Finance Tax Time

Dealing with the IRS when you owe back taxes is a fairly scary thing. The IRS realizes you do not want to talk with its agents and has come up with a solution.

Resolving Your Back Taxes Without Talking to the IRS

Imagine picking up the phone, calling the IRS and telling them you have not paid taxes for a few years. In a poll of the scariest scenes from movies, that has to rank right up there with the stomach scene from Alien and so on. Truth be told, most people will put it off for as long as possible. Many will just stick their head in the sand and hope nothing ever comes of it.

The IRS realizes it has a big, bad reputation. It likes it. If people thought the IRS was friendly, how motivated would they be to actually pay their taxes? Not very! While the IRS likes to maintain this reputation, it does have a backlash impact. Taxpayers that get behind on their tax payments often do not move to resolve things because they fear the IRS ripping them apart if they act. This, of course, means the back taxes don’t get paid until the IRS takes action. It costs the IRS man hours it doesn’t have and puts otherwise law abiding citizens in a worse situation. After years of contemplating this situation, the IRS has come up with a possible answer.

If you owe back taxes to Uncle Sam, it is critical that you take voluntary action to resolve the problem. The IRS takes a much different view towards those who come forward versus those that hide. The IRS even has instituted payment plan programs to help voluntary reporters resolve their issue and get back into the system. The problem with these programs, however, was most taxpayers feared calling the IRS so much that they didn’t take advantage of them.

The IRS has now implemented a new online system for people that owe back taxes. Instead of speaking with an IRS agent, you can now go online and fill out an application for a payment plan to resolve your back taxes. To use the system, you must have filed all relevant tax returns, even if you couldn’t pay the actual tax. If you have not done this, you need to before applying online. Once you have the returns in, you will need to wait for a balance due notice from the IRS. You then go online and apply. You will need the balance due, your social security number, and a pin number that is on the balance due notice.

This new program is a very smart move by the IRS. Imagine resolving your tax problems without every talking to anyone at the agency! To access the program, just go to the IRS site.

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The terror of most Americans is to be hunted by the IRS for overdue taxes. Well, the terror has evolved a bit as the IRS is now using private debt collectors to do much of the work.

IRS and Private Debt Collectors

If you get behind on your taxes, you undoubtedly worry about the IRS hunting you down. Many people develop a false sense of security because nothing much seems to happen at first. There is no denying the IRS is a huge bureaucratic institution. It takes the agency a while to figure out you haven’t paid and get the collection ball rolling. At least, this used to be the case.

Regardless of your political affiliation, there is no denying that all politicians like to spend money. Of course, this means they need money. In 2004, our beloved leaders decided to speed up the collection process on delinquent taxpayers. In passing the American Jobs Act of 2004, the politicians gave the IRS the ability to hire third parties to collect the back taxes. Apparently, “American Jobs Act” referred to keeping debt collectors employed!

As you might imagine, debt collectors used by the IRS failed to follow most of the rules when attempting to collect back taxes from delinquent payers. To be honest, they ran roughshod over nearly every right guaranteed to taxpayers often threatening liens, judgments and even jail terms. Objections started being raised and politicians started getting an earful. Despite passing the law, the politicians immediately blamed the IRS and instructed the agency to take corrective measures.

The IRS has now taken steps too real in the bounty hunting debt collectors. The IRS will still be using the agencies, but will monitor their activity closely. The IRS will also be sending out a detailed notice to delinquent taxpayers on how the process works and what the debt collectors can and cannot do to collect back taxes. Specifically, the notice will let you know that debt collectors cannot take any action against you in regard to issuing tax liens, judgments and so on. All they can really do is keep calling and annoy you till you finally pay.

If debt collectors start calling you about back taxes, do not be intimidated. Wait for the notice from the IRS and then address your problems. If the debt collectors start threatening or intimidating you, contact the taxpayer advocate office immediately. You can find their contact information on the site of the IRS.

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