Unless you have malicious intent when you pay the wrong amount of taxes, it’s unlikely that the federal government or the Internal Revenue Service (IRS) will haul you off to jail. Tax avoidance can carry steep penalties, but it’s pretty rare to see citizens put in jail because of unfortunate tax mistakes or financial problems and unpaid taxes.
However, the government does have a variety of tools at its disposal to encourage payment including garnishing your wages directly from your employer. Past-due tax bills can balloon into huge debts over time, and it’s important to take swift action with the IRS when you have a tax problem.
Settling Your Tax Debt
There are several options for paying off the IRS, and a monthly payment plan is one of the most popular options. Referred to as an installment agreement, these payments aren’t too difficult to qualify for, and the IRS will usually have no trouble approving you for an installment agreement as long as you haven’t had unpaid tax debts in the past.
The IRS recently introduced a slightly modified long-term payment plan allowing taxpayers to make payments on an installment plan but at a reduced rate over time. A tax attorney or legal representative can speak to the IRS on your behalf to arrange this plan. The IRS introduced this plan to accommodate taxpayers who wanted to pay their debts but weren’t able to cover the payments in full each month.
Another option is the Offer in Compromise, which is where the IRS agrees to settle your tax debt for an amount that is less than the total amount owed. The IRS uses a standard calculation to determine if you’re eligible for this program. There is some negotiation that can occur on the total amount you might pay, and it’s helpful to work with a legal professional who has in-depth knowledge of the process.
Watching Out for Unscrupulous Companies
An important part of getting tax debt resolved is working with the right company. The debt collection industry is a fierce group, but the government can act quite ruthlessly as well with wage garnishments and penalties. There are even instances where tax problems may lead to court cases or significant fees associated with unpaid tax debts.
Unfortunately, a new brand of company emerged in the wake of the last decade’s recession. These companies were created with the stated purpose of helping people with their tax debt. However, the companies would make impossible promises to their clients and end up costing the debtor more money and time than was necessary.
If you have unresolved tax debt or the IRS has indicated it will shortly file a lawsuit against you (or garnish your wages), the last company you want helping you is one that promises to reduce your tax debt for “pennies on the dollar.” While it is true the IRS will make deals with taxpayers, a company that promises huge reductions in tax debt is usually too good to be true.
The government’s Federal Trade Commission (FTC) explains further:
“The truth is that most taxpayers don’t qualify for the programs these fraudsters hawk, their companies don’t settle the tax debt, and in many cases don’t even send the necessary paperwork to the IRS requesting participation in the programs that were mentioned. Adding insult to injury, some of these companies don’t provide refunds, and leave people even further in debt.”
Paying thousands of dollars in up-front fees and receiving no solution to one’s tax debt can drive someone so far into debt that bankruptcy becomes the only option.
Fortunately, there are several legitimate programs offered by the IRS that can help reduce overall tax debt or spread payments out over a long time span. The IRS may actually give you years to pay off a tax bill as long as you submit the right paperwork and keep in touch during the process. It’s essential to make sure the professional tax service or lawyer you work with is reputable and experienced in IRS negotiations.
Get Legal Help with Your Tax Problems
Are you facing a large tax debt? Are you unsure how to work with the IRS to pay your overdue taxes? Would you like to know how the law team at Suburban Legal Group PC can help? Request a Free No Obligation Legal Evaluation today, and we’ll let you know your options and how to stop the harassment.
DISCLAIMER: All information on this website is provided for informational purposes only and are not intended to be construed as legal advice. Suburban Legal Group PC shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.