Death and taxes are the two inevitable events in life, and no one wants to die, but for many, this may be preferable to dealing with the IRS or trying to resolve a tax dispute. That is a sad commentary on this government agency when death is more popular than the IRS. Controversy with the IRS is something to be avoided whenever possible. When the IRS puts a taxpayer in their sights, the results are usually predictable. The agency will start piling up penalties and interest, seize assets and property, freeze bank accounts, and even start criminal prosecution against the taxpayer sometimes. The IRS will use every resource and weapon that they have available, sinking in its teeth like a rabid dog and refusing to let go.
If you find that you are in an intimidating tax dispute situation with the IRS, don’t worry, there is help available with IRS tax lawyers and things that you can do. It is better to avoid such IRS tax problems in the first place. Below, we will examine four of the most common red flags that get the attention of the IRS, and these will increase your odds of being audited by the agency.
Here’s How You Increase Your Chances of Courting IRS Tax Controversy
Avoiding these red flags and common mistakes can keep you away from the watchful eyes of the IRS and prevent you from having your life devastated by a tax dispute.
1) Simple mistakes in math are a good way to cause your tax return to be flagged. When you are adding, subtracting, and multiplying, always double-check the answers to make sure that you avoid simple math mistakes. These small errors could cause you to be audited and start a nightmare scenario. Check your work very carefully, or hire an IRS tax attorney with professional tax preparers, and accountants to prepare your tax return for you.
2) Claiming business deductions that seem excessive. Always claim any legitimate business deductions that you qualify for, but if the numbers seem excessive for the industry that you are in then you can expect the tax return to be flagged by the IRS computer system. If you have excessive business deductions then always keep any documentation just in case your return does get audited. This documentation will be very helpful during any audit or tax dispute. Even if you claim legitimate deductions, if these are considered excessive for the industry that you work in, then you should realize that you will have a higher chance of the return being audited.
3) Failing to report all the income that you have made. This is especially true if the income will be reported to the IRS by someone else. It may seem tempting to conceal certain income, especially if you think that the IRS will not find out. This is a big mistake, though. The IRS has ways of cross-checking and many different methods that can be used to uncover income that is not reported on your tax forms. If you fail to report income that you have earned during the year, then you can expect to be audited, and failing to report income to the IRS can carry a criminal charge as well as financial penalties.
4) Claiming a dependent when this person is also claimed by someone else. Since all the tax returns filed are entered into the IRS computer, the dependent being claimed on two different taxes will raise a red flag and start a tax dispute or audit. Once this happens, then every taxpayer who claimed the dependent will be looked at more closely. If you plan on claiming a dependent that you are entitled to, make sure this dependent will not be claimed by anyone else.
Six Ways The IRS Will Make Your Life Miserable If You Owe Them Money
Few people in America would describe the IRS as a popular agency of the government, in fact, this agency has some of the lowest ratings of any organization. Why is this, though? The IRS has caused many lives to be ruined, and they have devastated households and families across the country.
If a taxpayer owes a tax bill, there are a variety of aggressive collection methods and tactics that the IRS can use in order to collect the amount that this agency claims the taxpayer owes. The IRS has a reputation as the most aggressive collection agency. When the IRS decides to target a taxpayer for a tax dispute, they will use all of their powers and the full force of this government agency in order to meet this goal and make your life miserable in the process.
If you are involved in a tax dispute with the IRS, you will find that the agency may:
1) Send you letters with threats, or make demanding phone calls. This can be nerve-racking for typical taxpayers, and the threatening letters and obnoxious phone calls will not stop until the tax dispute is resolved. This is usually the first step in the IRS collection process, and ignoring these contacts will only escalate matters and cause the IRS to step up the aggression with their collection efforts.
2) Visit you, either at home or at work, to discuss your tax dispute. No one wants an IRS agent to suddenly appear and pay a personal visit to discuss a tax controversy. This agent will explain the tax dispute and the position of the IRS, and they are not usually very friendly or helpful during the process. This discussion often includes threats of severe financial penalties if you do not comply with the IRS demands.
3) If the first two steps do not resolve your tax dispute and force you to pay what the IRS says that you owe, then the agency will start assessing considerable penalties and substantial interest on top of the amount that the IRS claims the taxpayer owes. The longer the situation stays unresolved, the higher these financial penalties will be. In many cases, the interest and penalties can be just as big as the unpaid taxes that the agency claims you owe.
4) Usually, wage garnishment is the next step that the IRS will take in order to collect any unpaid taxes that they believe you owe the government. Unlike most creditors, the IRS does not have to take the taxpayer to court or get permission from a judge before garnishing your paycheck, and they do not care about your financial situation or that your pay is what you need to live on and take care of your family.
5) Another way that the IRS can make your life miserable when you are involved in a tax controversy with this agency is to seize your property. The agency can actually seize property that you legally own, and then sell off this property in order to satisfy any tax debt that you owe. This property can include vehicles, boats, and even your home or business at times. Many Americans are surprised to learn that the IRS has the power to seize personal property because this seems to go against everything that the country stands for, but the reality is that the IRS can and will do this if you do not resolve a tax debt.
6) If all other collection methods fail, the IRS can file criminal charges against a taxpayer, and this can lead to further fines and possibly even jail or prison in some cases.
