Tax debt can happen to anyone. Sometimes you make a mistake when filing. Sometimes you simply can’t afford your tax bill. And sometimes, life just gets in the way. Regardless of how you ended up in tax debt, resolving it should be one of your top priorities. To complete this goal, it is sometimes necessary to engage the services of an expert. You see, tax professionals understand the ins and outs of tax law, and they also have years of experience negotiating with the IRS. In most cases, a tax professional will help you find the best solution possible for your specific situation. However, it can be difficult to know when it is necessary to call in an expert. Let’s take a look at some of the signs that usually mean you need some professional help with your tax debt.
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You Owe More Than You Can Afford to Pay
Most people don’t have massive savings. Their paycheck goes into their account, and then comes right back out to pay for life’s many expenses. In fact, 67% of Americans live paycheck to paycheck. When people in this situation have a significant tax debt, there is usually no way they can pay it off. This is where a professional can really help. They can explain all of the payment options, such as installment agreements or offers in compromise, and help determine which one is best for you. They can then help negotiate with the IRS to get them to accept your preferred payment option.
The IRS Has Started Collection Actions
When tax debt goes unpaid, the IRS has a number of methods they can use to collect what they are owed. This includes bank levies, wage levies, tax liens, asset seizure, and more. When collection actions start, it means that your situation is serious. You need to resolve your tax debt as quickly as possible to avoid having your life turned upside down. Hiring a tax professional will allow you to resolve your debt in a much more timely manner than you would ever be able to do on your own.
You Have Multiple Years of Tax Debt
For most people, taxes are confusing and complicated even under normal circumstances. With multiple years of tax debt, things become so complicated that it is practically impossible for anyone except licensed tax professionals (such as Enrolled Agents, CPAs or Tax Attorneys) to make heads or tails of the situation. This is because different tax years may have different balances, penalties, or collection statuses. A tax professional can help you understand your overall situation and determine the appropriate next steps.
You Haven’t Filed Your Tax Returns
If you have been completely ignoring your taxes, you will have multiple years of unfiled tax returns. This can seriously complicate your situation. Each year’s return will have to be filed to begin resolving your debt. To further complicate the situation, the IRS may have filed a Substitutes for Returns on your behalf. These will lack the proper deductions or credits that can lower your tax liability, meaning that they should be replaced with actual tax returns. This can be a lot of work for your average person, but a tax professional will be able to get it all sorted out in no time at all.
What Can a Tax Relief Professional Really Do?
- Review tax debt and IRS records.
- Help identify missing returns or outstanding liabilities.
- Explain available resolution options.
- Communicate with the IRS on the taxpayer’s behalf when appropriate.
- Help address collection actions.
- Develop a strategy for resolving the tax debt.
As you can see, tax professionals can actually do quite a lot. Also, this list does not include the reality that being in tax debt is a scary and stressful experience. A tax professional can get rid of this fear and stress by handling almost everything on your behalf, which can be priceless.
