How to Talk to the IRS About Back Taxes Owed
The Internal Revenue Service (IRS) is often reputed to be a scary entity; therefore, many hesitate to communicate with the agency regarding back taxes. However, ignoring back taxes won't make the IRS go away; in fact, penalties and interest keep accruing with each passing year. Talking to the IRS openly and honestly can help you reach an agreement to get those taxes paid with a plan that will not cause undue financial hardship.
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Instructions
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File all tax returns for years you may have missed to get a total of what you owe in back taxes. If you have filed all years, gather any paperwork received from the IRS that provides a total for all back taxes owed. If there is not one total, add all the debts together to get one.
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Call the IRS and report that you want to make a payment arrangement or an offer in compromise. Request the proper paperwork to file for those options.
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Complete the paperwork for the option you have chosen. Decide whether the standard allowed deduction or your actual costs are better to take when listing your debts and monthly expenses against your income. The forms will direct you to each state's deduction allowances for rent, vehicle expenses and utilities.
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Respond to all IRS correspondence within the allotted time frame noted on the documents.
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Make all agreed-upon payments in a timely manner. If you encounter a hardship or unexpected problem, call the IRS immediately to explain the situation and request an extension.
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Tips & Warnings
File all future tax returns and payments on time. The IRS can void any agreement if you fail to do this.
Keep notes or recordings of all phone calls with IRS representatives. Note each representative's name and ID number.
Maintain a file system for all correspondence.
Keep copies of everything you send to the IRS.
Do not avoid the issue of back taxes. The IRS can garnish your check, take your property and in rare cases prosecute you criminally.
