When you have unfiled tax returns or unpaid taxes, the IRS will try to collect the debt. If you address the issue early, you have better options than if you wait and let the situation get worse.
If you owe $50,000 or more, a Fairfax IRS collections lawyer or enrolled agent can help you resolve it. Being proactive pays off, so reach out to our tax law firm as soon as you realize you have tax debt you cannot immediately pay.
What Happens If You Do Not File or Cannot Pay?
When a taxpayer does not file a return, or files but does not pay the full amount by the tax due date, the IRS will notify them by letter. It will include the amount of the underlying tax, any interest assessed, penalties, and a phone number to call to discuss the outstanding balance.
You can often resolve smaller tax debts yourself by calling the number and working out a payment arrangement. However, when the tax debt is $50,000 or more, working with a Fairfax attorney experienced in managing IRS collections issues is your best option.
Acting Quickly Is Beneficial
The IRS will work with taxpayers who respond to the letter promptly to find a solution. Taxpayers must pay what they owe, but the IRS will not seize their property or take other drastic measures if they acknowledge the debt and cooperate in finding a solution.
When you ignore the debt and do not attempt to resolve it, the IRS may file a Notice of Federal Tax Lien for the amount of the debt. The lien is public information and may impact your ability to obtain loans or sell property.
Eventually the IRS may levy your property. It can freeze a bank account, garnish wages, attach to tax refunds, and seize real estate and personal property. Any taxpayer who is facing this level of collections from the IRS should immediately contact a Fairfax attorney.
Multiple Options for Resolving IRS Collections
When seeking alternatives for resolving federal tax debt, the taxpayer must demonstrate an inability to pay in full. They must file Form 433, the Collection Information Statement, which requires you to identify assets, liabilities, income sources, and other financial information.
Installment Agreement
Paying the tax in installments is a good option for many taxpayers. Interest continues to accrue on the unpaid balance until it is paid in full, but if you follow the rules of the repayment agreement, the IRS will not take further enforcement measures.
Innocent Spouse Relief
Couples who file joint tax returns are each liable for the full amount of tax due. Sometimes, however, one spouse has sole responsibility for financial matters and it would be unfair to hold the other spouse responsible for unpaid tax debt. There are several forms of innocent spouse tax relief that depend on the circumstances, which a Fairfax IRS collections attorney could explain in an appropriate case.
Offer in Compromise
The IRS sometimes accepts less than the full amount due when you cannot afford other options. Many taxpayers will not qualify for an offer in compromise but the program can offer significant relief for those who do. Our team can help you determine whether you qualify for this type of resolution plan.
Currently Uncollectable Status
When you are experiencing financial hardship and cannot pay anything toward your tax debt, the IRS may grant currently uncollectable status and pause collection efforts. Penalties and interest will continue to accrue during this time, however. You must periodically update your information to confirm that you remain eligible, and the IRS may resume collection efforts if your financial situation improves.
Contact a Fairfax Attorney to Respond to IRS Collection Efforts
Sometimes you cannot pay your taxes when they are due. The smart move is to file your tax return and seek advice from a Fairfax IRS collections lawyer at Pontius Tax Law. Our team of Enrolled Agents and former IRS Revenue Officers can help you settle your debt and avoid continuing IRS collection efforts, so contact us today to learn how we can help.