Let's face the truth: The Internal Revenue Service is a scary federal agency that could easily ruin the life of any US citizen. Nobody wants to be contacted by the IRS or receive those terrifying IRS letters in the mail, but when it does happen, the first thing that people often think of is to look for quick ways to escape their tax issues. Mistakes happen when people rush to eliminate their tax problems, and this can cause much more harm to them in the long run.
Only a few taxpayers have the guts to deal with the IRS on their own, especially when the IRS is after them. Also, many are not aware of the potential mistakes that can happen during IRS debt-settlement negotiations. This post will address the latter problem, so let's take a look at the five major mistakes taxpayers make when it comes to negotiating their IRS debts.
1. Failing to be up to date on tax payments
If you're not current on the payment of your estimated taxes or if not enough taxes have been withheld, then carrying out negotiations with the IRS can be an unnerving exercise. This is because when you approach the IRS for debt-settlement negotiations, the first thing they expect from you is that you are in compliance with current tax rules. This means that your tax filings must be up to date and that you are making estimated tax payments on a regular basis.
2. Thinking the IRS will work towards your best interest
The employees of the IRS represent the government. They don't have your best interest in mind. Regardless of how nice they might seem, their only aim is to collect the maximum amount of money from you within the shortest amount of time. You will end up being disappointed if you think that the IRS official is there to help you lower your tax debts.
3. Not considering other settlement options
Many people quickly gravitate towards the IRS Offer in Compromise program to resolve their tax debts. Although this program may work for some, it certainly does not work for everyone. There are other solutions, however, like the Partial Payment Installment Agreement (PPIA), that can work best to minimize back taxes in many cases. Chapter 7 bankruptcy is another potential debt-settlement tool for you to consider.
4. Not completing the IRS forms accurately
Most people fail to address their tax issues until they have already become very serious. They fail to give careful consideration when filling out the details on the IRS forms 433-A, 433-B and 433-F. They simply complete them just like they were filling out a 1040 tax form.
The Internal Revenue Service will scrutinize all of the facts, disclosures, and expenses along with your ability to pay before they entertain anything less than full payment. So whatever you decide to mention on the IRS forms, it must be backed with a solid story and accurate information. You can also get help from a tax debt expert , who will review your documents and make suggestions. Remember, any mistakes made here can be used by the IRS to force you to pay more than what you can afford.
5. Not fighting back against a bad IRS decision
The IRS employees won't be always correct while making decisions. If you disagree with any particular IRS action, you have the right to request for the IRS appeals office to look at the case. But filing an IRS appeal is a very time-sensitive issue. In order to avoid potential adverse consequences, it is recommended that you have a professional tax attorney carry out the entire appeal process, from the filing process through the debt negotiations, for you.