fraudulent.
Regardless of how complex your tax problem may be, there is a way to resolve it. Taxing authorities offer a number of solutions that enable individuals to resolve tax problems without causing significant financial hardship. There is no “one size fits all” solution for everyone, but chances are good that there is a manageable solution available for each and every taxpayer who is dealing with a tax problem.