The IRS doesn’t forget. When a taxpayer has unpaid taxes, a taxpayer may hope if they ignore the issue long enough, the IRS will go away.
The opposite is true. The longer a taxpayer waits to respond to IRS notices and letters, the more the IRS will increase its actions to collect an unpaid tax debt.
Stepped-up Enforcement
With the passage of the Inflation Reduction Act, the IRS has more money and more resources. This includes a larger staff.
With the added resources, the IRS announced an increase in going after delinquent taxpayers in all tax brackets. Those with unpaid taxes that go back years may have thought the IRS forgot them, especially with the pause due to COVID-19.
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 agency also plans to expand audits for small businesses and individuals who make under $400,000.
The Ostrich Penalty
While a taxpayer may hope that putting their head in the sand will make the problem disappear, the reality is that ignoring the IRS makes the problem worse. Here are some of the outcomes for those with unpaid tax debts:
- 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
In other words, the fallout from failing to respond to the IRS isn’t a small detail. Ignoring IRS notices and letters can have a profound and lasting effect on a taxpayer’s life.
Even if a taxpayer cannot pay the full balance due, they should still contact the IRS. The agency has payment plans and other ways to settle a tax debt.
If taxpayers disagree with an IRS notice or letter, they should also not ignore the communication. They should contact the IRS to learn more about the discrepancy and how to resolve it, such as providing proof of previous payment.
If the IRS is contacting you, don’t ignore their notices. The IRS isn’t going away. If you’re receiving notices or letters from the IRS, contact the experts at Highland Tax Resolution. We help taxpayers understand the best way to respond to the IRS. We do a full financial review to ensure we’re selecting the most appropriate resolution, and we keep our clients updated with regular communication.