How to Handle IRS Collections
The IRS collections process commences with your submission of your tax return, excluding the amount of taxes due. It will be the IRS who will identify the taxes owed and they will send this to you through a bill. This first notice will contain explanations of the amount due as well as a request to receive full payment. If you choose not to heed to the IRS mails, others will be sent to you, and this time, there will be applicable penalties and they will be worded in more threatening tones. On the positive light, since notices are in a specific order and format, you can research for these from the IRS to get more information and understand what each implies. In general, getting several notices means that you have IRS problems that need to be attended to.
Should you find some errors in the computation of your taxes, you simply need to send the IRS a letter or make a phone call to request for a meeting with them. They will be more than happy to grant this request and make the necessary adjustments should it be proven that they incurred some mistakes. If you already paid your bill yet still continue to get IRS notices, you can just send them your proof of payment. Just make sure that you never send any original documents so will always have support data on your IRS payments.
However, if the tax bill is actually correct and you indeed must pay the amount stated, you still have many payment alternatives.. If you cannot afford to completely pay for the tax due, you may request to have a payment plan arranged for you. In this arrangement however, you will be paying for the debt over time and still incur the applicable interest for any unpaid balance or be penalized until you finish paying off the full amount.
Alternatives are also available in instances when you really cannot afford to partially pay for your taxes. Upon request, the IRS may defer their collection efforts for a certain period and consider you as currently not collective. The downside of this option, however, is this still causes you to be fined with penalties and interests that will most probably accrue making your IRS problems even worse.
An often popular solution is an OIC, or Offer In Compromise. When given, this allows you to pay only a percentage of the total amount due and the rest of the debt is forgiven. Although the odds of getting an approval for this are thin, it is always worth the risk as this effectively ends your IRS problem, at least until the next year.
In reality, there are a number of alternatives available to help you deal with IRS concerns. Some of them are as simple as calling your nearest IRS office while others involve employing the services of a tax lawyer. All these support the notion that everyone needs to be treated fairly and justly, even if some are indebted to the government. Just remember to be conscientious in responding to IRS notices to avoid having more severe collection procedures enforced upon you.
Filed under Blog by on Oct 8th, 2009. 
