It is Always Better to Avoid a Tax Debt
Owing tax money on the IRS is referred as tax debt. In most cases, a failure in paying your taxes on time either fully or partially is the main reason witnessed behind such a debt. Here it is important to understand that everyone earning a certain amount of money on yearly basis becomes a subject to the taxation automatically. Two major classifications exist. One out of them is the federal tax that is collected on behalf of the central government by the IRS, the second one is state tax, and its collection is the right of every state.
Common Reasons for a Tax Debt
We know the biggest reason of owing tax money is its nonpayment but there are some other possibilities as well. In the following points you can learn about a few possible causes and there might be one out of them that has pushed you in the list of defaulters,
You might have made a payment but well after the deadline or announced due date
The IRS may have not received your payment due to a broken link in between, thus you should double check all the details before making tax related transactions
The relevant authority has reviewed your overall tax liability on basis of a previous balance or the details which you have mentioned while filing your returns
There might be something missing in the details necessary for successful processing thus always remember to add all the required information like, your full name, social security number and the fiscal year for which you are making the payment
Maybe your recordkeeping is not up to the mark
.
Understand the Dangers of Tax Debt
Everyone already knows that maintaining, overdue accumulation of tax debt is a dangerous thing, and every effort should be made to avoid it. The IRS is an independent entity and it has all the legal and administrative powers to deal with the defaulters in a strict manner. There are several ways in which a growing debt can create troubles in your life, let us a discuss a few of them,
One of the most commonly applied and in fact, worse method in perspective of taxpayers is wage garnishment. The IRS have powers and authority to cut your pay checks up to 80% for recovering the money that you owe to them
Another method, frequently used by the IRS is a direct charge on your bank accounts. Thus, you may lose the money that you have saved for trouble some times.
Another harsh action that we see occasionally is the placement of lien at the home you own. In such a case the taxpayer becomes unable to borrow money, to acquire anything on credit and even to sell his or her home
Last, but the most dreadful power that IRS has been an initiation of a legal proceeding against you. The tax law applicable today is quite clear in this regard and a defaulter may find himself in the jail just because of his failure in paying taxes.
How to Mitigate with Tax Debt
Foremost important thing in this regard is hiring of a qualified tax debt. You will feel a power and a confidence while appearing before the IRS through your lawyer. In fact, a legal professional comes with all the relevant knowledge and knows well about the loopholes of system that he can utilize for betterment of his clients. Thus, moving under cover of such an expert is the best thing to do while negotiating with the IRS. There are several options available for settling your long held debts and out of which these two are quite common,
Tax Payment Plan
Offer in Compromise
We believe, you should not wait to receive a threatening kind of notice. A few minutes long discussion with the representative of a quality firm like, Chicago Tax Lawyer Firm can bring peace and wonderful solutions for you.
