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How Common Is It For People Or Companies To Owe The IRS?

It’s actually very common for people or companies to owe the IRS. There are statistics that show that over a hundred billion dollars is owed to the IRS by almost 10 million American individuals and companies.

Can The Internal Revenue Services Ever Be Bargained With?

It is possible to settle the balance with the IRS for less through the offer in compromise program. The IRS can also be negotiated with on penalties. They have a policy for first time abatement for late filing and late payment penalties that is based on filing compliance for the past three years. Other types of penalty abatement can be requested if you can show that there was reasonable cause for why you did not pay taxes. However, you cannot bargain with them in the traditional sense. If you owe $20,000, you cannot just approach them and say, “I’ll pay $10,000.” That’s not really how it works.

When Does Tax Debt Relating To Liens, Levies and Collections Come Into Play?

The IRS will generally pursue collection actions such as liens and levies if they haven’t heard from the taxpayer in regards to resolving a tax debt. If you owe more than $50,000, the IRS will oftentimes file a tax lien to protect the government’s interest. Levies usually come into play after the IRS has sent you several letters and is either unable to get in contact with you or unwilling to work with you on a payment plan.

When a tax lien is filed and before the IRS can actually levy your accounts, you have the right to request a collection due process hearing. At this hearing, your case will be assigned to appeals and you can offer to agree to collection alternatives, such as the installment agreement or an offer in compromise. Alternatively, your case can be placed in not collectible status. If you are not satisfied with the IRS determination after the collection due process hearing, then it can be appealed to the US tax court.

How Serious Are The Penalties For Unpaid Or Underpaid Taxes?

If you don’t file your taxes, the IRS will generally charge you with failure to file penalties, failure to pay penalties and interest on the outstanding balance. Ultimately, these penalty and interest charges can become astronomical. In many circumstances, the penalties and interest charges will exceed the actual tax liability. So, it does become a very serious problem if it isn’t dealt with.

What Are The Common Reasons That Individuals Or Businesses Need To Set Up A Payment Plan For Their Tax Debt?

The most common reason that people need to set up a payment plan is because they are unable to pay the IRS balance in full and they do not qualify for an offer in compromise. One thing to note is that the IRS only has 10 years from the date of filing to collect tax debt. Most of these plans are long-term, but if you are close to the collection statute expiration date, then the plan will be short-term. If the statute is not extended before the 10-year mark is reached, then the remaining balance of debt will actually be written off.

Is Someone More Likely To Be Audited If They Have Tax Debt?

Audits are generally chosen based on filed tax returns. The IRS has a discriminate inventory function system (DIF), so having tax debt does not make it more likely for you to be audited.

For more information on Owing Tax Debt To IRS In California, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (714) 321-3369 today.

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