Before the pandemic, almost half of Americans (48%) viewed the IRS negatively. Once the pandemic hit, though, most Americans were provided with financial relief and the IRS helped them get it, so perceptions about the IRS improved sharply. As a result, a letter from the IRS was no longer seen as something to fear—it might be an indication that a check was on the way!

Not all IRS letters to taxpayers are positive, though. Some could indicate that you owe a hefty sum of money to the IRS, and some could even mean that you’re about to suffer penalties or consequences for avoiding your returns or tax debt. 

The first step in preventing a bad situation from unfolding is to understand your letter from the IRS. You can learn everything you need to know about the different types of IRS letters and how to deal with them right here.

Identifying a Letter from the IRS

If you regularly receive mail, phone calls, or emails, then you already know how prevalent scams are. In fact, there’s a huge chance that you’ve been already targeted at one point or another. 

Fraudsters are always looking for new ways to trick people into handing over their hard-earned cash, and one of the most common types of scams involves tricking Americans into thinking they owe a tax debt to the IRS. For that reason, it makes sense to be suspicious if you receive a letter from the IRS in the mail.

The first thing you should do if you get a letter that appears to be from the IRS is to verify its legitimacy. This can be difficult to do because a fake IRS letter will likely look and appear real. Here are some tell-tale signs that could indicate the letter isn’t legitimate:

• There are misspelled words or clear grammatical issues.
• The letter asks you to provide bank account details to the IRS.
• The letter demands one form of payment.
• The letter is asking for payment in the form of gift cards or something else that doesn’t add up.
• The letter is threatening you and saying you need to act immediately.
• The letter contains contact information that’s different from the official IRS contact information.
• The letter contains mistakes like an incorrect last name.
• The letter doesn’t give you clear instructions on how to proceed.
• The letter claims that you’ve won gift money or some type of contest.

Real IRS letters will always have a notice number or a letter-number on the top or bottom right-hand corner. If there is not a number on one of those areas, then the letter is likely a fake. 

If you’re unsure whether a letter is legitimate or not, then it’s advised that you immediately reach out to the IRS at 800-829-1040. If you don’t feel comfortable doing that, then you could also bring the letter to tax attorneys who can help you determine if it’s real.

Different Types of IRS Letters and How to Deal With Them

Once you’ve accepted that the IRS mail is legitimate, you need to identify what type of letter it is and determine how to proceed. Remember, a real IRS letter will always include clear, actionable steps that you need to take. If a response isn’t required, then the letter should clearly state that no reply or action is needed. 

Below, we’ll go over the different types of IRS letters and how to deal with them.

CP521: You Have an Installment Payment Due

One of the most common IRS letters you might receive is a CP521 letter. This letter indicates that you have an installment payment due. Think of this letter as a gentle reminder to send in your monthly payment by the due date.

In response to this letter, you should pay the amount due by the date indicated on the letter. You can mail in your payment with the provided envelope. If you don’t pay, then you could end up defaulting on your agreement.

CP180 or CP181: Your Return Can’t Be Processed; Missing a Form

Another common reason the IRS may send you a letter is because there was an issue with your most recent tax return. A CP180 or CP181 letter means you’re missing either a schedule or form.

In response to this letter, be sure to read and understand what form or schedule you need to provide to the IRS. Then, download the required form and fill it out. If you have further questions or concerns about the issue, then consider reaching out to either an attorney or the IRS directly.

CP504: You Owe a Debt to the IRS; Final Notice

One of the most common tax problems is getting a tax bill that you can’t pay. If you owe a debt to the IRS, you’d better believe that they’ll remind you to make a payment. The first notice will come in the form of letter CP501. The second request is CP503. If you still haven’t paid in full, then the IRS will send out a CP504 letter.

This is a final notice to settle your tax debt. If you don’t act, then the IRS will move on to more serious consequences, including levying your assets. If you receive this notice, then you need to reach out to either a tax attorney or the IRS as soon as possible, as inaction could result in significant consequences.

CP44: Notification of Delay

Tax FAQ pages are filled with people wondering where their tax refund is. Is this you? If the IRS is experiencing delays when processing your returns, then they’ll send you a CP44 letter. This letter means the IRS is still in the process of determining your tax status. You’ll need to wait for more correspondence letters to determine what to do next.

