IRS Tax Debt: Put the Collections Machine on Hold and Get More Time To Pay

Procrastination: Don't procrastinate with the IRS. You may have received some notices in the mail. They may not look important, but they are. And if your put your dead off long enough, the IRS can unleash it's weapons of collections on you.

Automated Collections 101: If you ignore the notices the IRS mails you, your account is sent to the Automated Collections System (ACS). This is the area of the IRS that can Seize your assets, Levy your Bank accounts, and Garnish your wages.

Buying Time: If you ignored your IRS debt, it's probably already too late. But there are certain ways you can buy time.

Short-Term Hold: This usually doesn't work, but it's worth a shot. You can call the IRS and request a short-time hold. This could be anywhere from one week to 60 days. After you call the IRS, send them a written request for more time along with the photocopy of the notice you were sent.

Long-Term Hold: It's even harder to get a hold on your account that is longer than 60 days. You have to call the IRS and ask them to classify your account as a “Hardship Case.” If your situation is truly dire, a reprieve from debt collections for a year. But your have to provide plenty of evidence to support this. You need documents proving you cannot pay your debt. And IRS Hitmen are not known for their sympathy.

Getting Help: Did the IRS refuse to give you a long-term or a even a short-term hold. Then you have to face the music and find a way to pay your debt. At this stage, it's going to be really tough. You already tried one or two excuses that didn't work and the IRS doesn't like stalling tactics. You may need professional help at this point.

Window of Opportunity: The key here is acting on your debt as early as you possibly can. If you know you cannot pay your taxes, let the IRS know and research a plan. And respond to an IRS letter as soon as possible. Do this, and you can save thousands of dollars.

Aaron Carter Owes $ 1 Million in IRS Tax Debt

Yet another celebrity owes IRS Tax Debt... This time it's Aaron Carter, a 21-year-old former Dancing With the Stars Contestant and younger brother of Backstreet Boy member Nick Carter.

According to court documents, Aaron Carter owes more than $965,000 from 2003 alone. An additional $45,350.11 is also owed from income earned in 2006.

In a statement, Carter's manager Johnny Wright states:

"It is unfortunate that while Aaron was a minor, his finances were grossly mismanaged by his previous team which has lead to the current situation of which he was unaware of until today. Aaron is working with a new team to take appropriate actions towards speedy resolution of the matter and looks forward to putting this behind him and moving forward with the next stage of his music career."

It's clear that Aaron Carter's tax debt is a result of mismanagement, as he owed debt from 2003 when he was 15 years old. This is a classic example of the importance of hiring qualified accountants- you don't want to end up in tax debt for their mistakes!

Food for Thought: Two contestants from the popular show "Dancing with the Stars" have landed in Tax Debt. The first was Helio Castroneves, now it's Aaron Carter who's in the hot seat. Sometimes you have to wonder, is the IRS making examples out of contestants on a popular TV show to prove a point to the millions of Americans watching? Why wasn't a Tax Lien filed in 2003 when Aaron Carter owed over $900,000?

You May Owe the IRS Unexpectedly Come Tax Time

Breaking News: Several million Americans will be in for a shock this upcoming tax season. The Treasury Department bill that was designed to stimulate our dire economic condition could hurt your wallet when it's time to pay taxes.

You may have noticed that your paycheck have increased. This was due to the fact that the government lowered federal withholding. But for some, the lowered withholding amount will cost money when tax time rolls around.

The Numbers: A new study released by the Treasury Department reveals that over $15 Million could owe come April because of an over-calculation by the IRS.

The Three Most Affected Groups:

Group 1: Single People with 2 Jobs
If you have two jobs, the tax credit may have been given to each job for a total of $800 but you're only eligible for up to $400 in relief.

Group 2: Married Couples, Both Spouses Working
Couples are only eligible for an $800 total tax break. However, if both spouses make more than $13,000 per year, the new IRS withholding tables gave them a $1,200 tax break- $400 more than the amount allowed!

Group 3: Retirees
Retirees were given a $250 lump sum payment, but this lump sum payment was intended for those who didn't qualify for a $250 tax break. Around $50 million seniors on Social Security got the payment and a $400 tax break!

