New research across the United States estimates that the IRS is owed a whopping $441 billion in unpaid taxes. The majority of those (65%) are in households of $75,000 or less. Could you be one of those? If so, read on to see what you could do about it!
Facts and figures
A third of people with tax debt owe less than $7,499 to the IRS. However, more than 55% owe more than $10,000 to the US Treasury. Though billionaires are often blamed for avoiding taxes, only around 5% of delinquent taxes are over $1 million.
Older people are more likely to accrue tax debt – over 55% of respondents to the survey who owed money to the government were between the age of 51-65. Many of these people will never be able to repay what they owe as they will have to retire soon.
Tax debt solutions
A letter from the IRS can be scary. Even if you do not owe lots of money to the IRS, you may get very worried about what they can do.
Amongst other things the IRS has the power to:
- Take money directly out of your pay packet from your employer in a ‘wage garnishment’
- Take money out of your bank account in a ‘bank levy’
- Trash your credit rating with a Tax Lien
- Repossess your property
- It can even apply to the State Department to cancel your passport
In the next sections we will show you the best way forward to manage your tax debt problems with the IRS.
Call the IRS in the first instance
Taking punitive measures against someone with delinquent taxes costs the IRS money. Despite being the government’s only source of income, you might be surprised that it lacks the resources to go after everyone thanks to rich politicians not wanting to pay so much tax themselves!
As such the first thing you can do to bring all punitive measures to a halt is to call the IRS as soon as you know you owe them money that you cannot repay immediately. If you are in the group of 30% of Americans who owe the IRS less than $7,500 you can usually set up a repayment plan on the phone. It won’t cost you money and you may well avoid penalty charges and interest on your tax debt.
Get help from Defense Tax Partners
As with criminal law, there is a saying – ‘He who represents himself in court has a fool for a lawyer!’ It makes sense to get advice from a team of tax attorneys such as us at Defense Tax Partners.
Tax law and regulations are extremely intricate, and you could overlook a range of reasons that may mean you owe a lot less tax to the IRS than they say you do. Do you know all the things that you do that are tax deductible? If you do you should be a CPA, but even they have to refer to books!
Another reason to get a tax attorney is that we could save you a lot of money in the process of repaying your tax debt. In negotiating with the IRS, we can get penalty interest and charges waived, and can minimize your eventual bill.
In some cases, we have reduced people’s tax burdens to just cents in the dollar thanks to getting an Offer in Compromise (OIC) agreed with the IRS. This is an agreement where we show them that you have no means at all of repaying your tax bill and should only pay a small percentage to satisfy the debt.
Older people and the IRS
One classic example where an OIC is possible is for someone nearing retirement. If you are on a low income and must retire soon due to age or ill-health there is every chance that you will never be able to repay the money you owe to the IRS.
The IRS can demand taxes from your estate when you die. Getting tax debt help or even an OIC could save your family the added pain of the tax authorities taking a chunk out of your estate that would otherwise go to them.
In this case Defense Tax Partners may be able to work on your behalf and help you clear your tax debt without it hanging over your relatives when you pass.
Get in contact with us today!
If you owe money to the IRS or for state taxes, we at Defense Tax Partners can help. Get in contact with us today to discuss your needs!