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Forget about the FBI or the CIA. The IRS is easily the most feared government agency in the U.S. Created in 1862 by Abraham Lincoln, the Internal Revenue Service is responsible for collecting taxes and enforcing the Internal Revenue Code. Few Americans are aware of the fact that income tax was enacted to cover the cost of war expenses during the Civil War. As critics are quick to point out, income taxes are not mentioned in the original Constitution. After all, the Founding Fathers were fighting against excessive and unreasonable taxation. But whether we like it or not, the Sixteen Amendment to the U.S. Constitution (1913) gave the government the legal right to collect personal income taxes. It also made it a crime for any citizen to refuse to pay his taxes. According to the IRS, about one percent, or 13 million taxpayers are audited each year. An audit is authorized when the IRS determines that an individual taxpayer erroneously claimed deductions or exemptions, or failed to report income. IRS examiners will review your tax return and may ask you to provide documentation to support your claims, which they go over with a fine-tooth comb. If a single entry is out of place, they may order the taxpayer to pay more. Whether the result of audit findings, forgetting to file tax returns, or not being able to pay your taxes in full, IRS tax debt is something you must deal with sooner rather than later. According to the IRS, over twenty million American citizens owe back taxes. Some owe hundreds, others owe thousands. The total estimated shortfall is over two hundred billion dollars. What should you do if you are being dunned by the IRS? First and most importantly, you should not panic. Yes, the IRS is scary, but they don’t want to throw you in prison. What they want is their money. It is true that if you fail to file your return or pay what you owe, they will come after you to make sure you do, but their end goal is simply to collect the back taxes owed to the government. Getting audited is not a criminal accusation. It simply means that you may have made a mistake. Serious tax questions can only be answered by a trained professional. If you owe a substantial sum in back taxes, it may be a good idea to contact a tax consultant or advisor. No matter how much you owe, a tax professional can determine the best course for reducing your tax debt. Let us take a moment to discuss the kind of tax advice you might receive from an enrolled agent, attorney, or accountant. Negotiate a Compromise One in every seven taxpayers owes back taxes. With statistics like that, the IRS can’t afford to make acceptions or spend too much time on any one taxpayer. More often than not they will take what they are allowed by law according to the law. If you happen to qualify according to IRS guidelines, a tax accountant may recommend an offer in compromise. As they often say, a good deal is one where both parties walk away unhappy. In this circumstance, tax accountants can help a taxpayer gather all the information and documentation required to settle your tax debt. It is important to understand that your tax professional acts as your representative, not your negotiator. Arriving at an amount to offer in the offer in compromise depends largely on what you owe, what the IRS can expect to collect if they continue hounding you for payment, and how much money the IRS thinks you’ll make in the next ten years. Installment Agreements Since few taxpayers that owe back taxes can afford to pay them all at once, the IRS will often let you pay your tax debt in installments. When stretched over a long enough period of time, tax accountants should be able to negotiate a deal that lets you pay your debt with monthly installments you can afford. But be careful. If you lapse on a payment, the IRS can and will levy your bank account for the amount due. Just so you know, the first question they ask you when you set up a payment plan is, “Where do you bank?” The reason is they want know where to find your money if you miss a payment. For more information on tax debt reduction, consult a reputable tax advisor or consultant. For more information about IRS debt relief or to get back taxes help please visit http://www.txmstr.com.
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