Economic Impact Payment Notices

Recently, the IRS has taken control over distributing stimulus checks to millions of Americans. After you received your funds, you should have received an IRS letter detailing how much you received. This letter does not require further action, but it’s recommended that you save it. When you go to file taxes, you’ll need to verify how much you received. You can reference this letter to ensure you fill out those questions accurately.

If you did not receive the stimulus funds that the letter indicates you did, then you need to reach out to the IRS about the problem. Not only do you need to clear up the misinformation, but you could end up receiving your rightful stimulus money, too!

CP523: Intent to Terminate Your Installment Agreement and Seize Assets

A CP523 letter is a serious ordeal. This letter means that you’ve failed to keep up with your installment agreement with the IRS. It also means that the IRS is preparing to take drastic action to collect from you. Without any response from you, the IRS will move forward with plans to seize your assets.

After receiving this, it’s crucial to take action. Make a payment on your account if it’s possible. You should also reach out to an attorney ASAP, even if you are able to make a payment. Depending on your situation, you may be able to stop collection efforts. You might also be eligible to file an appeal. Even better, you might still be in a good enough standing to negotiate a new installment agreement or reinstate your old one.

How To Report a Fake IRS Letter

So, what should you do if you got an “IRS” letter in the mail only to find out that it was a scam? First, do not attempt to communicate with the scammer or give them any further details about your address, name, or accounts. Next, consider reporting the scam to the Treasury Inspector General for Tax Administration. You can contact the IRS directly at phishing@irs.gov.

You Don’t Have to Face a Letter from the IRS Alone

Have you recently received a letter from the IRS? If so, don’t panic! Follow this guide to ensure that you remain compliant with the law:

• Identify the letter and verify its legitimacy.
• Determine what type of letter it is and whether action is required on your part.
• Learn what to do to ensure you remain compliant and in good standing with the IRS.

These steps seem easy on paper, but IRS mail can be difficult to cope with. Getting correspondence from the government can feel intimidating, confusing, and ambiguous. The good news is that you don’t have to face the situation on your own!

Here at Tax Group Center, our tax consultants, tax attorneys, CPAs, and enrolled agents can all help you deal with the IRS. Whether you owe the IRS a significant chunk of money or you just don’t understand a letter they’ve sent to you, we can help. Contact us today with any of your tax questions, concerns, or needs. We’re happy to help, and we look forward to hearing from you!

Recently, worldwide headlines reported on the arrest of John McAfee, an American tech expert, who was hiding out in Spain after committing severe tax evasion in the U.S. According to the Department of Justice, McAfee could’ve faced a maximum of five years in prison if found guilty of tax evasion.

But wait, can you go to jail for not filing taxes? Is the U.S. government really willing to extradite citizens who didn’t pay their taxes on time? In a nutshell, the bad news is that you can get arrested if you don’t pay your taxes. The good news is that it’s unlikely to happen to you unless you are intentionally evading the IRS and you owe a lot of money.

Do you need more information about what happens when you don’t pay taxes? Don’t panic! Learn everything you need to know about tax crimes and tax fraud below.

What Happens When You Don’t Pay Taxes?

So, what happens when you don’t pay taxes, and can you go to jail for not filing taxes? The first step in not paying your taxes usually involves not filing your taxes. What you need to know is just because you don’t file your federal taxes or state taxes doesn’t mean that the IRS doesn’t know what you owe. On the contrary—they know exactly how much income you earned and how much you really owe.

If you don’t file, the IRS may not take action right away, but in time, you’ll get a bill in the mail from the IRS that outlines how much you owe. Keep in mind that you’ll likely get hit with a penalty, too. Depending on how much you owe, you could have accumulated a massive penalty in the form of fees and interest.

Aside from this financial penalty, the IRS won’t immediately attempt to file charges against you. If you don’t take action after the IRS notification, though, that may change.

Tax-Related Crimes: Civil Cases or Criminal?

At this point, the IRS knows you didn’t pay your taxes. They also know that you know about your situation because they informed you via letter. They may start to believe that you are both knowingly and purposely refusing to file and pay your taxes.

You can face criminal charges for this type of tax crime. Willful and intentional tax avoidance is called tax fraud.