The $15 million who fall into these target groups can expect less money in a tax refund, or worse, being forced to pay the IRS for the first time. Although the IRS believes the amount of people estimated to be victims of the mix up was exaggerated by the Treasury Department, they're working on waivers for those might owe underpayment penalties.

Tax Amnesty is NOT a Magic Cure for Tax Debt

Lately, a lot of commercials talk about the Tax Amnesty program in a VERY misleading manner. The IRS's Tax Amnesty program is ONLY for those with overseas accounts to avoid criminal prosecution IF they come forward and pay all taxes, penalties, and interest on the amount they owe the IRS.

Don't let an unreliable tax preparer steer you down the wrong path. Here's a list of questions you need to ask to make the best choice if you choose to work with a professional.

Questions to Ask:

These questions are determined by the National Society of Accountants. You have the right to answers to every one of these questions before you proceed with a Tax Preparer.

• What credentials do you have? You want to work with certified professionals with excellent track records for success.

• How long have you been in practice? Experience is an excellent indicator that you’re working with a trustworthy individual or company. Look for at least 10 years of experience.

• Have you ever dealt with tax situations like mine? You want to work with a Tax Preparer with a ride range of experience. They should know how to handle every IRS Lien, IRS Levy and any other IRS problem in-between.

• Are you the person who will be handling my return? It’s important to know who will be handling your Tax Issues. You need their name and contact information.

• What organizations do you belong to and do they have a code of ethics? You want your Tax Preparer to be a member of organizations like the Better Business Bureau that require companies and individuals to adhere to a strict set of ethics. Look for the highest ratings possible within these organizations.

You don’t want to owe the IRS or risk an IRS Audit because you chose the wrong Tax Preparer. Remember, if choose the wrong Tax Preparer you can be held liable for all of the damages incurred. If you owe the IRS or have an IRS Lien or IRS Levy issued against you, it’s very important to choose someone you can trust or you run the risk of making your situation

Options to Pay Taxes Owed if You Can't Afford to Pay

Unemployment rates are at record highs. Many taxpayers simply cannot afford to pay their Tax Debt obligations. However, there is a variety of options available for taxpayers that simply cannot afford to pay.

Currently Uncollectible

Currently Uncollectible or Hardship status is granted to people who cannot afford to pay their IRS tax debt without sacrificing Basic Needs.
The IRS will compare your monthly gross income versus what they consider your "allowable expenses" to determine if you qualify for this program. If you qualify, collection efforts may be extended.

Basic Needs: These include food, housing, clothing, transportation, medical expenses, and insurance. Luxury expenses do not count, not even private school tuition for your children.

Allowable expenses Applying to One Person:
• Food: $227
• Housekeeping Supplies: $28
• Apparel & services: $85
• Personal care products & services: $30
• Miscellaneous: $87

Partial Payment Agreement

With a Partial Payment Installment Agreements you can pay less than the full amount of the tax debt. To apply you must:

- Fill out Form 9465, Installment Agreement Request.
- Fill out Form 433-A, “Collection Information Statement”
- Mail this information to the IRS, along with a letter request a Partial

Payment Installment Agreement.

Partial Payment Installment Agreements drag on the amount of time it takes to pay the debt, sometimes for up to 10 years. Since Penalties and Interest will continue to accrue on the account, this is probably not the best option for resolving the Tax Debt.

Credit Card

Everyone accepts credit. The IRS is no different. If you have cash in your credit cards, use it to pay your Tax Debt. Credit Card companies have lower interest rates and easier payment plants available. Additionally, it’s a very rare occurrence for a Credit Card company to issue a lien or levy.

Loan

The interest rates on loans are far lower than IRS interest rates. If you qualify for a loan with your bank, it’s a good idea to use a loan to pay your debt obligations. Much like paying with a Credit Card, payment options may have more flexibility than the IRS has.

Friends & Family

Nobody wants to ask their friends or family for money. But owing the IRS is truly a desperate situation. Interest and Penalties double and triple your Tax Debt.
Borrowing money from a family member will get the IRS off your back and keep your debt obligation low by not allowing interest and penalties to accrue like it would if you decided to pay with a Credit Card or a Loan.

Signs of the Times

The IRS issued a press releases and statements assuring taxpayers that they were going to go easier on taxpayers that owe money, but they have not held true to the sentiment. The IRS collection budget increases every year. If you owe, you have to find any way possible to pay or resolve the Tax issue.