Tax debt is when an individual or business owes the Internal Revenue Service (IRS) for unpaid taxes. It may come from income, payroll, property, or sales taxes. Tax debt can result from underreporting income, not filing tax returns, or not paying the full amount on time.
The IRS says the penalty is 5% of the tax owed for each month or part of a month that the tax return is late, up to 25%. The IRS may provide penalty relief to taxpayers who have made an effort to comply with tax laws but were unable to meet their obligations due to circumstances beyond their control.
This relief is typically granted for failure-to-file, failure-to-pay, and failure-to-deposit penalties. According to tax debt relief attorney Angie Smith, Esq., to request penalty relief, you can contact the IRS directly or consult a tax attorney to explore your options.
Recognizing the Signs of Serious Tax Debt Issues
If you are consistently missing payments or experiencing financial difficulties due to your tax debt, it is a sign of a serious problem. The IRS or state tax agency is likely keeping an eye out for any tax debt if you are already receiving notices from them on a regular basis. Your wages may soon be garnished if you don’t settle your tax debts immediately.
If you experience feelings of despair or anxiety when thinking about taxes, it may indicate the impending arrival of significant tax issues. You should think twice if your only option was to borrow money to cover your tax obligations.
Tax fraud defense lawyer Michael Vitaliano says before you think of evading tax authorities or ignoring the notices sent to you, you should remember that being accused of tax fraud can involve a protracted and expensive investigation that may cause you an incredible amount of stress.
Understanding the Consequences of Ignoring Tax Debts
Tax debts, if not taken care of, can have severe consequences for your financial stability and peace of mind. As mentioned, it could literally mean garnishing your wages or levying your assets. It will also be difficult to borrow money or obtain credit, as lenders see unpaid taxes as a deal-breaker.
In the meantime, penalties and interest accumulate on your debt, which means the total keeps going higher with time. A negative impact on your credit score could potentially hinder your ability to rent or purchase property.
In some instances, ignoring taxes might lead to criminal charges. The very last thing you want is letting these issues pile up to snowball into something significant that endangers your financial health in the future.
Evaluating Your Options: DIY vs. Professional Help
If you have tax debts, you must choose between DIY and getting expert help. Dealing with it yourself may save you money and give you control. You can read tax laws, fill out paperwork, and negotiate with the IRS.
However, it would be best to avoid others being involved if your legal tax case has a great deal of complexity. Attorneys and experts really understand the ins and outs of these types of laws and will often negotiate a bit harder on the settlement.
Balance the importance of juggling legal matters for yourself and potential risks in DIY against the cost of hiring. After all, your particular situation and quest for self-confidence to handle your tax issues must determine your choice.
Assessing Your Financial Situation and Its Complexity
Before thinking of hiring an attorney for tax debt relief, identifying where you stand financially is central. Income, expenses, assets, and liabilities significantly impact your financial condition. Are your tax dollars enormous or manageable? An attorney may help if you have several creditors, complex assets, or tax concerns.
Your debts significantly affect your overall financial health. If you need to negotiate with the IRS or are unsure how to handle these issues, hire a tax lawyer.
It’s always a beneficial idea to consult a professional in the face of potential legal action. You may now make a more realistic judgment as to whether further legal assistance is needed.
Finding the Right Lawyer for Your Tax Debt Needs
Begin by performing a Google search for the lawyers who either exclusively practice tax law or are professionals at debt relief.
Look for the reviews from current and past clients to gauge their success in the past. Once you have a favorable idea from your search, schedule consultations with lawyers you may have just removed to discuss your specific case.
During these consultations, be sure to question his/her strategy for settling tax debt, as well as fees. Since communication is vital, make sure your lawyer is clear and easy to be with.
Listen to yourself—the best lawyer for you is one you can get along with and trust to work the precepts to your advantage and guide you through the taxing issues.
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