Traversing the mountain of your tax debt may feel insurmountable. Once you get into tax debt, penalties, fees, interest, and other long-term consequences accrue, making it feel like you will never reach the peak. It’s only human nature to retreat and hide when conditions get rough, but ignoring the IRS is a bad option.
Like when hiking a difficult trail and reaching an obstacle, when it comes to tax debt, you need to recalibrate and find a different path. You can’t turn around on the trail of tax debt and go home; your tax issues will follow you. Fortunately, you have options. But just because others are traveling one trail doesn’t mean it is the right path for you. When you work with a qualified tax professional from Highland Tax Resolution, we join you on the trek to resolve your tax debt. While the mountain seems high, our team helps you find a manageable path and hikes with you every step of the way.
Stepped-up Enforcement
Addressing your tax debt immediately instead of ignoring it is more important than ever before. With the passage of the Inflation Reduction Act, the IRS has more money and more resources pouring into enforcement. The IRS announced new measures pursuing delinquent taxpayers in all tax brackets. If you have unpaid taxes that go back years, you may have thought the IRS forgot them, but that isn’t the case. The IRS will be doubling the number of audits of individuals in the top tax bracket and tripling the rate of audits for larger corporations.
The Ostrich Penalty
While you may hope that putting your head in the sand will make the problem disappear, the reality is that ignoring the IRS makes the problem worse. When you avoid the IRS, you can face:
- Increased interest payments
- Additional penalties
- For failing to respond by deadlines, limited options for appealing and/or resolving a tax debt
- Liens on property
- Criminal charges, such as tax evasion
Ignoring IRS notices and letters can have a profound and lasting effect on your life.
Multiple Paths
When discussing debt resolution options, one thing to keep in mind is that the best resolution option can be different for each taxpayer. When selecting a tax professional, you should be looking for someone who is well-versed in working with the IRS and its rules and regulations. Picking the right tax professional can help you select the best option based on your unique financial situation.
Offer In Compromise
While an Offer in Compromise (OIC) is one of the best-known options for resolving a tax debt for less than the total amount owed, it’s not the best option for everyone. The IRS may reject an OIC, and it may take the agency over a year to decide whether to accept your OIC. You may want to consider a faster and potentially more realistic solution.
Currently Not Collectible
When paying a tax debt would create a financial burden, the IRS may change your tax debt status to currently not collectible. This means the IRS won’t collect taxes from you during the deferment. The downside of this option is that penalties and fees continue to accrue. In addition, if the IRS decides your financial situation has changed, they may end the deferment in collecting the tax and make your tax debt due immediately.
Partial Payment Installment Agreement
When you cannot pay the full amount of your tax debt, the IRS may agree to a partial payment installment agreement (PPIA). This option can be available when you cannot pay the total amount during the tax period. One downside to this option is that the IRS may investigate your financial assets. In some situations, the IRS may require that you use some assets to make payments before the IRS will agree to a PPIA.
Finding the Best Solution
When you have unpaid taxes with the IRS, one challenge can be determining the best resolution for your unique situation. If you have a tax debt with the IRS, contact the experts at Highland Tax Resolution. We have years of experience helping people chart the right course of action for their situation in a professional and empathetic manner.