Six Things to Know When You Owe the IRS

Glen frost

Attorney at Law *

Certified Public Accountant **
Certified Financial Planner®
Master of Laws in Taxation
Every Tax Problem has a Solution

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Columbia, MD 21044

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Owing money to the Internal Revenue Service can be stressful and overwhelming. It can cause even more concern when you don’t have the money to pay. But, what many are not aware of is that they have options to pay off the debt gradually, or if they are eligible, at a substantially reduced amount. Since people are not aware of these options, they try to evade or ignore a powerful agency. Sooner or later, the IRS will catch up with you and you might find yourself in a deeper debt.

Here are six things to know when you owe money to the IRS:


1. Do not ignore IRS notices.

The notices that come from the IRS are computer-generated. Never ignore these notices. It is important that you respond to the IRS each time you get the notices. Many people get in deeper trouble because they ignore these notices.


2. Be sure to consult a tax expert before you approach the IRS.

Talk to a tax expert to prepare for your interview with the IRS. An expert will be able to advise you about how to present yourself and how to tell if the IRS officer is trying to take advantage of you. It is also important to remember that collection interviews with IRS officers can be an intimidating experience. It would be in your best interest to have a tax attorney on your side when you engage with the IRS.


3. Always remember that you have “due process” rights.

What this means is that the IRS, just because it’s a federal agency endowed with a lot of power, can confiscate your assets and personal property such as your bank account, car or business. Under the law, they are required to give you proper written notice and the opportunity to challenge their assertions. Also, when you are in the process of challenging the IRS claim, no one can initiate or continue collection activity against you. Even if you take the IRS to court, they can’t collect a penny from you until the judge adjudicates the case and hands down a decision.


4. The IRS is not always right.

The IRS might make its own determination and send you notices. However, that does not necessarily mean the agency is always right. It is a fact that the IRS can be wrong sometimes with regard to how much you owe. The IRS does make mistakes from time to time. So, do not take what they say for granted. Do your own math, consult a tax professional or tax attorney to determine for yourself. Doing so may end up saving you a lot of money.


5. You won’t go to prison if you don’t pay the IRS what you owe.

It’s extremely rare in the United States to see someone actually go to jail for being unable to pay his or her taxes. However, you could go to jail if you try to cheat the tax collector with actions such as claiming deductions that don’t exist and filing fraudulent returns. But, you cannot go to prison simply because you are unable to pay what you owe to the IRS.


6. You do have options when you cannot pay.

Those who owe taxes to the IRS have a number of options available. For example, you may be able to negotiate an installment payment where you typically pay off your debt in three years. In some cases, bankruptcy might be the best option for you. You may be able to discharge tax debt by filing a Chapter 7 bankruptcy. In some other cases, you may be able to work out an Offer in Compromise. This is where, under certain conditions and circumstances, the IRS will accept a smaller payment to settle a larger tax debt.


If you owe the IRS money and have questions about your options, call our experienced Maryland tax lawyers to explore your options. We can help you work out a strategy that fits your needs while making sure that the correct procedures are followed.

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