Not receiving a tax refund can be disappointing enough, especially if you look forward to getting a little financial boost each April.
What if you not only donâ€™t get a refund, but you actually end up owing money? Even worse, what happens when you owe more money than you can afford to pay? Going to bat against the Internal Revenue Service by yourself can be annoying at best and downright traumatizing at worst. Luckily, you donâ€™t always have to go through the process alone.
How a Taxpayer advocate can help resolve your tax problem
When you deal with the IRS, itâ€™s possible that youâ€™ll connect with an IRS representative who is helpful and can help you straighten out your tax problems. Other times, unfortunately, you may wait a long time to hear back from the agency, feel that theyâ€™re not addressing your concerns or unable to reach an agreement with the IRS on how much you owe.
The federal government has created a free, independent program called the Taxpayer Advocate Service to help. The Taxpayer Advocate Service is not for everyone who owes back taxes â€” it was created to help specifically when you are having problems dealing with the IRS.
Consider contacting the Taxpayer Advocate Service (TAS) if any of the following are true:
Your tax problem is causing you financial hardship.
The IRS is not responding in a timely manner.
You believe the IRS is not respecting your taxpayer rights. Your taxpayer rights include the right to be informed of IRS decisions about your account, the right to quality service (prompt, courteous and professional assistance), the right to pay no more than the correct amount of tax, rights to privacy and confidentiality, and other rights in the Taxpayer Bill of Rights.
How to get help from the TAS
Start by visiting the Taxpayer Advocate website, which includes answers to many questions and common tax problems. If you still need help resolving problems with the IRS, use the map feature on the website to find contact information for your local TAS office. Itâ€™s not guaranteed that the TAS will accept your case. However, the TAS does have the power to help you when youâ€™ve tried unsuccessfully to resolve your problem with the IRS by yourself. They can do the most good when your case falls into one of these categories:
Itâ€™s not guaranteed that the TAS will accept your case. However, the TAS does have the power to help you when youâ€™ve tried unsuccessfully to resolve your problem with the IRS by yourself. They can do the most good when your case falls into one of these categories:
If your case needs to be processed quickly in order to avoid causing you more financial harm, the TAS can speed things up. For example, the IRS may need to remove a levy or release a lien when you are having a financial emergency, difficulty or hardship.
If your case is complex and different steps and units of the IRS are involved, the TAS can help coordinate the various parts of the process.
If you have a unique case that doesnâ€™t work well with the â€śone size fits allâ€ť approach of the IRS, or you feel the IRS isnâ€™t listening to you, the TAS can work on your behalf. They may try to have the IRS issue new guidance, if necessary, for your circumstances.
If the TAS determines that you qualify for help, you will be assigned your own advocate who will work on your case until it is resolved. You can talk to your caseworker by phone, or visit your local TAS office.
5 ways to resolve a tax debt on your own
Donâ€™t panic over a bill from the IRS. Youâ€™re not the first person to get behind on taxes, and the IRS has specific procedures to help people like you get back on track. They donâ€™t put people in jail for simply owing taxes; youâ€™ll have to ignore a lot of notices or otherwise test the patience of the IRS before they levy your bank account or take other drastic action.
And not every tax problem means you need the help of a taxpayer advocate. You may be able to resolve your issues in one of these ways:
Make sure you actually owe the tax. Read your tax return carefully from front to back. Look for errors, such as income counted twice, or missed deductions and credits. If you received a letter from the IRS stating that you owe a tax, make sure you understand what you owe and why. In some cases, you may just need to file an amended return, or send a letter of explanation to the IRS.
Pay as much of the balance due as you can afford. Determine how much you can pay without jeopardizing your other expenses, including current taxes. The more you can pay now, the less youâ€™ll pay in penalties and interest. You have several options for paying the IRS, including electronic funds transfer, a paper check or debit or credit card. (Be careful paying by card. It will cost you extra fees, and in some cases, the credit card interest rate is higher than you would pay to the IRS.)
Pay off your tax bill within 120 days, if possible. You donâ€™t need a formal payment plan if you only need up to 120 days to pay the full amount. The penalties and interest will continue to add up until your balance is paid.
Ask for an installment plan if you need more than 120 days to pay. You can apply online for a formal payment plan. Youâ€™ll have to pay an application fee, plus penalties and interest until your debt is paid in full.
Consider an Offer In Compromise (OIC). If you are way over your head in tax debt, you can request an Offer in Compromise so you can pay less than the total amount owed. You should only ask for an OIC as a last resort, and you will have to pay fees and fill out forms to apply. Use the IRS Offer in Compromise Pre-Qualifier to see if you are eligible to apply.
If you are in financial distress and canâ€™t make any tax payments right now, the IRS may set your account as â€śCurrently Not Collectible.â€ť This doesnâ€™t resolve your debt, and the interest and penalties continue to accrue. However, it does stop IRS collection activities as long as your account is in this status. You generally do not need a taxpayer advocate to have the IRS make this determination. To request this status, contact the IRS at 1-800-829-1040 or the phone number on correspondence you have received from the IRS. You may be required to complete a Collection Information Statement and submit documentation.
Avoid future problems with the Internal Revenue Service
If youâ€™ve ever had more than the briefest encounters with the IRS, youâ€™ll appreciate the importance of avoiding such encounters as much as possible in the future. Read these tips to see how you can avoid most future tax problems:
Learn about taxes. The tax code has changed significantly thanks to recent tax reform initiatives, and you need to know how the changes affect you.
Plan and organize your finances. You can only do so much about your taxes after the end of the year, when youâ€™re scrambling to find receipts and paperwork and possibly getting hit by a big tax bill. Try to estimate your tax year ahead so you can do better tax planning and avoid surprises.
Prepare and review your tax return carefully. Making mistakes, such as not including all your income that is reported on 1099 forms, is the fastest way to get the attention of the IRS. If you prepare your own return, use tax software to improve accuracy. Itâ€™s also important to always file your return on time, even if you canâ€™t pay the balance.
Adjust your income tax withholding or estimated tax payments. If you owed money when you filed your return, you may need to pay more throughout the year. Not only will you avoid a large one-time bill, but you may save interest and penalties as well.
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