Busted! Don’t Believe These IRS Tax Collection Myths!
It has been reported that one in six US taxpayers cannot pay the amount that they owe the Internal Revenue Service (IRS) or California tax agencies. If you are unable to clear a tax debt, these federal agencies can place a lien against a significant asset that you possess.
To prevent an IRS lien or resolve a tax issue, it is imperative to work with an experienced tax resolution specialist. They will help you get out of trouble.
Unfortunately, in the absence of knowledge, there is a lot of misinformation that gets circulated regarding what the IRS can and cannot do.
Tuttle & Tuttle, CPAhas explained three of the most common IRS tax collection myths.
Myth 1: The IRS is eager to make an offer on your tax debt.
Many clients come to us asking for an Offer in Compromise with the IRS, FTB or EDD. Who wouldn’t want to pay less than they owe? They hear ads on the radio and TV that make it sound easy to get an offer. However, the facts are different.
Tax collection agencies are in the business to collect taxes. The only reason they settle for ‘pennies on the dollar’ is if it is in their best interest. Therefore, it is vital that an offer is filed after a detailed financial analysis is made to determine if you qualify for an offer and if you can pay the amount required to be offered. Yes, I said required. Once our financial analysis is completed, a figure arrives at the IRS, FTB, and EDD who expect it to be paid shortly after acceptance. Before the offer is submitted, you need to know ahead of time if you have a good chance of being accepted and that you have a funding source to pay the amount that is offered. Offers are evaluated thoroughly, and lots of financial information is asked for to verify the paperwork you submit. You should have a professional help you through this process. Don’t pay someone to make a frivolous offer. It would be a waste of precious time and money.
Myth 2: The IRS will take away my house.
While the IRS is an aggressive tax collector, I have yet to meet a Revenue Officer who will take away your home. This is also a scare tactic you hear on the radio and TV. The tax collector may ask you to try to refinance your home to get the equity out to pay the tax debt. But, if you show that you cannot refinance your ho me, they will not get angry about it. They may record a tax lien in the county where you live. However, this is not taking your home away. It merely means that if you sell your home and there is equity after the mortgage is paid, they will get that equity. While you live in your home, it is yours to enjoy. You will not be ‘kicked out.’ While having tax debt is a severe problem and needs to be dealt with professionally, get the facts and work with a tax resolution expert to resolve your tax problems. Do not respond to scare tactic ads.
Myth 3: I should allow them to bill me for what they say I owe and not file my past due tax returns.
Many times, if you do not file a tax return, the taxation authority will ‘prepare’ one for you. Then they start to collect this estimated amount. In most cases, what they prepare for you is much more than what you would owe if you filed a tax return. Also, since you did not file a return, you are not in what is called ‘compliance.’ This means that in many cases they will not set up a payment plan until the missing returns are filed. You want a payment plan, so your wages are not garnished, and your bank account is not levied. So, our advice is to do your best with the information you have and file the past due returns. We can help you obtain missing data from various sources as well as your social security credits that make filing past due returns significant.
If you’re looking for a certified public accountant in Fresno, CA, contact Tuttle & Tuttle, CPA. We assist clients with tax audits, installment agreement negotiation, bank levy release and tax resolution across Tulare, Visalia, Porterville, Fresno, Madera, Merced, Clovis, Selma, and the surrounding areas. We not only solve a client’s tax problem, but we also give them sound advice to help them secure their finances in the future.