Articles Tagged with tax debt

What to Do When You Can’t Pay Your Taxes
If you have an upcoming tax payment that you can’t pay, or have delinquent tax debt that is continuing to accrue, you may be tempted to delay filing your taxes. You may also want to avoid responding to any IRS notices you receive because you can’t pay off the tax debt listed on the notice. The desire to hide from your tax problems is understandable, but it is actually the worst thing you can do when you are unable to pay your tax liability.

Instead, you should file your taxes on time, respond to all IRS communications, and consider talking to a tax attorney about your options. Taking this proactive approach has several benefits, including the possibility of substantially reducing the amount of penalties and interest you owe and preventing any IRS collection actions.

Do Not Put Off Filing Your Taxes

What Causes an IRS Tax Audit?
The IRS has several methods of selecting returns for a tax audit. First, returns are identified that may possibly contain incorrect amounts, causing a review of the return by an auditor. If everything on your return checks out, the auditor can accept your return as submitted. If the auditor suspects that something is amiss, your return can be selected for an examination.

How Returns Are Selected for Audit

The IRS can select your return for an audit if any of the following happens:

The Requirements for Traditional Innocent Spouse Relief
Traditional innocent spouse relief is one of three types of defenses available to taxpayers when the IRS is attempting to collect tax that is attributable to a return filed jointly with your spouse or former spouse. The IRS can collect from either spouse for tax assessed on a joint return, but innocent spouse defenses allow you to avoid liability for these items, if certain requirements are met.

The Conditions for Innocent Spouse Relief

All four of the following conditions must be met in order for you to qualify for traditional innocent spouse relief:

IRS Actions Affecting Passports of Delinquent Taxpayers
Your unresolved tax debt could prevent you from taking your next trip overseas. The IRS has the right to certify to the State Department that an individual has seriously delinquent tax debt. Upon receiving this certification, the State Department will generally not issue you a new passport, and will revoke your current passport.

Tax debt is considered “seriously delinquent” if it is unpaid, legally enforceable and assessed, is greater than $50,000 (indexed for inflation annually), and a notice of federal tax lien has been filed, AND the rights to appeal a levy have expired, or a levy has been made. In other words, the IRS has been doing everything it can to collect your tax debt, and you still have a large outstanding balance owed to the Treasury.

There are exceptions where debt will not be included when determining if you have seriously delinquent tax debt. The following amounts will not be included: