Tax Debt To-Dos

If you owe tax debts, or think you might owe the IRS this tax season, there are some things you can do to evaluate your tax liability. While resolving unpaid taxes is a priority, it doesn’t mean that taxpayers should be overwhelmed by the process. In general, there are three things every taxpayer should do before resolving tax debt problems.

Keep your records

People often make the mistake of getting rid of their tax documents too early. Even after a tax return has been filed there can be questions or changes that need to be made. The IRS recommends that taxpayers keep their tax return and all items related to the taxes for a minimum of three years. Anytime there is a question of tax liability or calculation errors, records should be kept until the issue is resolved.

Ask for an appeal or review

Taxpayers have the right to appeal tax debt liability claims or have calculations reviewed by an IRS agent. Even if the tax debts are old, the IRS allows for taxpayers to request a review of these debts prior to paying them. Requesting a tax debt liability review can be done fairly easy with little effort on the part of the taxpayer. However, the more information that can be provided and proof of tax documentation, the easier the IRS can review the tax debt accuracy.

Contact the IRS

Whether tax debts are old, or upcoming, taxpayers that are experiencing financial hardships can request help with payments. The IRS offers several ways for taxpayers to resolve their unpaid taxes without busting the budget. Taxpayers may be eligible to repay their taxes over a series of smaller payments through an installment plan. Others may be eligible to settle their debts for less than is owed through an Offer In Compromise. Contacting the IRS before tax debts become delinquent can prevent further penalties.