7 Types of Tax Problems and How to Resolve Them

Millions of taxpayers have run-ins with the Internal Revenue Service(IRS) each year. You may owe taxes or haven't filed your returns; you may be struggling to pay your tax bill; you may be the subject of an audit or wage garnishment, or you may have received IRS letters. Any tax issue can be easily solved. 

Usually, the IRS offers payment plans to the vast majority of taxpayers. Of course, you can also consider hiring reputable tax accountants to help you out. Below are the most prevalent tax issues and ways you can resolve them.

Owed Taxes 

Have you failed to pay your tax obligation? The IRS offers many choices if you're unable to pay the sum in full. You may be eligible for a payment plan or a reduced payment amount based on your ability to pay and the amount you owe. The IRS may temporarily halt all collection efforts if your account has been deemed currently not collectible.

Lack of Tax Filings

Unlike the penalty for delinquent taxes, the fines and penalties for late filing are much higher. Regardless of your financial situation, you should always submit your return. Time limits apply to both audits and unpaid taxes; however, none begins to run until you or the IRS submits your tax return.

Moreover, the IRS will treat you considerably more leniently if you come out freely. Additional fines may apply if the IRS needs to contact you to remind you to file. 

IRS Letters

The IRS is known for sending out intimidating letters to those who aren't tax experts. About 75 distinct kinds of IRS notifications are sent out annually. Taxpayers may get letters informing them of taxes owing, but more commonly they serve as a warning of impending collection actions or of their ability to appeal rulings. Consult a tax specialist if you're unclear about what to do.

Tax Lien

When you owe the IRS money, one of the first major actions they'll take is to put a tax lien on your property. When the government has a right to seize your property via taxation, this is called a tax lien. If you have an auto loan, for instance, your lender will have a lien on your vehicle. When the IRS issues a Notice of federal tax lien, creditors are notified of their claim on your property.

The IRS is not currently seizing any of your property. In the past, tax liens would be included on a person's credit report, however, as of 2018, all three main credit reporting agencies no longer have this information. Public access is still maintained to tax liens.

Creditors may check your tax liens with the IRS Centralized Lien Unit. To eliminate a tax lien and stop collection action, contact the IRS as soon as possible.

Tax Levy

When the Internal Revenue Service begins to confiscate your property, they have issued a tax levy. The IRS may seize your bank accounts, vehicles, and even your home if you owe back taxes using the agency's toughest collection method: a levy.

The IRS is required by law to offer you 30 days' notice before proceeding with a tax levy and provide you the opportunity for a hearing. If the IRS has already sent you a notice of a tax levy, you must take immediate action to prevent the seizure of your property.

IRS Wage Garnishment

In order to pay back taxes, the IRS may charge your wages, or take money directly out of your paycheck. The IRS indeed has more wiggle room than other debtors when it comes to garnishing wages.

Even while they can't take money directly out of your bank account to pay your taxes, they may go for money that's owed to you from customers if you're self-employed. Although it is best to get in touch with a tax expert before any garnishment action is taken, it may be possible to stop a garnishment that has already begun.

Tax Audits

You may expect to get audited at some point in your life. Self-employed individuals and company owners are more likely to be audited than the general population because of these factors. A tax expert might be of assistance if you are undergoing an audit. Having to deal with tax issues may be stressful, costly, and exhausting.

Final Words

The most important thing to remember is that tax problems can be solved. The IRS is not necessarily your enemy, and you will benefit from working with the governmental agency to find a resolution to the problem you are facing. With the right information, guidance, and motivation, you will be able to resolve your tax issue and continue living your life peacefully.