These collection methods and actions explain the unpopularity of the IRS, the good news is that an experienced IRS tax attorney can help you resolve a tax dispute before things reach these stages. Sometimes it is even possible to settle a tax dispute with the IRS for less than the full amount owed, but only if you address the issue immediately and do not delay or ignore the problem.
Reasons for Optimism
No one volunteers to be part of a tax controversy with the IRS, and no sane person would want to be caught up in this type of situation. There is reason for optimism if you find that the IRS has a tax dispute with you though, and there are options available for taxpayers who are informed and who know their rights. Listed below are three reasons for optimism when dealing with the IRS over a tax dispute. Remember that you must take action, though, this problem will not just disappear or go away without any effort on your part. You should contact a qualified IRS tax lawyer as soon as you realize there is a tax dispute to help you out with the tax problems you are facing.
1) An experienced IRS attorney will help you deal with this agency.
The IRS tax lawyer can face the IRS in your place so that your life is less stressful. As soon as the IRS determines that there is a tax dispute, the harassment and stress start. You will start to receive threatening letters, nasty phone calls, and even visits from IRS agents at your home and place of employment. Who wouldn’t feel intimidated in this situation? For most people, these measures alone may be enough to get payment, just to stop the stress and the constant contact. When you have an experienced IRS tax lawyer on your side, then this legal representative can negotiate with the IRS on your behalf. Your tax attorney can negotiate with the IRS so that the agency stops contacting you, giving you some relief from the stress.
2) If you have a tax dispute with the IRS then a qualified attorney can help make the IRS follow all the rules and regulations
This can make the agency back off and give you some breathing room. A common tactic used by IRS agents is to try and pressure the taxpayer into coughing up what the agency says is owed, even if this means stepping over the line and breaking the rules in the process. With a tax attorney, you can force the IRS to play by the rules and put an end to the pressure. Make the agency stay within its legal authority, and call the IRS on it when the rules and regulations are not followed closely by having an IRS tax debt lawyer who understands the tax code and the laws.
3) In many cases, it is possible to settle a tax debt for less than the full amount that the IRS claims you owe.
There are programs available, but the IRS does not widely publicize these options to taxpayers, so most people do not even realize that paying less than the full amount may be possible. The agency does not advertise these programs because the hope is that bullying and intimidation will get the desired results. When you have the legal advice of an experienced IRS attorney, this is a possibility, though. The IRS makes a settlement difficult, but with help from your tax lawyer you will be able to negotiate this option, and you may be able to reduce your tax debt. They will show you how to avoid future tax problems in the first place.
Facing IRS Controversy: Where To Begin
The most important thing to remember is to face the tax problem and head it off early, rather than ignoring the issue. You may feel overwhelmed but ignoring this situation will not make it go away, the IRS will just keep coming and will not simply disappear. The five places to start taking action if you have a tax dispute with the IRS include:
1. Consult with a tax attorney who has experience dealing with the IRS
As mentioned earlier, it is never a good idea to try to take on this government agency without a good lawyer who understands the tax code. The average American taxpayer does not understand the tax code because this code is so massive and complicated, but the IRS does because the agency is responsible for tax collection. You need someone on your side who understands IRS rules and regulations so that you have a fighting chance and do not get taken advantage of.
2. Organize Your Documents
As soon as you realize that there is a tax dispute with the IRS, gather all relevant records and documents that you have and organize them. When dealing with the Internal Revenue Service, records are critical, and the more information and documentation you have available the better. Get everything together as soon as the IRS informs you that there is a tax dispute so that you are prepared.
3. Always meet any deadline that the IRS gives you.
When you are notified of a tax dispute, the IRS will detail the information that the agency wants and the time frame when this must be provided. If you miss deadlines, this will just compound the problem and inflate any interest and penalties that you will be assessed. Why make things harder on yourself? Pay attention to IRS deadlines and meet them whenever possible, the dispute process will be easier and less painful for you.
4. Only give the IRS the details and information that has been requested
Never provide more than what you were asked for. You may be tempted to send extra documents and information that was not requested, especially if you did nothing wrong, but this error can be a huge mistake. The added information will not typically help your case, but you could be allowing the IRS the opportunity to scrutinize your situation even further. The situation could become worse as a result of your effort to go above and beyond the IRS request.
5. Know what your options are
Before you can decide which option to take, you need to know what your choices are and what options you have to choose from. Is paying the full amount that the IRS claims impossible? Would you be able to make a payment plan and keep to it? Are there any IRS programs that you would qualify for which may help eliminate some of your tax debt? Few IRS agents will explain your options clearly so that you know what you can do in this situation. An IRS attorney or qualified tax lawyer can help explain your various options.
If you have been notified of an IRS tax dispute, taking action is important. This problem will not simply resolve itself, and you need someone on your side! Whether you are facing IRS tax lien problems, are being audited, or experiencing any other tax problems and are looking for IRS tax relief in Dallas and nearby areas, book a no-obligation consultation with the Law Offices of Nick Nemeth. We have a team of the best tax attorneys in Dallas along with qualified and experienced tax preparers. You can contact us here or call (972) 426-2991 for a free consultation.