If you make a mistake but didn’t do it on purpose, then the IRS expects you to act. They expect you to contact them and work on resolving the issue. In these situations, the IRS won’t charge you with a crime, but they may still hit you with civil penalties in the form of monetary penalties: 

• Negligent reporting could cost you up to 20% of the taxes you underestimated. 
• If you failed to file your taxes in a timely manner, then you could owe up to 5% for each month you didn’t file. 
• In total, you could end up paying up to 25% of the overall amount you owe. 
• Failure to report specific information could cost up to $520 per return.

These civil penalties may not seem like much, but they add up quickly. If you already know you can’t pay your tax bill, then ignoring it will only make matters worse. 

Tax Fraud and Jail Time

A deliberate attempt to avoid paying your taxes by lying or falsifying information is considered a crime. You could be considered guilty of tax fraud if you lied on your tax form intentionally, falsified records, or misrepresented certain expenses. Income tax fraud is serious. If you’re found guilty, then you could be subject to three to five years of jail time. 

But jail time isn’t the only thing you’ll have to contend with if you’re found guilty of tax fraud. You might also get hit with serious financial fines on top of the extra fines and penalties you’re already facing from the IRS.

Illegal Tax Shelters

Using an illegal tax shelter is evidence that you’re willfully and intentionally avoiding paying your taxes. A tax shelter is a type of investment that the taxpayer uses to reduce their overall income tax liability without actually changing the overall value of the taxpayer’s income or assets. Some tax shelters are legal, but many of them are nefarious. Putting money into an overseas bank account, for instance, doesn’t serve any legitimate purpose. Putting money into an employer-sponsored 401(k) program, on the other hand, would be considered a legal tax shelter.

Abusive and illegal tax shelters are investment strategies that reduce taxes unfairly. Sometimes large investors use specific counties, states, or regions that have a lower corporate or personal income tax rate. This is called a “tax haven.”

The IRS sees illegal tax shelters as abusive and fraudulent behavior. You could face a penalty that’s up to 75% of the taxes you underpaid if you’re found using an illegal tax shelter to reduce your tax liability.

How to Avoid Tax Consequences

The above scenarios are all pretty frightening, especially if you don’t earn a huge amount of money to begin with. If you’re currently facing a large tax bill, remember this: It’s not a crime if you can’t pay your taxes on time. So long as you are not willfully or intentionally lying or avoiding your taxes, the IRS can’t file a criminal case against you.

Rather than avoiding the situation, you should respond to the IRS and consider the tax relief solutions available to you. Obviously, the best solution is to pay your tax bill in full, but that’s not always possible. If you can’t pay your debt right away, then you can likely enter into an agreement with the IRS.

Installment agreements allow you to pay off your tax bill over time, and other options like penalty abatement can help you reduce any fees you’re facing due to late payment. If you’ve been struggling to pay off your back taxes for a while or you owe a very high amount, then you should research whether the IRS Fresh Start Program can help.

If you enter into any of these agreements, then the IRS is unlikely to continue attempting to collect from you. Instead, they’ll wait for you to adhere to your side of the agreement and start making payments. If you default on your payment plan, however, the IRS may re-initiate those tax consequences.

So, Can You Go To Jail for Not Filing Taxes?

So, can you go to jail for not filing taxes in the U.S.? To make the answer as simple as possible, you can get arrested for not filing your taxes. Your actions must be willful and intentional, though, which means you won’t simply get arrested off the street. You’ll have ample opportunity to settle your debt or at least get into contact with the IRS to prevent an arrest.

In most cases, you can reconcile your tax debt and avoid the consequences of tax crimes. There are legitimate tax planning and tax avoidance measures, but flat-out refusal to pay what you owe is considered a criminal act.

Leave your tax worries behind with expert guidance from a team that has 30 years of experience working with the IRS. Contact us today!

In the wake of the coronavirus pandemic, about 11.23 million Americans failed to pay their taxes on time. Collectively, that means a whopping $125 billion didn’t get paid to the federal government and therefore can’t be used to fund important programs or help citizens in need.

