How to act when the IRS says you owe money.

When you get a letter saying you owe money to the IRS do not panic. Stay calm and follow these steps. Remember the IRS is not always right, but at they same time they are not out to get you. Follow these steps, if you are having problems understanding what is going on it is always best to contact a Accountant or a Tax Attorney.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Tax claim from the IRS.
• Determination to see it through.

1. Open the letter! You may be surprised how often letters to the IRS does not get open in time due to people being stressed out about owing the IRS. The worst thing you can possibly do is ignore the letter. Look over the letter to see if you agree with it.
2. If you get a bill from the IRS that you do not understand or do not agree with take it to your accountant. If you did your taxes your self, you may consider getting one now to look over your situation. If you do agree you owe the taxes skip to step 5.
3. If the bill is incorrect and you can show the error to the IRS, write a letter stating clearly why they should remove the tax along with penalties and interest stated in their letter. Make sure you save the copy of the letter and note when it was postmarked.
4. Be patient if they are still inquiring about the past due taxes and you do not believe you owe it, keep tying to explain it to them. You may also want to listen very closely to them, this may clear up any miss communication. Remember they are not out there to get you. If you are still having trouble and do not intend to pay the back taxes you will need to get professional help at this point. Start with a good accountant and then a tax attorney if necessary.
5. If you owe a large amount of taxes to the IRS, request the penalties and interest of the penalties be reduced or removed before you pay. The IRS will often reduce these fees if the individual will pay at that time where they can close the case. This saves them time and money.
6. If you owe a sum of money and cannot pay it you must file form 9465, a installment agreement request.
7. If your claim from the IRS is in collections, you may file an appeal to stop the collection process.
8. If the amount you owe to the IRS is more then you net worth you and you tax professional may consider sending the IRS and Offer in Compromise a OIC. This is a last resort way to negotiate your debt balance with the IRS. This may allow you to owe a fraction of the claim.