Discovering that you have an IRS problem can be a stressful and overwhelming experience. Whether it's an audit, a tax debt, or an issue with tax filings, facing the Internal Revenue Service (IRS) can be intimidating. However, it's crucial not to panic and take proactive steps to address the situation. With Enrolled Agents on staff, Levelheaded Bookkeeping is here to guide you through the necessary steps to take when you have an IRS problem and provide insights on how to resolve it effectively.
#1 Stay Calm and Gather Information
The first and most important step is to remain calm. It's natural to feel anxious, but panicking will not help. Take a deep breath and gather all relevant information related to the IRS problem. This may include tax returns, notices received from the IRS, and any supporting documents or receipts.
#2 Review IRS Notice
Carefully review any notice or correspondence you've received from the IRS. Understanding the nature of the problem is essential in determining the appropriate course of action. The notice will typically explain the issue, the tax period in question, and the actions you need to take.
#3 Seek Professional Assistance
When dealing with an IRS problem, seeking professional assistance is highly recommended. Enrolled Agents (EAs), Certified Public Accountants (CPAs), or tax attorneys have the expertise to navigate through tax issues and can represent you before the IRS. Levelheaded Bookkeeping is an Enrolled Agent and qualified to help you through the process, providing peace of mind and ensuring that your rights and interests are protected.
#4 Respond Promptly to IRS Notices
Ignoring IRS notices will only exacerbate the problem. Promptly respond to any communication from the IRS, especially if there are deadlines for providing documentation or appealing the IRS decision. Failing to respond on time may lead to additional penalties or consequences.
#5 Gather Evidence and Documentation
To support your case, gather all necessary evidence and documentation. This might include receipts, bank statements, employment records, or any other documentation that can substantiate your tax positions or claims. A tax professional like Levelheaded Bookkeeping can help you organize and present the information effectively.
#6 Understand Your Rights
As a taxpayer, you have certain rights when dealing with the IRS. Familiarize yourself with the Taxpayer Bill of Rights, which outlines your rights to privacy, representation, and a fair and just tax system. Understanding your rights will empower you to make informed decisions throughout the process.
#7 Request an Extension (if needed)
If you need more time to gather information or respond to the IRS, you may request an extension. However, it's essential to adhere to the extended deadline and use the additional time wisely to avoid further complications.
#8 Address Tax Debt and Payment Options
If you owe tax debt, explore payment options with the IRS. The IRS offers various payment plans, such as installment agreements or offers in compromise, to help taxpayers settle their tax liabilities. Your tax professional can assist you in negotiating a payment plan that aligns with your financial situation.
#9 Consider an Offer in Compromise
In certain situations, you may qualify for an Offer in Compromise (OIC), which allows you to settle your tax debt for less than the full amount owed. The IRS will consider your ability to pay, income, expenses, and asset equity when evaluating an OIC. Consulting a tax professional will help determine if an OIC is a viable option for your case.
# 10 File an Appeal (if necessary)
If you disagree with an IRS decision, such as the results of an audit or a proposed tax assessment, you have the right to appeal. The appeal process involves submitting a formal request for reconsideration, providing additional evidence, and presenting your case to an independent appeals officer. A tax professional can assist you in preparing a strong appeal.
Facing an IRS problem can be a challenging experience, but it's essential to take the situation seriously and act promptly. Remember to stay calm, seek professional assistance, and respond to IRS notices on time. By understanding your rights and gathering relevant documentation, you can present a strong case to resolve the issue effectively.
We can help with your IRS problem
As an Enrolled Agent, Levelheaded Bookkeeping has the expertise to guide you through the process and represent you before the IRS. We can help you find the best solution for your specific situation. With the right approach and support, you can navigate through IRS challenges and achieve a favorable resolution, ensuring your financial well-being and peace of mind.