If you owe a significant chunk of money in back taxes, you may have received a Notice of Intent to Offset. You know consequences are imminent, but what you may not know is exactly how the Treasury Offset Program works or what you should do after you get a Notice of Intent to Offset. Learn everything you need to know to protect your rights and financial future below.

What Is a Notice of Intent to Offset?

In a nutshell, a Notice of Intent to Offset is an informational letter that tells you what’s about to happen. It means that you owe the IRS back taxes or you owe a significant chunk of money to a different government agency.

It also means that the IRS is planning on seizing your tax refund.

Read the letter carefully to determine whether your entire tax refund or federal payments are at risk. Often, the government will only seize a portion of your refund or payments, but the amount they want to take will depend on several factors. You also need to go through the letter and verify that the following details are 100% accurate:

• Your name
• The amount of your federal payment or tax bill
• The agency that’s initiating the offset
• The agency’s contact information

Depending on the situation, the agency may take all your tax refund. In other cases, you’ll still receive a portion. Be sure to check the information in the letter and make sure that it is correct.

How Does the Treasury Offset Program Work?

The Notice of Intent to Offset is most often sent through the Bureau of the Fiscal Service. This government agency operates the Treasury Offset Program, and it also processes all payments from any federal agency. In other words, your tax refund must go through the Bureau of the Fiscal Service before it gets to you.

This government agency also gets information about delinquent debts you owe to creditor agencies. Your debts get attached to your tax identification number and name. If you owe the Department of Education for unpaid federal student loans, for example, the BFS knows about it!

Before issuing your tax refund or federal payment, the BFS will run your tax number to check for debts. If the debt is eligible for the offset program, then you’ll get sent that dreaded Notice of Intent to Offset.

Types of Treasury Offset Program Debts

Are you wondering what types of debts get sent over to the BFS and which ones are eligible for the Treasury Offset Program? Here are the types of liabilities that could potentially end up resulting in an offset:

• Unpaid child support
• Delinquent spousal support
• Past due student loans
• Delinquent state income taxes
• Back federal taxes
• Certain unemployment liabilities

The above types of debts get sent to the Treasury Offset Program once they’ve been delinquent for over 90 days.

Not every federal payment is eligible to get offset, though. Here are the types of federal payments though could get reduced through the Treasury Offset Program:

• Military pay
• State income tax refund
• Federal retirement payments
• Federal travel reimbursements
• Contractor or vendor payments from the government
• Some federal benefits (other than Supplemental Security Income)

The amount of income that can get offset is limited by law. If your Notice of Intent to Offset letter mentions your Social Security benefits, then know that they can only withhold 15%. If the letter mentions your tax refund, then understand that the full amount could be offset.

The Consequences of an IRS Tax Offset

An IRS tax offset or other type of offset means that consequences are forthcoming. If you do not take action, then the money mentioned in the notice will likely get seized. You will not receive the funds you expected, but the overall amount of debt you owe will decrease. If the offset doesn’t cover the full amount of your debt liability, then you’re not out of the woods yet. Future federal payments or tax refunds could be offset, too.

What to Do If You Get a Notice of Intent to Offset

It’s essential to take action if you receive a Notice of Intent to Offset. First, confirm that everything in the notice is accurate. As we explained above, you need to verify that all your information is correct, and you should ensure the debt amount is current and accurate. This step is very important, because the Federal Offset Program may not realize that you’ve already paid off a debt liability.

Next, you need to decide whether to fight the offset or allow the money to be seized. If you don’t want to challenge the offset, then you don’t have to do anything. Your money will be taken and it will go towards your unpaid debt.

If you know that the debt amount is correct but want to prevent the offset, then you have several options depending on whether you owe money to the IRS or the Department of Education.  

First, you need to identify who you owe your debt to. If you owe money to the IRS, then you’ll need to contact the IRS about your debt. We’ll go over that in more detail below. 

If you owe student loan debt to the Department of Education, then you have a few options for preventing the offset. A student loan consolidation tax offset means that you can bundle all your student loans into a single loan. After consolidating your debt, it will no longer be considered in default, which will mean that you’re no longer eligible for an offset. Another option is to rehabilitate the loan by reaching an agreement with your lender. You could always pay the defaulted loan in full, too, but that’s usually not an option for most borrowers.

If you want to challenge the offset, then you do have options. We’ll get into more detail about them below.

