The biggest issues that the average taxpayer is having in today's economy are dealing with unfiled tax returns and back-tax debt.
So what do you do if this is YOU.
The IRS predicts that by June 2021 there will be over 26 million people that owe back taxes and close to 10 million people who have yet to file their back taxes, oops! So what are your different options if you fall in this category? The IRS has very specific programs dealing with back taxes. The three options that IRS has to deal or settle with taxpayers are:
1. Hardship Programs
2. Installment Payment Plans
3. And settle the debt through a program called the Offer in Compromise
How does the Internal Revenue Service determine which program they were used to you? The IRS will take a financial statement and after the IRS reviews it, the IRS will place you in one of the three aforementioned programs.
Your current documented financial statement will determine the outcome of your case.
This that’s why it’s best to see an IRS Expert NOW to make sure you get your desired outcome. The statistics at this present time is that 40% of all taxpayers are in the current hardship program, 6.5 million taxpayers on installment agreements and 20,000 taxpayers have settled their debt for pennies on the dollar in which the average settlement is approximately $16,000. How about if you haven’t filed your past tax returns in many years? The IRS has a current policy statement which is 5-133 that says if you have not filed tax returns in years IRS will accept the last six years. In many cases based on your circumstances, it is possible to file only the last three. Also if you move the file back taxes and you don’t have your tax records IRS has a history of your income for the last six years and really good tax professionals can easily reconstruct your tax returns. It is really important to be assertive in dealing with the Internal Revenue Service and not for them to knock on the door.
Keep in mind if you don’t respond to IRS notices they have the ability to send out wage garnishments, file federal tax liens and completely wipe out your bank account. Keep in mind you do not have to fear the Internal Revenue Service. Finding prudent and competent help is your best defense against any IRS action and the nice thing usually is never having to speak to Internal Revenue Service.
Michael Sullivan is a former IRS Agent & Teaching Instructor, once an ABC news correspondent in Washington, now affiliated with R3 Accounting, Mr. Sullivan has also contributed to the Bloomberg News and Wall Street Journal.