Tax Problems

Every year, millions of taxpayers face challenges with the IRS. Whether it's unpaid taxes, unfiled returns, an unexpected audit, wage garnishments, or a flood of IRS notices, tax problems can be stressful. The good news? There are solutions. The IRS offers various relief programs, and licensed tax professionals can help you navigate your options and negotiate favorable outcomes. Here’s a breakdown of the most common issues and how to address them.

Unpaid Taxes

If you owe back taxes, the ideal solution is to pay in full. But if that's not possible, you may qualify for:

Installment Agreement: Pay over time based on your budget.

Offer in Compromise: Settle for less if you qualify.

Currently Not Collectible Status: Delay collection if you can't pay now.

Tax Liens

A federal tax lien is a legal claim the IRS makes against your assets when taxes go unpaid. While it doesn't mean immediate asset seizure, it does alert creditors and becomes part of public record. Though tax liens no longer appear on credit reports, they can still impact financing. To avoid or remove a lien, contact the IRS to make payment arrangements.

Tax Levies

A tax levy allows the IRS to seize your property to satisfy a tax debt. This may include funds from bank accounts, vehicles, real estate, and other assets. The IRS typically sends a Final Notice and gives 30 days to respond. Taking action quickly can help stop or reverse the levy.

Wage Garnishments

When the IRS garnishes wages, a portion of each paycheck goes toward your tax debt. Unlike other creditors, the IRS can take a larger share. If you’re self-employed, they may contact clients to redirect payments. It’s best to seek professional help before garnishment begins, but it’s also possible to lift an existing one with proper representation.

Bank Levies

The IRS can freeze and seize funds directly from your bank account. Once your bank receives the notice, it must hold your funds for 21 days before releasing them to the IRS. This gives you a small window to respond and negotiate. Future levies can also be issued.

Unfiled Tax Returns

Failing to file tax returns often leads to harsher penalties than failing to pay. Even if you can’t pay, always file on time. The IRS won’t start the clock on collection or audits until a return is filed. Voluntarily coming forward typically results in more lenient treatment. If you're missing documents or overwhelmed, a tax professional can help you catch up.

IRS Offsets

When you owe taxes, the IRS can seize your federal tax refunds or other government payments through the Treasury Offset Program. Notices typically arrive before the offset occurs. Understanding your rights and liabilities can help you respond appropriately.

Missing, Lost, or Stolen Refunds

If your refund is delayed, lost, or stolen, the IRS offers tools to help. Use the "Where’s My Refund?" portal, or call the IRS. You can also report identity theft or refund fraud to initiate an investigation.

Tax Penalties

Late-filing and late-payment penalties can add up quickly. Fortunately, penalty abatement may be available, especially if this is your first offense or you have a reasonable cause. Setting up a payment plan can also reduce the impact of some penalties.

IRS Notices and Letters

The IRS sends various notices for different reasons—tax due, audit notifications, collection warnings, or requests for information. Always read IRS letters carefully and respond by the stated deadline. When in doubt, contact a licensed tax professional for help.

Tax Audits

Audits can be triggered by many factors, including high income, unusual deductions, or random selection. If you're facing an audit, a tax pro can help gather records, respond to requests, and represent you before the IRS. Most audits take three to six months.

FBAR (Foreign Bank Account Reporting)

If you have foreign bank accounts exceeding $10,000 in aggregate, you must report them to the IRS. Failure to file can result in steep penalties. A tax specialist can help you understand filing requirements and resolve delinquent FBARs.

FIRPTA (Foreign Investment in Real Property Tax Act)

If you buy U.S. real estate from a non-resident alien, you're responsible for withholding a portion of the sales price for taxes. Failing to do so may make you liable for the seller’s tax bill. Learn about the rules and exceptions to avoid surprises.

Cryptocurrency Taxes

Selling, exchanging, or even holding crypto can have tax consequences. If you haven’t reported cryptocurrency transactions properly, you could face audits and penalties. The IRS offers voluntary disclosure programs that can help mitigate consequences.

Mistakes on Tax Returns

Made an error on your tax return? Don’t panic. You can file an amended return or, in some cases, a superseding return. If the IRS made the mistake, you can dispute it. Timely correction prevents additional penalties or interest.

Need Help With Tax Problems?

Facing the IRS doesn’t have to be overwhelming. Whether it’s a letter in the mail or a full-blown levy, there are programs and professionals available to help you. Explore free and paid options, and get guidance tailored to your unique situation.

Always consult a licensed tax professional to explore the best resolution path for your circumstances.