Tax Refund Offset 2021: What Are Your Options?

After receiving a tax refund offset notice, your time is limited. The IRS will only give you about 60 days to pay off the full balance of back taxes. Clearly, that’s not possible for most individuals who are receiving an offset in the first place.

That’s where tax debt negotiation strategies come in. If you and the IRS come to an agreement about your delinquent taxes and you start making payments, then there is a chance that the government will decide not to offset your federal payment.

Take note, though: there is no guarantee that the IRS will choose not to offset your federal payments even if you attempt to reconcile your debt. The only way you can be sure that no offset will occur is if you pay off the full balance of what you owe before the 60-day deadline. In most circumstances, the IRS will still offset your tax refunds even if you’re making monthly payments on your back taxes by using an IRS installment agreement.

If you owe state taxes, then look into your options for state tax debt relief, too. Sometimes, you can work with the IRS to reduce the overall amount of tax debt you owe. You can also act and start making payments to show the agency that you are willing and able to pay off that debt over time.

Steps to Take If You Want to Dispute IRS Offset Claims

Do you want to challenge or dispute the notice? If so, then you need to contact the agency listed on the notice ASAP. You only have a certain amount of time after receiving the notice to act, so get started quickly. If the agency agrees that you’ve paid your debt, then tell them to stop the offset by informing the proper agency immediately. Otherwise, that agency may be tasked with refunding you any amount that gets unfairly offset.

How to Deal With a Notice of Intent to Offset

Have you recently been served with a Notice of Intent to Offset? Are you wondering how to deal with the notice without suffering the consequences of losing out on federal income you expected to receive? Whether you decide to dispute IRS offset claims or participate in a tax refund offset alternative like making payments on your debt, there are ways to successfully deal with a Notice of Intent to Offset.

Here at Tax Group Center, our experts can help you determine your best financial option. Our experts include professionals like tax attorneys, CPAs, enrolled agents, and certified tax consultants. Our top priority is providing realistic and achievable solutions to individuals and businesses struggling with the IRS.

Get accredited and sound professional advice on your Notice of Intent to Offset, tax relief, or other IRS issues by contacting us today.

If you had to guess the maximum financial penalty you could face for failing to pay your taxes, then what would you say? Five percent of your unpaid taxes? Ten percent?  Believe it or not, the highest penalty you could face if you fail to pay your taxes in time is a whopping 47.5%! That’s the least of your worries, though. On top of that, tax evasion is a crime. If you intentionally attempted to evade a tax assessment, then you could face up to five years in jail if you get convicted. You could face an entire year in jail for each year that you failed to file a tax return. The good news is the IRS rarely issues such harsh penalties. For the most part, they just want you to pay what you owe.  Are you wondering how to reduce IRS penalties so that you can afford to pay back your tax debt? If so, keep reading. You can learn everything you need to know about how to get out of IRS penalties below.

How to Get the IRS to Remove Penalties and Interest Debt

When was the last time you filed your taxes? Do you take the time to verify that your returns are error-free every year? If you had to think hard on either of these two questions, then there’s a good chance that you could owe the IRS money due to unfiled returns or unpaid taxes. When you’re late on your taxes, the IRS has the authority to issue fines against you. These fines are no laughing matter, either. At minimum, you’ll be charged a 5% interest fee on your entire tax bill for each year you’re late. The IRS has a lot of authority to penalize you in other ways, too, so it’s a good idea to get informed on the consequences of not filing taxes if you know that you owe back taxes or haven’t filed in a few years. Knowing that you’ll likely owe even more money in the form of IRS penalties and interest fees can discourage you from filing at all. You’re likely asking yourself, Can I get the IRS to waive penalties and interest fees?  The short answer is most likely. The long answer is that it depends on the actions you take right now. Next, we’ll give you an overview of the best steps to take to help you reconcile your tax debt and get penalties and interest debt removed from your account.

Determining How Much You Owe

You’ll never be able to tackle your tax debt if you never face it head-on. Your first step, then, involves determining how much you owe in back taxes. Before you get in touch with the IRS, do a little research on your own. Try to estimate how much income you earned in the years you didn’t file, and then try to estimate how much taxes you owed that year.  If you’re struggling with estimating your taxes, it may be time to discuss your situation with a tax professional. If you reach out to the IRS about your account, then they may re-initiate collection methods.

