Nobody enjoys being in debt to the IRS, and most of us do our best to find every possible way to avoid facing such a situation on the tax deadline of April 15th. However, sometimes luck is not on our side and we find ourselves in a tight spot.
Presently, given the cash crunch many of us are experiencing, we all want to find ways to save money. Owing money to the IRS simply adds to our worries. Fortunately, there are some little-known strategies that the IRS doesn’t openly share.
Before you deplete your emergency savings on April 15th, pause and reassess your situation—you might be able to turn the tables in your favor.
One such solution is an “Offer in Compromise”. As per the IRS, this mechanism allows you to pay less than the total liability, ideal when the full payment could lead to financial hardship. Eligibility is tied to your ability to pay, revenue and expenses, and asset equity. The IRS’s Offer in Compromise Pre-qualifier can help you ascertain your eligibility.
Don’t delay payment: Ignoring payable taxes isn’t a solution—the IRS will eventually find you and you must be prepared to face potential consequences such as a seized bank account or wage garnishment. If full payment is not viable, consider setting up a payment plan.
Court is a risk, albeit a small one: Although the IRS is in control of legal proceedings, they prefer to avoid court wherever possible, primarily due to high trial costs. Before resorting to litigation, more manageable solutions such as an appeals court or settlement negotiation are likely to be explored.
The IRS can make errors: The people managing your taxes are human and, like us all, they can occasionally make mistakes. Don’t hesitate to file a complaint if you suspect an error.
Customer service might be lacking: The IRS isn’t famous for excellent customer service, so brace yourself for potentially less than friendly interactions. In the face of such challenges, it’s necessary to be thorough, proactive, and clear in your communications. Make sure to document each interaction and stay on top of all deadlines.
As the adage goes, “Don’t mess with the IRS.” Dealing with tax debt is a daunting and stressful affair just like any other debt. The key is to stay calm, be methodical, and maintain a clear record of everything.
Ever had an experience dealing with the IRS?
**Disclaimer: The above content is not intended as tax or legal advice. If there are queries specific to your circumstances, please consult with your tax or legal advisor. For more information, refer to the IRS website.**
photo credit: Minwoo
