Thu. Apr 18th, 2024

It’s understandably intimidating to deal with the IRS, given the huge role it plays in the federal government. There is a common misconception that any mistake in tax filing will result in immediate penalties. Contrary to this belief, the IRS often allows for corrections before imposing penalties, especially for unintentional errors.

For those who are behind on their taxes and owe money to the IRS, they may face consequences like wage garnishment, asset seizure, or property liens (collection methods used by the IRS). Although some aspects of the IRS’s operations are publicly known, the specific tactics and internal workings are typically not disclosed. This intentional lack of transparency serves a lot of purposes, like security, maintaining the effectiveness of IRS operations, and confidentiality.

If you fail to properly pay your taxes, your property, your income, and your assets are all on the line. Jacksonville IRS tactics attorney advises that by working with an attorney, you can make sure that your taxes are done correctly and submitted on time. Helping you determine how to pay and if a payment plan might be right for you.

In this article, we’ll go over the common IRS tactics you should know about, from audit triggers to collection methods. Being aware of these strategies will make a huge difference in how you handle tax-related matters.

Audit Triggers

Accuracy and transparency can help you avoid unwanted attention from the IRS, but there are some red flags in your tax return that can catch the attention of the Internal Revenue Service. Here’s a list of audit triggers:

  • Big errors or inconsistencies in your reported income. Make sure all your income sources are accurately reported to avoid raising suspicion.
  • Large charitable deductions relative to your income can also raise eyebrows. While it’s great to be generous, excessive deductions compared to your earnings may lead the IRS to take a closer look at your return.
  • Failing to report all of your income. Any discrepancies between what you report and what’s on file with the IRS can spark an audit, like income from freelance work, rental properties, or any other sources not included in your initial filing. Be meticulous in reporting all sources of income to prevent triggering an audit. 

Information Requests

After triggering an audit due to errors or omissions in your tax return, the IRS may request additional information from you to clarify discrepancies. These information requests are steps included in the audit process.

The IRS typically sends a letter outlining the specific documents or details they need to review. It’s essential to respond promptly and provide all requested information accurately. Failure to comply with these requests can lead to further scrutiny and potential penalties.

When gathering the necessary documents, make sure to organize them neatly and double-check for any errors. Keep copies of everything you submit to the IRS for your records. If you encounter challenges in providing the requested information, consider seeking assistance from a tax professional to ensure compliance.

Penalties and Interest

When you owe taxes to the IRS, they may impose penalties and interest on the amount due. Penalties are charges added to your tax bill for various reasons, such as late filing, late payment, or underpayment of taxes. These penalties can quickly accumulate, making your tax debt grow substantially. The IRS also charges interest on any unpaid taxes, which accrues daily until the full amount is paid. Addressing these penalties and interest as soon as possible can help you avoid further financial strain.

Ignoring penalties and interest from the IRS will only worsen your situation. The IRS has the authority to take legal action to collect the taxes owed, which can include wage garnishment, seizing assets, or placing a lien on your property. Take proactive steps to address these penalties and interest by setting up a payment plan or negotiating with the IRS, so you can mitigate the financial impact and work towards resolving your tax debt efficiently.

Collection Methods

When you owe taxes and fail to pay, the IRS may initiate various collection methods to recover the amount owed. Staying informed about IRS collection methods and seeking professional assistance when needed is key to resolving tax debts effectively. Here’s a list of examples that the IRS uses:

  • The Issuance of a Notice of Federal Tax Lien: This serves as a legal claim to your property as security for the tax debt. This can impact your credit score and make it challenging to sell or refinance assets.
  • The IRS’ Issuance of a Levy: A levy is where they seize your assets, such as wages, bank accounts, or retirement income, to satisfy the outstanding tax debt. Act promptly if you receive a notice of intent to levy to look at options like installment agreements or an offer in compromise. 
  • Wage Garnishment or Wage Levy: In these scenarios, the IRS takes all or part of your paycheck to pay back the outstanding tax debt. This way, the money goes straight from your employer to the IRS, yet it only occurs if you ignore the IRS’s attempts to contact you.

Ignoring these collection methods can lead to serious consequences, including additional penalties and legal action. 

Appeals Process

If you believe the IRS has made an error in assessing your taxes or you have a valid reason for not being able to pay, you have the right to appeal their decision.

The appeals process is a formal way to resolve disputes, and it’s necessary for you to follow the specific procedures outlined by the IRS. To initiate an appeal, you typically need to submit a written request within a specified timeframe after receiving the IRS notice. Once your appeal is filed, an appeals officer, who’s impartial and independent, will review your case.

During the appeals process, you can present your arguments, provide supporting documentation, and work towards a resolution. Being prepared with a strong case and knowing the appeals process can increase your chances of reaching a favorable outcome and resolving your tax debt issue effectively.

Conclusion

There are common tactics that the IRS uses, and you can better prepare yourself for any potential audits or inquiries by being aware of them. Remember to keep detailed records, respond promptly to any requests, and seek professional help if needed. As you stay informed and proactive, you’re allowing yourself to handle the IRS processes with confidence and minimize any negative outcomes. Stay vigilant and stay informed to protect yourself from any unexpected surprises. 

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