Tax law is notoriously complicated. As a result, those who find themselves facing audits and formal tax collection practices by the IRS can quickly feel confused, overwhelmed and concerned about how to escape any long-term implications the situation may have on their financial well-being. These are all legitimate concerns, but you have to address them head-on, otherwise they’ll continue to fester until they get to the point that they consume you. Fortunately, there are several legal options available to you that may help you avoid that sort of situation.
That said, there are several errors that can be made along the way that can put you in an even more challenging position. That’s why in this post we want to look at some mistakes that individuals often make in these situations that tend to lead to poor outcomes. That way you know what you need to avoid in your case and can better figure out what you need to do to successfully navigate the issues you’re facing.
Common pitfalls when dealing with the IRS
Dealing with the IRS and lingering tax debt can be incredibly stressful. But you can’t let the pressure of the situation lead to costly mistakes that further jeopardize your well-being. Therefore, as you navigate the issues before you, be sure to avoid making these errors:
- Ignoring the IRS and your debt: If the IRS determines that you owe back taxes, then you’ll receive notice in the mail. You can’t ignore these notices. If you do, then you could be subjected to interest and fees, and tax and bank levies may be implemented. Your passport application can even be denied if your outstanding tax obligation is significant enough. So, when you receive notice from the IRS, take it seriously and act on it quickly.
- Misunderstanding the options available to you: There are several ways to get a handle on tax debt. You need to appropriately vet each one so that you can select the path that makes the most sense in your circumstances and that provides you with the most protection. If you don’t assess each of your options, then you could wind up in a repayment plan that’s too costly for you to afford, which can force you back to square one where you’re unable to make payments and are subjected to harsh penalties.
- Failing to learn from mistakes: As you deal with the tax issue in front of you, it’s important to identify how the issue arose in the first place so that you can revisit your current finances to address the situation. Otherwise, there’s a good chance that you’ll wind up facing the same tax debt problems in the future.
- Trying to address the issue alone: While you might think that it’s more cost-effective to try to resolve your tax debt on your own, this can be a mistake that proves costlier. This is because, without knowledge of the law and its applicability, it’s easy to make the wrong decision that winds up being more burdensome. So, if you’re facing tax debt, it might be in your best interests to have an ally in your corner.
Don’t let unresolved tax debt get the best of you
Tax debt can feel like a crushing weight resting on your shoulders. But you can ease the pressure and resolve your tax issues with confidence so long as you know how to apply the law to the set of circumstances at hand. That’s why if you’re dealing with tax issues, then now is the time to read up on what you can do to find relief and protect your interests.