The IRS has wide reaching powers to collect on delinquent tax debt, which includes levies, wage garnishments and liens. But if you’re drowning in tax debt , there are a few things you can do to resolve your tax debt issues.
Things you should do immediately to handle your tax issues:
- Contact the IRS immediately. Or, if you owe state taxes, contact your state taxing authority. Communication in key when you owe back taxes. Failure to communicate with taxing authorities will only exacerbate your situation. You can call or even write the IRS or state taxing authority detailing your financial situation.
- Understand your rights. In the case of the IRS you have a right to challenge the validity of a tax assessment made against you. You also have a right to request a payment arrangement or even request a settlement. However, the IRS has the right to deny your request; but only if they provide a valid reason. Also, the IRS and state taxing authorities are prohibited from treating tax debtors in a demeaning or disrespectful way. For example, the IRS agents or state taxing authorities are prohibited from making threats against your person or using profanity when speaking with you.
- When asking for a payment arrangement, be prepared to provide financial data that proves that you cannot pay your taxes immediately. The IRS and state taxing authorities will generally request that you provide bank statements, paystubs and a monthly budget that details your income and expenses. Generally speaking if your payment arrangement only spans a year, you will not be denied a payment arrangement.
- If you are facing a tax levy or wage garnishment, filing bankruptcy will stop the collections actions of the IRS and if your taxes meet certain criteria, you may be able to discharge then in bankruptcy.