You probably know this. The Internal Revenue Service is really a scary federal agency that could easily devastate the life of any American citizen. So for most people who learn about an IRS tax debt problem, their very first kind of reaction, quite rightly, is to get the IRS as far off from them as possible. Mistakes happen when they rush to eliminate tax problems and this will cause a lot more harm to them.
Very few taxpayers have the courage to deal with the IRS single-handedly especially when the IRS is right after them. Also, many are not aware of the mistakes that occur in the debt settlement negotiations. The following paragraphs will tackle the latter problem. So let’s discuss the five biggest mistakes individuals make when it comes to settling their IRS debts.
Mistake No.1: Not being up to date on tax payments
If you aren't current in payment of estimated taxes or if enough taxes is not withheld, then doing negotiation with the IRS can be quite a reckless exercise. Why, because the IRS wants current compliance when making tax settlement deals, but generally don’t inform you until weeks of negotiations. Current will mean that your tax filings need to be up-to- date and also making estimated tax payments in regular basis.
Mistake#2: believing the IRS proposals will be in the taxpayer’s best interest
IRS staff members are representatives of the government. They may be a good person in general, however they work for the best interest of the agency and never to you. If you believe that revenue officers are out there to mainly help you, then it means you are not aware of the truth. Their every action is aimed towards getting maximum money from you within the shortest time period and not in finding a tax solution for you personally.
No.3: Not choosing the best debt settlement option
Many individuals like to gravitate towards the IRS Offer in Compromise program to resolve their tax bad debts. But the OIC won’t work for all. There are other alternatives like partial payment installment agreement and installment agreement which are viewed as best for numerous reasons. Chapter 7 bankruptcy can be an another excellent debt settlement tool.
Mistake#4: Not giving correct information in the IRS forms
Many individuals want to address tax problems only after it become more really serious. They think that filling out IRS financial forms 433a, 433b and 433f are like filling outa tax return. And whenever something is not clear, the IRS bends the policies.
The IRS will review all the disclosures you make in this form closely before they agree to partial payment. So whatever you state in the IRS forms, it must be backed with solid story and true facts. Or you may get the help of a tax specialist who'll take a look at documents and make suggestions. In the event you miss out on things like vital expenses when filling in, you will be made to pay more than what you could afford.
No 5. Not making use of your legal right to appeal
Many times IRS staff make mistakes. And you can use IRS appeal rights in your favor. But most of them are time sensitive. So it is extremely important to know what to appeal, the best time to appeal and ways to best address your claim.