Navigating IRS Disputes: Essential Steps
Understanding IRS Disputes
Dealing with the IRS can be a daunting experience. Taxpayers often find themselves needing to resolve disagreements with the IRS over tax audits, assessments, penalties, fast-growing tax debt, liens, levies, and other disputes. Sometimes taxpayers don't even want to open IRS mail because they dread the news inside that envelope. The tendency is to let IRS mail pile up, but that is the worst thing you can do. Understanding the process and knowing how to work with the IRS to resolve disputes is crucial for a favorable outcome.
Common Types of IRS Disputes
IRS disputes can arise from many issues, including:
- Unfiled returns
- Incorrect tax assessments
- IRS Audits
- Inability to Pay
- IRS Tax Levies
- IRS Tax Liens
- Penalties for late filings or payments, trust fund, or other penalties
- Innocent Spouse Claims
- Refund Claims, and more.
These disputes require careful navigation to ensure that your interests are protected. Taxpayers have options to address and resolve these issues.
Current Compliance and First Steps
The first step is to thoroughly review IRS correspondence and look out for response deadlines. If you are up against a deadline, don't hesitate to contact a professional to help you with a timely response. You don't want to miss response deadlines because you can potentially lose valuable appeal rights. The IRS has procedures in place to protect taxpayers' rights, but if you don't follow the procedures, you can lose those rights.
Secondly, and just as important as the first step, is to stay CURRENT with tax filings and payments from this point forward. No matter how much you may owe for old years or the nature of the IRS dispute, you can't work with the IRS without getting into compliance for the current year and going forward. That includes making timely 1040 estimated tax payments, federal tax deposits (941, 940), and timely filing federal income, employment, and other tax returns, as appropriate for your situation. After checking for response deadlines, CURRENT COMPLIANCE is the single most important step you can take to start working your way out of a tax problem. If you stay in current compliance you "stop the bleeding," so to speak, and allow yourself to be in a position to work with the IRS on your tax disputes.
Options for Resolving Disputes
Once you understand the nature of your IRS dispute, you have many potential avenues to resolve it so long as you are in current compliance, including but not limited to:
- Negotiation: Negotiation with the IRS may lead to a solution without escalating the issue further.
- Appeal: If you disagree with an IRS notice, proposal, or determination, you may be entitled to file an appeal, which will be reviewed by an independent appeals office within the IRS.
- US Tax Court: In many cases, if you don't get results in Appeals, you can take your case to Tax Court to get it resolved.
- IRS Taxpayer Advocate. The Advocate is also sometimes a great way to get help when nothing else has worked.
Proactive Communication is Key
Regardless of the IRS dispute or how long it has been going on, the key is to face it head-on and communicate with the IRS via a professional. Get a professional to step in and work out a solution for you. You will feel better instantly just hiring a good lawyer to work with the IRS on your behalf. IRS problems never get better when ignored.