No refund this year… After you’ve filed your income taxes you find out that you owe money to the IRS. Maybe the debt was from taxes on your business, or the debt is because you just claimed something or someone you shouldn’t have. No matter how you’ve gotten the debt, it’s there and you need to do something about it.
Here comes the cavalry… The Hitman wants to give you some help in this tough time and give you some steps to help you with this debt.
1. Make sure you actually owe the debt. Go back over you information and make sure you did the math right. If the IRS has audited you, you can always use the services of the Tax Payer Advocate Service to verify your debt is accurate. You will need to get all paperwork together to prove any tax deductions or tax credits that you claimed.
2. If your debt is accurate, don’t panic and don’t put off dealing with it. The IRS debt is not going to go away. Interest and penalties start adding on to the debt immediately and if you don’t do anything the IRS will start taking more aggressive collection actions.
3. You can buy yourself some time. Send a written request to the IRS stating that you can’t pay the tax debt right now. You’ll be given a 45 day grace period before they start sending intent to levy letters and threatening collection actions.
4. Do something! If can borrow money to pay off the debt in full, do it! Owing your bank or a creditor gives you a better interest rate than the IRS does. Between interest and penalties the IRS is increasing your debt by about 25% per year.
5. If you can’t get a loan you can try to negotiate with the IRS. For a complete list of the options for settling an IRS debt read my article, “Tax Problem Help: How to Give Yourself a Fighting Chance”. If you feel too overwhelmed by the IRS bureaucracy then you can consider using a tax professional service to help you with the right plan.
6. Don’t wait for the IRS to contact you! Because of the size of the IRS everything moves slowly, at first. When I was a Hitman some people wouldn’t get notification of their debt for up to a year. And once you get that first notification we would have you targeted and then we sped things up. Not to mention interest and penalties would add on starting from day one of your tax debt.
One more thing… The best advice this reformed Hitman can give you is to act immediately! Don’t put your head in the sand, and don’t hope things will work themselves out. The IRS is not just a collection agency; they’re not bound by State laws. They can take whatever they want from you, and they can destroy your life if you let them.
Now you have the smoking gun…Use it!
