What NOT To Do When Faced With a Tax Debt
A large tax debt can be frightening. What happens now? How can you climb out of the hole?
Thankfully, a qualified tax attorney in Utah can help you deal with the IRS and put you on a path to financial security. It may seem overwhelming now, so don’t make these common mistakes when faced with tax debt.
Don’t Ignore the Problem
Unfortunately, the problem is not going away. And the IRS certainly won’t forget it. Many people feel paralyzed and unsure of what action to take when they face a huge tax debt. The failure-to-file penalty is 5% of the amount you owe each month. The failure-to-pay penalty is .5 to 1% of what you owe.
Remember that it’s best to file on time, even if you can’t pay right away. But doing nothing will see your bill quickly climb after penalties are included. An experienced tax attorney can give you advice on the best way to promptly deal with the debt. This is not a time for inaction.
Don’t Go it Alone
Unless your debt is minimal, hiring a tax attorney will ensure you have all the facts at your disposal. The US tax code can be confusing. Also, a Utah tax attorney has years of experience helping people in your exact situation, and they can help you understand the process and what will likely occur.
Don’t Expect Forgiveness
The IRS is not known for its generosity. Yes, a select few cases can qualify for reductions, but those typically involve life-altering events such as death, significant healthcare issues, and other catastrophic challenges. If you have a steady income and large assets such as a home in Utah, expect to pay a hefty bill.
However, this is where a tax attorney can make a difference. He or she will assess your situation thoroughly and recommend a course of action based on experience. You won’t be wholly forgiven, but correctly communicating your position to the IRS can significantly help.
Don’t Take Your First Deal
It is sometimes overwhelming to spar with the IRS. What hope does a single citizen have against such a large and powerful branch of the US government? That’s why, when some people are faced with sizable tax debt, they feel there’s no hope of reducing it.
However, a tax attorney is knowledgeable about ways to relieve your debt. Form 656, also known as an Offer in Compromise, is a way to work with the IRS to bring down the total amount owed. A tax attorney can also help you work out an installment plan to tackle the debt piece by piece.
Hiring a tax attorney won’t magically wave away your tax debt, but it is an essential step in negotiating a lower amount with a more realistic payment schedule. In Utah or around the US, tax debt doesn’t have to be a horror story. With qualified help, you can climb out and reestablish your sound finances.