Filing Tax Returns for Previous Years

Once you’ve got a good idea of how much you owe, it’s time to get squared up with the IRS. You’ll need to file your tax returns for all the previous years you’ve missed out on. It’s crucial to enlist the help of a tax professional during this step, because tax laws are always changing. The deductions or credits you can claim from years past may not be the same as they are today. You’ll have a better shot at maximizing your return if you get a professional to help.

Negotiating Your Tax Debt

Once the IRS processes your returns, you’ll likely receive a hefty tax bill. First, review this tax bill thoroughly. Verify that all the information on the bill is accurate. Then, go through and review how much of your bill is from tax penalties and interest. If you can pay off the entirety of your bill, then it’s advised that you do so. More than likely, though, you’ll need to negotiate with the IRS to create a payment plan that works for you. Depending on your situation, you may be able to apply for tax debt relief programs that reduce or eliminate your tax bill altogether. If you’re interested in learning more about these programs, then reach out to one of our tax experts today.

How to Get the IRS to Remove Penalties and Interest on Back Taxes

If you want to remove IRS penalties from your account, then your best option is to apply for IRS penalty abatement. This action potentially gets all of your penalties and interest removed from your tax debt. In rare situations, you could even have some of your interest or penalty payments refunded to you. It’s no easy feat to qualify for penalty abatement, though. First, you need to prove that you had reasonable cause for not paying your taxes on time. “I didn’t have the money” isn’t considered a reasonable cause. You’ll need to prove that you experienced a hardship, like an inability to obtain your records, a death in the family, or a severe illness in the family. It’s advised that you speak with a tax consultant to determine if you’re eligible for penalty abatement with the IRS if you own a significant amount of tax debt.

The Number One Way to Avoid IRS Penalties in the Future

Getting the IRS to eliminate your penalties for non-payment or late payment is a hassle. The best way to avoid IRS penalties in the future is to ensure that you get your taxes filed every year on time. You also want to do your best to avoid making errors on your returns. So, how can you ensure that your taxes are error-free? We suggest using a bookkeeping service to help you record your transactions all year long. Doing so will help ensure that your taxes are correct and easy to file once Tax Day arrives.

Are You Ready to Solve Your Tax Problems?

Have you been avoiding filing your taxes because you’re afraid you won’t be able to afford the bill? Are you simply not sure how to cope with excessive penalties levied against you by the IRS? Our certified tax consultants can help answer your questions, guide you through filing your taxes, and help you find solutions to your tax problems. If you’re ready to make a change in 2021, then let our experts help. Leave your contact information on our online form now to get started on making a change.

A whopping 65% of Americans own their own homes. The remainder either rent, live with family members, or suffer from homelessness. If you haven’t become a homeowner, then you likely have your reasons. Are you currently not pursuing home ownership because you’re uncertain about your tax status? Have you found yourself wondering, If I owe taxes, can I still buy a house? The last thing you want to do is invest in a home only to have to forfeit it to the IRS.  Thankfully, you don’t have to! If you’re interested in learning more about buying a house with IRS debt, then you’ve come to the right place. Read on to learn everything you need to know about becoming a homeowner, even if you owe back taxes.

Can You Buy a House if You Owe Taxes?

The American Dream often involves homeownership, so if you’re getting older, you’re likely considering whether now is the right time to buy a home. But, there’s just one problem. You haven’t paid your taxes over the past few years, and you do owe a significant amount of back taxes to the IRS. Can you still buy a house? The short answer is yes. It will take some hard work on your part, though, and the road won’t be as straightforward as it will be for someone who doesn’t owe money in back taxes. You’ll need to first learn about and understand the real consequences of not paying taxes. Depending on how long it has been since you filed or how much you owe, the IRS could already have started pursuing collection actions. If you don’t have any assets, then you might not realize that you could already have a tax levy against you. A tax levy is legal permission for the IRS to seize your assets or property to settle a tax debt. If you’ve received a “Final Notice of Intent to Levy” document in the mail, then the IRS likely already has this legal measure in place. If you are in this situation or you’re not sure about your tax levy status, it’s crucial that you speak with a tax expert ASAP. If you do end up securing a home without attempting to settle your tax debt situation with the IRS, then the IRS could utilize their tax levy to take it away from you. You might also already be facing significant IRS penalties, like wage garnishment, which can make it harder to buy your home. If you’re struggling under the weight of collection efforts but want to buy a home, then you do have options. Get more details about how you can move forward with your homebuying aspirations even while you still owe back taxes below.

