Owe money to the IRS? Owe a lot? Too much? Well, don�t assume that the best thing to do is hope it will somehow go away, or just hunker down and wait for them to come after you. Actually, in many ways, that�s the worst thing you can do.
The big news is that, in many cases, you can actually work out a deal with IRS that you can live with without having to go live in a cardboard box. Not only that, but the way the system works, usually the best thing you can do is to approach them, as opposed to waiting for them to find you.
Do you recall the �horrible IRS� hearings in the Senate Finance committee from the late 90's? The hearings which led to a slew of restrictions on the powers of the taxman and promises for a �kinder, gentler IRS�? Even if you don�t, many laws and regulations were enacted as a result of those hearings which still, to this day, form the backbone of important protections for taxpayers. The only requirement to make use of these protections in many cases is that you must be working in good faith with the IRS to sort out your situation.
For example, even if you owe back taxes, you�re allowed to live, and pay your mortgage or rent, and eat food, and own a car, and make car payments, and pay medical bills, and buy clothes, and pay current taxes and have insurance and everything. The IRS simply can�t take or demand that you pay over money which you need to have a reasonable lifestyle. They publish what�s called �National Standards� for collection purposes which give taxpayers an idea of what IRS will allow for expenses like housing, utilities, medical expenses, food and clothing, and transportation (usually car) expenses. For those sorts of expenses for which standards are not published, all you have to do is show that you�re spending the money and that you need to spend it (the important word being �need�).
It doesn�t take a genius to figure out that, given the rough economic environment, many people really don�t have any money which isn�t being spent on necessities. What happens if every dime you make goes to cover necessary living expenses or the taxes on the income you�re making? Simply put, if there�s nothing left, there�s nothing left, even for the great and powerful IRS.
The trick, if you could call it that, is that these sorts of allowances are only available to taxpayers who are �cooperating� with IRS. Now, I know that little word �cooperating� has been used many times in the past to mean �going along with the coercion�, but in this case, it just means making a good faith effort to sort out the mess. If you are in communication with them, if you�re honest about what you�re making and spending, and if it works out that you can�t really afford to pay much or anything, that�s all there is to it. No levies, no garnishments, no seizures, no threats. You just pay them what you can afford, and if you stick to the agreement, you are protected.
Believe it of or not, the single thing the IRS is most interested in is seeing that you file and pay your taxes on time from here on out. Even more than collecting on an old bill. They would much rather you file and pay on time from now on, even if it means giving up on that huge old tax bill.
Now, I grant that the IRS, like any good bureaucracy, has more rules, regulations and traps for the unwary than any ordinary citizen might be expected to know. Tackling them, and your old bill, might be more than than you can really be expected to deal with. If that�s the case, go get some help. Firms like ours deal with this stuff all the time and know the ins and outs of how to get the mess sorted out as quickly and easily as possible (not that you should expect it to be quick or easy, but it is do-able), and to your greatest benefit.
So, if you truly can�t pay off the old bill, don�t despair. Don�t hide or resort to the underground economy. Don�t give up and go live in a shelter. The IRS, and that old bill, can be handled in such a way that you can live and breathe. Come up into the sun and air with the rest of us and take your place in society.
The big news is that, in many cases, you can actually work out a deal with IRS that you can live with without having to go live in a cardboard box. Not only that, but the way the system works, usually the best thing you can do is to approach them, as opposed to waiting for them to find you.
Do you recall the �horrible IRS� hearings in the Senate Finance committee from the late 90's? The hearings which led to a slew of restrictions on the powers of the taxman and promises for a �kinder, gentler IRS�? Even if you don�t, many laws and regulations were enacted as a result of those hearings which still, to this day, form the backbone of important protections for taxpayers. The only requirement to make use of these protections in many cases is that you must be working in good faith with the IRS to sort out your situation.
For example, even if you owe back taxes, you�re allowed to live, and pay your mortgage or rent, and eat food, and own a car, and make car payments, and pay medical bills, and buy clothes, and pay current taxes and have insurance and everything. The IRS simply can�t take or demand that you pay over money which you need to have a reasonable lifestyle. They publish what�s called �National Standards� for collection purposes which give taxpayers an idea of what IRS will allow for expenses like housing, utilities, medical expenses, food and clothing, and transportation (usually car) expenses. For those sorts of expenses for which standards are not published, all you have to do is show that you�re spending the money and that you need to spend it (the important word being �need�).
It doesn�t take a genius to figure out that, given the rough economic environment, many people really don�t have any money which isn�t being spent on necessities. What happens if every dime you make goes to cover necessary living expenses or the taxes on the income you�re making? Simply put, if there�s nothing left, there�s nothing left, even for the great and powerful IRS.
The trick, if you could call it that, is that these sorts of allowances are only available to taxpayers who are �cooperating� with IRS. Now, I know that little word �cooperating� has been used many times in the past to mean �going along with the coercion�, but in this case, it just means making a good faith effort to sort out the mess. If you are in communication with them, if you�re honest about what you�re making and spending, and if it works out that you can�t really afford to pay much or anything, that�s all there is to it. No levies, no garnishments, no seizures, no threats. You just pay them what you can afford, and if you stick to the agreement, you are protected.
Believe it of or not, the single thing the IRS is most interested in is seeing that you file and pay your taxes on time from here on out. Even more than collecting on an old bill. They would much rather you file and pay on time from now on, even if it means giving up on that huge old tax bill.
Now, I grant that the IRS, like any good bureaucracy, has more rules, regulations and traps for the unwary than any ordinary citizen might be expected to know. Tackling them, and your old bill, might be more than than you can really be expected to deal with. If that�s the case, go get some help. Firms like ours deal with this stuff all the time and know the ins and outs of how to get the mess sorted out as quickly and easily as possible (not that you should expect it to be quick or easy, but it is do-able), and to your greatest benefit.
So, if you truly can�t pay off the old bill, don�t despair. Don�t hide or resort to the underground economy. Don�t give up and go live in a shelter. The IRS, and that old bill, can be handled in such a way that you can live and breathe. Come up into the sun and air with the rest of us and take your place in society.
