For many people, owing money to the IRS is something that causes them a lot of stress. Instead of allowing IRS debt to rob you of your joy, find ways to get out in front of this debt. You need to realize that tax debts are quite common in the United States.
In fact, nearly 12 million Americans owe money to the IRS. According to the IRS, there is over $125 billion worth of back taxes owed by American citizens and businesses. If you owe money to the IRS, here are some things you need to keep in mind.
Never Ignore a Notice From the IRS
When the IRS needs to inform an American citizen about outstanding tax debts, they will send out a notice. These notices come in the form of certified mail and messages on the IRS website. One of the biggest mistakes you can make when receiving a letter from the IRS is ignoring it.
These letters are used to provide information about things like collections and wage garnishment. By ignoring these notices, you will only make your tax debt situation worse. As soon as you receive letters from the IRS, you need to reach out to them. If you can’t satisfy your debt to the IRS, then you need to reach out to the team at Oak Tax Management for assistance.
IRS Wage Garnishment Has No Limits
The longer you ignore your IRS debt, the harder it will be to avoid wage garnishment. You need to realize that when the IRS garnishes your wages, there are no predetermined rules for how much they can take. The last thing you want is for the majority of your paycheck to be garnished due to a lack of communication with the IRS.
The IRS can garnish up to 70 percent of your wages. The main reason behind wage garnishment is to motivate a debt defaulter to contact the IRS. Instead of allowing your tax debt situation to devolve into wage garnishment, you need to work with the IRS to set up a payment plan. With this payment plan, you can start to pay off your tax debt and avoid wage garnishment.
Tax Debt Can Be Renegotiated
Did you realize that the IRS has an offer in a compromise program? The main purpose of this goal is to help debtors pay off their IRS debt at a reduced dollar amount. This method is generally used to settle large tax debts. Proving that a financial hardship has rendered you incapable of satisfying your tax debt is a great way to settle your tax debt for a lower amount.
Once you apply for this program, a tax collector will consider things like your future income, cash and non-cash assets and the amount of income you generate each month. If you are approved for the offers in the compromise program, you will have to satisfy your tax debt in two years.
Are you struggling with tax debt? If so, let Oak Tax Management help you develop a plan to pay it off.