Your Guide to Buying a House With Back Owed Taxes

So, what should you do if you want to buy a home but you’re unsure about your tax situation? If you’re not sure whether you owe taxes or how much you owe, then your first step is to identify where you fell short. You may need to get in contact with the IRS to determine what years you didn’t file for or what years have errors. You’ll need to rectify those errors by filing the correct tax returns for each year you missed. The IRS will accept your forms, process them, and then let you know how much you still owe. Your best option at this point is to completely pay off your back taxes, but this usually isn’t an option for most Americans. After all, if you had the money to pay off your tax debt, then you probably would have when they were originally due! Don’t panic. There are plenty of options for you if you can’t pay off your tax debt right away. The IRS will work with you as long as you prove that you’re not intentionally avoiding paying your taxes. Not taking any action at all, though, could be viewed as evasive. If the government suspects you’re willingly avoiding paying your taxes while you have the means to do so, then they will likely take action against you.  That’s why you need to work with the IRS to come up with a tax debt negotiation that works for both parties. We’ll get into more detail about that below. Remember, once you initiate contact with the IRS, they’ll be looking into your accounts. Depending on how much time has passed since you last filed your taxes, the IRS may have stopped attempting to collect from you. Once they have your current contact information, things might change. To avoid getting hit with collection efforts, criminal charges, or other penalties, it’s advised that you speak with a tax professional about your situation before you get in touch with the IRS.

How to Tackle Your Tax Debt Before Buying a House

So, how can you tackle your tax debt and start to buy your own home? Both are possible! You don’t have to pay off all your debt to qualify for a home loan. You also don’t have to pay off all your debt to avoid penalties, criminal charges, or collection efforts. All you need to do is show the IRS that you aren’t willingly avoiding your tax bill. Here are the most common tax debt negotiation methods Americans utilize when they don’t have money to pay their tax debt right away:

• Installment Agreements
• Currently Non-Collectible (CNC)
• Offer in Compromise (OIC)
• Innocent Spouse Relief
• Negotiation by Default

Often, the best solution is to enter into an installment agreement with the IRS. An installment agreement is like a payment plan between you and the IRS. You pay down your tax debt each month, and in exchange, the IRS won’t pursue collection efforts or criminal charges against you for your debt. An Offer in Compromise could help you pay less than what you owe through a reduced payment plan. The IRS must determine that you’re experiencing financial hardship, though. You could also get filed under Currently Non-Collectible status if you can prove that you really can’t pay off your tax debt. Did you know that you could also have your tax debt disappear through Negotiation by Default? There is a statute of limitations on tax debt, which is usually 10 years from the date your tax debt was originally assessed. If enough time passes without the IRS taking action, then you could end up not owing the IRS anything! If you believe you may have tax debt that has already expired, it’s wise to consult with a tax professional to ensure that’s the case.

Are You Considering Buying a House When You Owe the IRS?

If you owe the IRS money in back taxes, then you’re in good company. Right now, a whopping 11.23 million Americans are in the same position that you are. Despite that, many of them own their own homes or plan on purchasing one in the coming years. How is that possible? So long as you’re actively working on reducing your tax debt, the IRS will work with you, too. Keep in mind that there’s no benefit to penalizing you if the IRS knows they won’t be able to collect what you owe. Instead, they have an incentive to help keep you on your feet and working so that you can continue to be a source of revenue for them no matter how small. Are you getting ready to buy a house while owing the IRS back taxes? You don’t have to face this situation alone. The experts at Tax Group Center specialize in providing affordable solutions to individuals who owe the IRS. Our tax attorneys, CPAs, and certified tax consultants will work together with you to create a customized tax debt plan that works for both you and the IRS. Are you ready to get started? Leave your name, email address, and phone number on our online form now to hear back from one of our agents as soon as possible.