Millions of taxpayers either could not pay their taxes or failed to file their tax returns. The number increases every year. Furthermore, many taxpayers file their returns incorrectly. In these cases, the Internal Revenue Service (IRS) often sends a formal letter to the taxpayer.
The Internal Revenue Service have alerted taxpayers about a growing number of fraudulent tax schemes circulating on social media that promote the misuse of credits such as the Fuel Tax Credit and the Sick and Family Leave Credit. As a result of these scams, thousands of taxpayers filed inaccurate or frivolous returns, often resulting in the denial of refunds and steep penalties. Many of the posts falsely claim that all taxpayers are eligible for credit, such as those meant for self-employed individuals or businesses, when they are, in fact, not qualified. The IRS stated: “People who follow this advice could end up with rejected claims and a penalty of up to $5,000 in addition to any other penalties that might apply. So far, the IRS has imposed over 32,000 penalties costing taxpayers more than $162 million. It’s in the taxpayer’s best interest to stay informed.”
The IRS states that the new technology, mainly AI (Artificial Intelligence), has helped tremendously in discovering fraud and has facilitated the collection process. It is unfortunately common for many taxpayers to ignore letters from the IRS. Even worse, some taxpayers only learn the contents of these letters far too late, often when they finally seek professional help because they were afraid to open the mail when it arrived. If you are among those taxpayers who feel overwhelmed or anxious about opening a letter from the IRS, we recommend contacting a tax resolution professional as early as possible. A professional can help relieve this stress by:
1. Opening and reviewing the correspondence on your behalf.
2. Explaining the specific details and requirements of the content.
3. Discussing the various resolution options available to you.
Addressing these notices promptly is the best way to manage your tax situation effectively. The IRS acknowledges that they are receiving an increasing volume of daily calls while operating with fewer employees to answer them. As a result, they are working to provide taxpayers and tax practitioners with greater access to information through online accounts. We encourage you to create an online account to help you stay informed regarding any correspondence with or from the IRS.
The Internal Revenue Service Commissioner estimates that taxpayers owe approximately $1 trillion per year. The IRS has several means available to enforce tax filing compliance and the payment of taxes due. Please be aware that penalties for late filing or failure to file are significantly higher for business tax returns. We recommend paying as much as possible, as soon as possible, to lower potential penalties and interest. While the IRS can be lenient in certain cases, they actually advise taxpayers to consider borrowing money to pay a tax due, as the interest rates imposed by the IRS may be higher than those of a private loan.
Many taxpayers inquire if they could call the IRS to offer to pay less than the amount due. The answer is NO. To pay less than what is owed, taxpayers have to qualify for an offer in compromise (OIC). The process start with an investigation of the taxpayer’s IRS tax account and then a financial analysis.
There are many ways to resolve a tax debt. However, a taxpayer needs to be in compliance for the past 6 years to obtain an abatement, an installment agreement, and an offer in compromise.
- Taxpayers could be qualified for an abatement (FTA) of the penalty.
- Taxpayers could use the reasonable cause exception to get relief from tax debt.
- Taxpayers could also request for Currently Not Collectible (CNC) status when the payment of the tax due would cause a significant financial hardship on the family.
- Taxpayers could request an installment agreement (IA). An installment agreement could be modified based on changing financial circumstances.
- Taxpayers could apply for an offer in compromise (OIC) if they meet certain requirements.
Never ignore a tax due letter, regardless of your financial situation. Seek the guidance of a tax resolution professional who is qualified to represent you before the Internal Revenue Service.
It should be noted that under the Fixing America’s Surface Transportation (FAST) Act, the IRS notifies the State Department of taxpayers certified as owing a seriously delinquent tax debt. This debt threshold is currently $64,000 for tax year 2025 and $66,000 for tax year 2026. The amount is adjusted yearly for inflation. The law requires the State Department to deny passport applications or renewals for these individuals. Furthermore, if a taxpayer already holds a valid passport, the State Department may revoke it or limit the taxpayer’s ability to travel outside the United States.
Hiring a tax resolution expert is the best action a taxpayer could take in a tax matter before the IRS or a state tax authority.
We offer FREE initial consultation!!!
Recent Comments