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The old adage says that the only certainty in life is death and taxes, but when you owe the IRS, you may feel anything but certain. And while three out of four filers typically receive a refund, according to the IRS, being among the remaining 25 percent can present some not-so-subtle financial stress.
"Dealing with the IRS can be frustrating and time consuming," said Kenny Crandall of Utah Tax Fighters, which offers professional tax resolution services. "It can take anywhere from a month to a year to solve a case. Many people don't have the time or the know how to correctly deal with the IRS."
But if you owe money to the IRS, you may not be as alone as you think. In fact, there are many resources available to help taxpayers lift the burden of unpaid IRS debt. If you owe the IRS, there are several important ways you can protect yourself.
Understand what the IRS wants
If you've received a letter from the IRS, the first thing you should do is make sure you understand it. Once you understand the issue at hand, you can take the first steps in solving the problem. Many people avoid the IRS at the first sign of trouble and end up with compounding bills, fees and other issues. If you need a professional to help you understand your situation, contact one as soon as possible.
Know your rights
As a U.S. taxpayer, you're not simply at the mercy of the IRS. You have certain rights that protect you from unfair treatment when dealing with the IRS. These are called the Taxpayer Bill of Rights, and include the right to be informed, the right to a fair and just tax system, the right to privacy, the right to challenge the IRS's position and be heard, and, very importantly, the right to retain representation. Become familiar with the entire Taxpayer Bill of Right so that you know if you're being treated unjustly.
Don't bury your head in the sand
If your first reaction to an official IRS notice is pretending it never happened, you're not doing yourself any favors. Ignoring the IRS will never make them go away; in fact, it will make a negative situation even worse. When you ignore the IRS, it will file your taxes for you and start collections on a number that likely isn't even accurate. Once it starts the collections proceedings, you could receive levies, liens, audits and wage garnishments. Real estate liens can even lead to the forced sale of your home to settle the debt.
Get help from a third party
The right to retain representation is imperative if you owe the IRS. That's because IRS issues can be complicated and time consuming. When you retain representation, you essentially hand your case over to a professional who will communicate with the IRS on your behalf. This includes making and taking phone calls, submitting paperwork, writing letters, completing back tax returns and negotiating your case. With a professional handling your case, you'll be able to focus on your life—the one you had before the IRS came knocking.
Start paying what you can
When you retain help from a third party, that tax professional can help you understand when and how much to pay the IRS. Even if you don't think you can afford to pay your debt, a professional may be able to help negotiate your bill and payment terms. The key to using a tax relief professional is that he or she will work to ensure you never pay more than you really owe—which may be a much different number than the IRS reported to you.