Tax Problems: Type of Tax Problems and how to Resolve Them
Tax problems come in different forms; IRS tax problems, State tax problems, and Sales tax problems. Tax authorities are constantly increasing their tax enforcement efforts through tax collection and tax audit.
When taxpayers receive the dreaded tax notice that their tax return or their business is going to be audited and examined, the first thing they should do is seek professional tax advice. Same thing when taxpayers receive collection letters threatening levying and garnishing their wages or paychecks, or the tax levy letter for their bank account, taxpayers should seek professional tax advice to resolve their tax problems. The most common options to resolve your tax problems are:
- Full Payment: paying the amount on the tax notice and avoiding the confrontation with the taxing authority. Most of the time, this option is not the best option for the taxpayer to resolve their tax problem, as often the tax bill is inaccurate.
- Pay The Correct Tax Only: paying the actual amount of taxes if you can afford it is usually a good solution to your tax problem. This will entail working with the taxing authority to abate the penalty assessed. The success of penalty abatement is based on reasonable cause and not willful neglect.
- Installment Agreement: paying the tax amount through an installment agreement is a common way to resolve your tax problem. You should seek professional tax advice, as the taxing authority will usually request a large monthly payment, while professional tax representatives will work on attaining an installment agreement that is reasonable and you can live with without causing a financial and economic hardship on you and your family.
- Offer In Compromise: an offer in compromise, OIC, will usually be accepted by the taxing authority to resolve your tax problem if the amount offered to settle your tax problem is equal or exceed the taxpayer’s Reasonable Collection Potential, RCP. The IRS, or the State, or the Sales Tax Agency determines RCP by using the financial analysis tools like the 433-A for individuals and 433-B for business entities.
No matter which option is correct to resolve your tax problems, usually there are more than one viable option, it is essential that the taxpayer comply with the tax law going forward. That is, all tax returns are filed timely; all estimated income taxes and payroll deposits must be paid timely.
An experienced tax professional who specializes in tax representation would be the best person to have in your corner when the IRS, the State, or the Sales Tax Agency contacts you.
The most surprising fact of all after plumbing the depths of what to do when the IRS contacts you regarding a tax problem is how shallow the well really is. With the lull in activity on the IRS tax audit and collection front, there are relatively few pronounced tax-experts. The $345 billion dollar tax gap remains fascinating to the US Congress and the IRS. It is a high profile item!
The IRS released tax records on their most famous tax problem cases that imprisoned Al Capone, they inadvertently nabbed the Governor of New York allegedly spending tens of thousands of dollars for what they least expected. From Will Smith, to Wesley Snipes to Nicolas Cage IRS audits and collection are on the rise, and is expected to continue for many years to come!
So, do you have a tax problem yourself? Do yourself a favor and contact us today to assist you in resolving your tax problem. We resolve IRS tax collection and or audit problems, we resolve State tax audit and collection problems, and we resolve Sales tax problems.