The following is an explanation of a few common IRS problems, and some ways to deal with them.

IRS Problem

Common IRS Problems and Solutions

Many people have IRS problems and have no idea what they really mean or what options they have to help. Read on to learn about a few common problems and a few ways that may help ease the burden.

A large part of the population has at least one IRS problem. Of those people, many do not even really understand what the IRS problem is, let alone how to get help for the problem. Here are a few common IRS problems that many face daily; these are followed by a few possible ways to alleviate the stress causes by each IRS problem.

IRS Problems

  1. IRS Liens – The IRS can file federal tax liens, which are public records that specify various taxes you owe the IRS. These prove to be a common IRS problem for many taxpayers. This IRS problem can make it difficult for one to get financial approval on many things, including a home or car loan. This also often leads to a further IRS problem in that once a lien is filed against one’s property, they cannot sell that property without a clear title; so often one may find his or herself with property, but no way to use it.
  2. Excessive Tax Debt – Penalties and interests can build so fast that debt that is too large to pay becomes a serious IRS problem.
  3. IRS Audits – IRS is able to audit the taxpayer through the mail, in their or your office and at your home.
  4. IRS Seizures – The IRS has the power of Seizure of Assets, which can be a serious IRS problem for taxpayers. Basically, the IRS is permitted to take control of personal and business assets to pay one’s debts after that person has avoided the IRS.
  5. Penalties and Interest – Another frequent IRS problem is the penalties and interest the taxpayer may have to pay. A taxpayer may be penalized for not paying their taxes or filing them late; in addition to these penalties, one is hit with a further IRS problem — interest on these penalties.

Possible Solutions to an IRS Problem

  1. Payment Plans – The IRS does accept payment plans to help alleviate IRS problems. To qualify, one must do the following: file all tax returns, disclose all assets owned, not have enough money in any form to pay the IRS, not have the ability to borrow said money from any source and not have enough equity in a retirement account from which you could borrow. Also be aware that even though one is on a payment plan, that person is still charged penalties and interest.
  2. Audit Reconsideration – This can be used to reopen a closed audit. This is used for IRS problems and other circumstances where the person did not receive a fair deal during the original audit.
  3. Appeals – A taxpayer can appeal to the IRS if they did not agree with a decision made by the IRS. A taxpayer must file their appeal within a certain amount of time and following IRS guidelines to help with their IRS problem.
  4. Collection Appeals – These are used for those who are dealing with the IRS problem of seizure. When the taxpayer is threatened with such action, they may issue an appeal to explain how they think the situation could be handled without resorting to the seizure.
  5. Offers in Compromise – This program helps people whose IRS problem involves a debt of more than they could ever afford, an opportunity to pay a small amount of their debt as a final settlement.
  6. Penalty Abatement – This helps taxpayers who have an IRS problem that lies in the penalties and fees they have incurred due to unpaid amounts or taxes that were filed late. There are circumstances such as natural disasters and illness, which allow the taxpayer a refund or reduction in penalty and interest that have been paid or must be paid.

By Lauren Culliton