When you failed to pay your federal taxes in full or did not file tax returns, you have probably received an IRS notice stating its intention to collect the debt. Do not ignore the notice: the sooner you demonstrate a willingness to resolve the issue, the more options you have and the lower the interest charges and penalties will be.
Dealing with the IRS can be stressful and you might pay more than necessary if you try to handle delinquent taxes on your own. Working with a local tax lawyer is often a cost-effective solution. An Alexandria IRS collections lawyer could suggest the best options for resolving your tax debt and help you every step of the way.
IRS Debt Collection Process
When a taxpayer does not timely pay the IRS what they owe, or fails to file taxes, the IRS sends a bill explaining its calculation of the amount due. A taxpayer could challenge the IRS’s calculation but must do so promptly. An Alexandria IRS collections attorney could help a taxpayer make their case for a lower tax assessment, and if the IRS agrees, it will adjust the amount due accordingly.
If the taxpayer does not pay the full amount of the bill, they will receive a series of letters reminding them of the debt. Eventually the taxpayer might receive a letter informing them that the IRS plans to levy their assets or take other collection action. The IRS has the power to garnish wages, attach bank accounts, put liens on real estate and property, and attach any state or federal tax refunds and apply them to the taxpayer’s debt.
An Alexandria taxpayer could save themselves significant inconvenience by consulting an attorney before the IRS moves forward with tax debt enforcement. However, even after the IRS has acted, a legal professional could help mitigate the effects of the enforcement action.
Common Methods for Resolving IRS Debt
Unpaid tax debt accrues interest and penalties, so it is in a taxpayer’s interest to resolve the debt as quickly as possible. Depending on the taxpayer’s specific financial condition and other circumstances, multiple avenues are available to satisfy the debt.
Debt Currently Not Collectable
If the taxpayer can prove they are experiencing financial hardship and cannot pay their debt and meet basic living expenses, the IRS might agree to give them Currently Not Collectible Status. However, the debt remains, interest continues to accrue, and the IRS reserves its right to resume collection efforts when the taxpayer’s financial condition improves.
Innocent Spouse Relief
When married couples file jointly, each spouse is legally responsible for the accuracy of the return and paying the amount due. However, as a practical matter, sometimes one spouse handles finances and the other has little awareness of tax matters. In such cases, the unknowing partner might apply for innocent spouse relief. If the IRS grants it, the spouse will not be responsible for the taxes due on the other spouse’s employment or self-employment income.
Installment Agreements
Taxpayers who owe more than they can immediately pay could apply to enter into an installment agreement. If the IRS accepts the application, the taxpayer pays off their debt in monthly installments and interest continues to accrue until the debt is satisfied.
Offer in Compromise
When a taxpayer cannot pay their tax debt in full, the IRS sometimes agrees to settle it for a lesser amount. However, the taxpayer must demonstrate an inability to pay the debt and not have any unfiled tax returns. Other restrictions limit the availability of an offer in compromise.
Taxpayers seeking an Offer in Compromise agreement must file Form 656-B along with an application fee and an initial payment. A taxpayer should get help from an Alexandria IRS debt collections attorney before applying because a rejection of the offer cannot always be appealed. The IRS could return the offer and application fee but keep the payment and apply it to the taxpayer’s balance.
Work With an Alexandria IRS Collections Attorney to Resolve Tax Debt
There are multiple reasons why someone might be delinquent on paying their owed taxes. Once the IRS begins collection measures, however, you must address the matter immediately.
Contact an Alexandria IRS collections lawyer when you receive a tax bill you cannot pay at once or if the IRS has initiated collection proceedings. Pontius Tax Law could review your situation and suggest a strategy to resolve your debt in a way that fits your current financial situation. Give us a call to learn how.