How to Resolve Income Tax Problems

Problems with income taxes

Income taxes used to be taboo in the United States. That changed by 1913, when the 16th Amendment authorized Congress to pass an income tax and to use enforcement mechanisms. Since then, the income tax has become a nuisance for millions of Americans. The Internal Revenue Service, or IRS, hunts down those with income tax problems, and punishes them with penalties. On the flip side, there are many ways you can see income tax problems and solutions. Both outside tax professionals and the IRS offer ways to help solve income tax problems.

So how can you solve income tax problems? In general, it is best to work with the IRS. From time to time, the IRS gets penalties wrong. Sometimes, IRS officials do not understand relevant tax code, which is very large. Mostly, they do not have a clear idea of the facts of the case. If you believe this applies to you, hire an independent tax professional to mediate. Never argue with the IRS unless advised to do so by a tax professional. The IRS will almost always win.

Baring that, the IRS offers several possible solutions to problems with income taxes. One income tax problems solution is an offer in compromise, or OIC. An OIC is a plan where you pay as much as possible over a period up to 24 months. In return, the IRS will write down what balance remains. OICs are very time consuming, although a menu of possibilities exist.

An alternative to OICs is penalty abatement, or PA. PAs are when the IRS relieves some penalties if you show both reasonable cause for falling behind on taxes, and due diligence for resolving your debt. As you can imagine, PAs are rare.

Most income tax problems do not disappear on their own. Rather, income tax problems require you to cooperate with the IRS. It may not be easy, but it is often the best way to resolve income tax problems.

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