If you experience a financial bump in your life, don’t shut out the world by grabbing a gallon of your favorite beverage and lying in your theater chair for the next decade. While one of your goals may include ignoring family and friends, you can’t avoid the Internal Revenue Service.
The friendly folks at the IRS might miss you for a couple of months, but they will eventually find you and your assets. Before they hunt you down, get in touch with the IRS consider their tips to help ease tax burdens.
Common Tax Related Questions and Solutions
Help, I Can’t Pay My Taxes?
First, don’t hide under your covers. If you cannot pay the full amount of taxes you owe, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest.
Contact the IRS to discuss your payment options at 1-800-829-1040. The agency may be able to provide some relief such as a short-term extension to pay, an installment agreement or an offer in compromise. In certain situations, the agency may be able to waive penalties. They are unable to waive interest charges which accrue on unpaid tax bills.
Gosh, I Can’t Pay my Installment Agreement?
Call the IRS at 1-800-829-1040. You have several options available if your ability to pay has changed and you are unable to make payments on your installment agreement or your offer in compromise agreement with the IRS.
An example of an option is reducing the monthly tax bill to reflect your current financial condition. Be prepared to provide proof of financial changes.
Now What? There is a Federal Tax Lien on my Home?
If there is a federal tax lien on your home, you must satisfy the lien before you can sell or refinance your home.
There are a number of options to satisfy the tax lien. Normally, if you have equity in your property, the tax lien is paid (in part or in whole depending on the equity) out of the sales proceeds at the time of closing.
If the home is being sold for less than the lien amount, the taxpayer can request the IRS discharge the lien to allow for the completion of the sale.
Taxpayers or lenders also can ask that a federal tax lien be made secondary to the lending institution’s lien to allow for the refinancing or restructuring of a mortgage.
The IRS is working to speed requests for discharge or mortgage restructuring to assist taxpayers during this economic downturn. One of IRS plans is to increase the dollar thresholds when liens are generally filed. The new dollar amount is in keeping with inflationary changes since the number was last revised.
Also, the IRS is making other fundamental changes to liens in cases where taxpayers enter into a Direct Debit Installment Agreement (DDIA). Furthermore, the IRS is modifying procedures that will make it easier for taxpayers to obtain lien withdrawals. Liens will now be withdrawn once full payment of taxes is made if the taxpayer requests it.
See IR-2011-20, IRS Announces New Effort to Help Struggling Taxpayers Get a Fresh Start; Major Changes Made to Lien Process; IR-2008-141, IRS Speeds Lien Relief for Homeowners Trying to Refinance, Sell; and Understanding a Federal Tax Lien.
Hey, Your Tax Levy on my Wages is Creating Hardship?
Contact the IRS at 1-800-829-1040 or the number given on any correspondence and tell them about your situation.
If the levy is creating an immediate economic hardship, the levy may be released. A levy release does not mean you are exempt from paying the balance. The IRS will work with you to set up payment plans or take other steps to help you pay off the balance.
To help make sure quick action, please have the fax number available for the bank or employer office that is proces
Mmmm, I Don’t Trust The IRS. Where Can I Find More Help?
Contact the Taxpayer Advocate Service (TAS) toll free number at 1-877-777-4778 or TTY/TDD 1-800-829-4059.
The TAS is an independent organization within the IRS whose employees help taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should.
You can also call or write to your local taxpayer advocate, whose phone number and address are listed in your local telephone directory and in Publication 1546, Taxpayer Advocate Service – Your Voice at the IRS.
You can file Form 911, Request For Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), or ask an IRS employee to complete it on your behalf.
See http://www.irs.gov/advocate for more information.
If I Had Money, I Would Pay The IRS. Where Can I Find Affordable Legal Representation to Help Me with my Tax Problem?
Low Income Taxpayer Clinics (LITCs) represent low income taxpayers before the Internal Revenue Service, aid taxpayers in audits, appeals and collection disputes, and can help taxpayers respond to IRS notices and to correct account problems.
If you are a low income taxpayer who cannot afford professional tax help or if you speak English as a second language (ESL) and need help understanding your taxpayer rights and responsibilities, you may qualify for help from an LITC that provides assistance for free or for a nominal charge.
Although LITCs receive partial funding from the IRS, LITCs, their employees, and their volunteers are completely independent of, and are not associated with, the federal government. The LITCs are generally operated by nonprofit organizations or academic institutions. Each LITC independently decides if you meet the income guidelines and other criteria before it agrees to represent you.
Each state has at least one LITC. You can find an LITC located in or near your area by using Publication 4134, Low Income Taxpayer Clinic List. There is a publication identifies all LITCs who represent low income taxpayers before the IRS or give ESL services, and is available at www.irs.gov/advocate or your local IRS office.
Low income taxpayers may be able to receive help from a referral system operated by state bar associations, state or local societies of accountants, and other nonprofit tax professional organizations.