There are many misconceptions out there related to the IRS or delinquent tax issues. The following are ten of the top misconceptions we at the Zeiders Law Firm hear every week.
- What a divorce decree says regarding tax liability has no bearing on the IRS. If a joint return was filed both husband and wife are on the hook for the tax debt, regardless of what the decree holds. The IRS can and will attempt to collect from both husband and wife.
- The IRS doesn’t “cold call” to collect and they never ask for payment over the phone.
- Deadlines are no joke when it comes to the IRS. The IRS offers no grace periods. If documents are required by a certain date, they are due on or before that date.
- The IRS does not allow an individual to call and “just settle” the debt for a lesser amount. In some cases, the IRS will settle for less than the amount owed through an Offer In Compromise but whether that applies to you depends on the circumstances. Click here for more information on Offers In Compromise.
- A gambling habit is not ignored by the IRS. The IRS may treat gambling losses as dissipated assets and include them in determining a settlement amount in an Offer In Compromise.
- The IRS is generally limited to 10 years to collect back taxes, unlike some state taxing authorities that are not limited by time. Certain actions by the taxpayer can extend that 10 years. It is important to keep that in mind when you determine how to respond to the IRS.
- Debtor’s prison is a thing of the past! The IRS will not put in prison for failing to pay your taxes nor will they call to threaten prison. However, individuals can go to prison for cheating on or filing fraudulent tax returns. It is also unlawful to not file a tax return each year.
- The IRS has many ways to get paid if a delinquent tax payer fails to pay. They can garnish a taxpayer’s wages and bank accounts and seize assets, following notice of due process. The IRS can contact friends or business associates in attempt to collect.
- A payment plan with the IRS may be an option. However, the IRS will not continue the payment plan if the taxpayer fails to file and pay taxes for each subsequent year after the payment plan is established.
- Ignoring the IRS is never a good idea. The IRS will consider a taxpayer “served” even if the individual fails to pick up the certified letter or doesn’t receive the notice because it went to the last know address for the taxpayer. The taxpayer remains responsible even if unaware of the situation.
If you are dealing with the fallout from an IRS audit or would like to discuss any IRS matter with a tax Attorney, contact the Zeiders Law Firm at (918) 743-2000 or email us for a free consultation.