In an article I wrote a few weeks ago, we discussed why 2020 might be a good time to settle your tax debt. In that article, we discussed how the IRS had a reduction of resources over the past 10 years and how the tide had started to turn. The IRS was now seeing some increase allotted by Congress and had several initiatives to crack down on taxpayers with debt. As part of this crack down, the IRS intended to address the estimated 7 million non-filers that they’ve identified.
In the News
It’s been in the news that the IRS has begun contacting taxpayers. For now, they’re focused on higher income taxpayers, those with income exceeding $100,000 in a given year. The IRS has estimated that they will make 800 visits in the first two months of this new outreach, and they are planning to visit thousands more during the year. In addition, they plan to contact taxpayers through other means to get the attention of non-filers.
What Does This Mean To You?
You may want to get a heads up on getting your returns filed and effectively dealing with your tax debt. In addition to the potential embarrassment of getting an IRS visit, you have much more flexibility in dealing with any tax debt if you are acting proactively. You have more time to file the return maximizing any deductions and finding the best solution to any tax debt. Remember that when taxpayers do not voluntarily file their returns, the IRS is authorized to file a Substitute for Return (SFR) to assess the tax and enter them into the collection queue. However, SFRs are filed using the wort filing status available to the taxpayer with minimal deductions and it typically to the benefit of a taxpayer to file their return voluntarily.
What If You Owe Past Due Tax?
By addressing the issue proactively, a Taxpayer has an opportunity to plan the best option available to address their tax debt. These options include:
- Filing an Offer-In-Compromise for less than the full amount owed,
- Entering into a Payment Plan that best benefits them,
- Being classified as Currently Uncollectible,
- Getting Penalties Abated (Removed), and
- Bankruptcy if the debt qualifies.
To enter into collection alternatives, you must be tax compliant and get your returns filed.
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