You don’t need to be drowning in letters from the IRS.  

Receiving a notice from the IRS can be intimidating. However, with millions of mailed letters to taxpayers each year you are definitely not alone in this situation.

Although there are a variety of reasons to explain why you received a notice regarding your tax returns there are a few steps you should take next. From responding in a timely manner to filing copies of documents, considering payment plans, requesting delays and using the right payment method; solving your tax return issues can be easier than you thought.

Respond Timely

One of the most vital steps to keep in mind when dealing with the IRS is to respond in a timely manner. Simply responding to the notices that they are sending you often helps to take care of the issue while avoiding the added panic and stress that ignoring it causes.

Most IRS notices include instructions about what to do and how to act next. For this reason, it’s important that you read the notices you are receiving carefully to know how you are required to act. Plus, most of these letters include specific dates that you will need to act by which is why it’s vital to act quickly when notified.

Organize and Make Copies

It is also important that you carefully collect, file, copy and document every notice that the IRS sends you. This is important for you to be able to take the documents to a professional (such as a lawyer or financial advisor) to overlook. Without these documents, you may struggle to request copies of the original from the IRS which can result in added delays and disputes.

Consider Payment Plans

If you are struggling to pay, it is recommended to consider a payment plan. Payment plans are specific to each individual’s tax situation which is why it’s best to speak with a professional for some advice and help on your situation.

Oftentimes, the plans include short-term (120 days or less) or long-term (more than 120 days) agreements. It is important to keep in mind that although these plans offer a flexible option of payment it can come with an added cost.

Short-term payment plans have no set-up fee but accrue penalties and interest until the balance is paid in full. Long-term payment plans have an initial set-up fee as well as added interest and penalties until the remaining balance is paid.

Depending on your situation, set-up fees may be waived for taxpayers in low-income situations or those that are living below the federal poverty level.

Regardless of your personal situation, it is advised to speak with a professional financial advisor before offering a payment plan to consolidate your debt or it may just contribute more to it.

Request a Delay

Another option to consider when you owe money to the IRS is to request a delay in payment. This is only an option when the IRS believes that the individual cannot pay any of their tax debt at the moment.

If you fall into this category you will need to complete a Collection Information Statement form and provide proof of financial status, including information about assets and monthly income/expenses. Keep in mind that even if your debt collection is delayed, the IRS will still enforce a penalty and interest until the full amount is paid off.

Avoid Paying with Credit

A final note to remember when dealing with notices from the IRS about your tax return is to avoid paying with credit. Although paying with credit can seem like a short-term solution it can cause long-term financial issues for you.

Paying with credit often leads to added interest rates, higher penalties and lowered credit scores in the future. Before paying off your debts with credit its best to speak with a professional about other options to avoid causing more financial stress.

Ultimately, receiving a notice from the IRS can be stressful. However, with the right preparation and information, your debts can be resolved. If you would like more information on the topic or get some personalized advice about your situation get in touch with a member of our team today.

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