Read these 4 Tax Debt Help Tips tips to make your life smarter, better, faster and wiser. Each tip is approved by our Editors and created by expert writers so great we call them Gurus. LifeTips is the place to go when you need to know about Tax Relief tips and hundreds of other topics.
When an individual lives, or a business operates, in a state where an income tax is collected, there are state tax debt issues that are bound to arise. Income taxes are the largest revenue generating sources of income for states.
What is unique about a state income tax debt issue is the fact that the IRS partners with many states in collecting unpaid taxes. The program is titled ‘State Income Tax Levy Program. This Program allows the IRS to take (levy/seize) your state income tax refund to pay your unpaid IRS bill. You will receive a Notice of Levy on your State Tax Refund from your State.
Other state taxes that may be accumulating in your state tax debt include:
Becoming involved in a tax debt situation can be a nervous time for many. Receiving the first IRS Notice can come as a total surprise and bring a panic attack. It turns out you must contact the IRS at their request. Before you do, there are some things you need to know.
Be armed. Have all your applicable documents with you. This includes your IRS Notice Letter, your social security number (or taxpayer identification number), applicable tax year, and tax amount.
Be friendly. State why you are calling in friendly terms. Whether you believe it or not, the IRS does have humans working there. Treat them with respect and you will do better than if you do not.
Do not be berated. You do not have to put up with an IRS revenue officer who belittles you or tries to mistreat you. If you are uncomfortable with anything about the IRS revenue officer you are dealing with (or feel they are incompetent), simply ask to be transferred to another officer. If this does not work...
Contact Taxpayer Advocacy Service. This independent organization of the IRS will deal impartially with you regarding your IRS employee interactions. Report the revenue officer you were dealing with.
Meet deadlines. It goes without saying that if you meet your tax deadlines for both filing your tax return and paying your taxes, you will not begin having tax debt issues. Set up a tax calendar to help with this.
Pay your taxes. This is another commonsense statement. When you file your tax return, pay your tax bill in full, or as much as possible. The more you pay, the less can be penalized. Pay your delinquent taxes as early as possible. Penalties and interest have led to many an ugly tax debt situation.
Sell your assets. It may be a good idea to sell some of your assets to pay your IRS tax debt off. The IRS, with its incessant penalty and interest accruing, is not a pleasant creditor to have hovering around.
Do not ignore. Do not ignore the IRS once you receive your first IRS Notice. They will not go away like a bad virus over time.
Do not volunteer information. Stick with the facts that pertain to your tax debt situation. The more information you give the IRS, the more they can question.
Do not admit to violating tax laws. Do not admit to anything. It more than likely was an oversight on your part that caused your tax debt problem, not an out and out violation. The IRS may try to coerce you into admitting wrongdoing. Do not let them.
Know where you stand. Know where along the IRS collection process your tax debt situation really is. What needs to be done to correct it? What do you need to do? What will the IRS do?
Get it in writing . Whatever the IRS says, ask for them to put it in writing. Many times they will offer to do that anyways. It is just better to be safe than sorry.
There are times when taxpayers have problems resolving issues with the IRS through no fault of their own. For instance, a rude and intolerant IRS agent making negotiations difficult on you would be a reason for contacting the Taxpayer Advocate Service. Or, maybe you have an IRS employee who you just cannot understand due to his or her thick accent. In an effort to help taxpayers when dealing with the IRS, the IRS has a service it provides titled ‘Taxpayer Advocate Service'. This service is independently operated, yet provided by, the IRS. This service may help you resolve a problem that could not be settled through normal IRS channels. More information about what this service is and how you can benefit are as follows:
Generally, the Taxpayer Advocate Service can help if, as a result of the administration of the tax laws, you:
You will be assigned an individual Case Advocate who will work with you throughout the process. Your Case Advocate will listen to your concerns without judgment. You can expect the advocate to provide you with:
After you have exhausted all your other available options with your tax debt, you may be able to gain some tax debt help by filing for bankruptcy.
Once you file for bankruptcy an automatic stay occurs. This protection stops collection efforts by any of your creditors, of which the IRS is the major one. An automatic stay will stop the IRS from issuing a tax lien or from seizing any of your property.
You need to be aware, however, that an automatic stay will only stop the IRS collection process. It will not stop any of the following IRS actions from happening:
Bankruptcy is a complicated legal issue that is out of the scope of this publication. It is best handled by a tax debt attorney who is knowledgeable in that area.