Answers to Your Frequently Asked Questions about IRS Tax Debt

FAQ: Frequently Asked Questions about IRS Tax Debt

Q: Can the IRS really levy my bank account?
A: Yes, the IRS can Levy your Bank Account. When Back Taxes are due, the IRS may send you a "Notice of Intent to Levy". Take this notice seriously. If you fail to contact the IRS, all funds may be seized from your bank account to satisfy your debt.

Q: Can my IRS Back Taxes really be settled for "Pennies on the Dollar"?
A: Yes and No. Although a very small amount of taxpayers have settled their Back Taxes for "Pennies on the Dollar", very few taxpayers qualify for a settlement with the IRS. Additionally, those who qualify almost never have their debt settled for "Pennies on the Dollar." In fact, the IRS released a Consumer Alert advising taxpayers to beware of promoters that claim Tax Debts can be settled for "Pennies on the Dollar".

Q: I simply can't pay the IRS. What should I do?
A: There's hope yet. Even if you can't pay on your IRS Back Taxes, there are other options to consider. You may qualify for "Hardship Status," or "Currently Not Collectible". If you are approved for "Currently Not Collectible," the IRS will stop collections efforts for a limited amount of time.

Q: Is there any way to have Penalties removed from my IRS Back Taxes?
A: Yes, Penalties can be removed from your IRS Back Taxes. If you qualify for "Penalty Abatement", the IRS will remove the Penalties accessed on your Tax Debt. In order to qualify, you must have Reasonable Cause for being late on or missing your Tax payments. Reasonable Cause is any situation that was beyond your control. For example, you could qualify for Penalty Abatement if you were in the hospital when your tax bill was due and could not make the payment.

Q: Is it true that the IRS "can't do anything" if I don't pay on my tax debt?
A: This could not be further from the truth. Any taxpayers that thought they could simply ignore the IRS without any repercussions were swiftly corrected. The IRS has the power to Levy your Bank Account, Garnish your Wages, or even seize your assets to satisfy your Tax Debt.

Q: What is an "Offer in Compromise"?
A: An "Offer in Compromise" is an IRS Tax Debt settlement. The IRS has strict guidelines that must be followed if you want your Tax Debt Settlement to be approved. You must have Reasonable Cause for needing to settle your Tax Debt. Additionally, the IRS will take all of your assets and income into consideration.

Q: Should I file an "Offer in Compromise" to avoid collections actions?
A: If you don't qualify for an "Offer in Compromise," don't submit an offer. The IRS will simply resume collections activities once they realize you do not qualify for an Offer.

Q: Can I pay the IRS in monthly payments?
A: Yes, you can pay the IRS in monthly payments. This is called an "Installment Agreement". Basically, you are entering a binding contract with the IRS. You are agreeing to pay the IRS every month until your Tax Debt is paid in full.

Q: Can the IRS put me in jail for not filing my tax returns?
A: Failing to file your Tax Returns is a felony and is subject to criminal and civil penalties. You can receive up to three years in prison and/or a $25,000 fine. Additionally, you can receive the same punishments for reporting false information on your Tax Returns. It's best to play it safe when it comes to the IRS. Make sure to file your taxes truthfully and on time.

Q: I can't handle the IRS on my own. Who can negotiate with the IRS on my behalf?
A: Many taxpayers feel overwhelmed when it comes to handling IRS Tax Debt issues. There are many legitimate Tax Resolution Companies that will work with the IRS on your behalf. If you decide to work with a Tax Resolution Company, make sure you choose one with a good track record for getting the best results possible.

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