Five Common IRS Tax Problems and How to Resolve Them

5 Common IRS Tax Problems and How to Resolve Them

Dealing with IRS tax problems can be intimidating, especially when you’re unsure where to begin. Whether you’re struggling with unfiled tax returns, mounting tax debt, or an impending audit, it’s important to understand that help is available. At EAS Income Tax Services, we have years of experience helping clients resolve their IRS issues efficiently and effectively. Below, we’ll explore five of the most common IRS tax problems and provide actionable steps to resolve each one with confidence.

1. Unfiled Tax Returns

Failing to file your tax returns is one of the most frequent issues taxpayers face. Whether life got in the way or you were unable to pay what you owe, unfiled returns can trigger a host of consequences. The IRS can impose failure-to-file penalties, which add up over time. In severe cases, they may even file a “substitute for return” (SFR) on your behalf. This is the IRS’s way of estimating your income and filing for you—typically resulting in a higher tax liability since they won’t consider any deductions or exemptions you may be entitled to.

How to Resolve It:
The first step is to gather your financial documents, such as W-2s, 1099s, or business records, for the years you missed. A tax professional can help you file your back returns accurately, ensuring you take advantage of all available credits and deductions. Filing as soon as possible is crucial because penalties increase over time. Additionally, filing back returns may help you qualify for tax relief programs or payment plans to address any outstanding balances. If the IRS has already filed an SFR for you, a professional can amend the return to lower your tax liability.

2. Tax Debt You Can’t Afford to Pay

Owing the IRS money can be extremely stressful, especially when you can’t afford to pay the balance in full. Ignoring the problem can lead to more severe consequences, such as wage garnishment, tax liens, or the freezing of your bank accounts. The good news is that the IRS offers several options for individuals who cannot pay their taxes immediately.

How to Resolve It:
One of the most popular options is an Installment Agreement, which allows you to pay off your debt in monthly installments over time. There are also more specialized programs like the Offer in Compromise (OIC), which lets you settle your tax debt for less than the full amount if you can prove that paying the full debt would cause significant financial hardship. The OIC program has strict eligibility requirements, and only a small percentage of applicants are accepted, so having a Certified Tax Resolution Specialist on your side is key to increasing your chances of approval. Additionally, some taxpayers might qualify for Currently Not Collectible (CNC) status, which temporarily halts collection efforts if you can’t afford to pay your basic living expenses. A tax expert can help you determine which option is the best fit for your situation.

3. Tax Liens

A tax lien is the IRS’s legal claim against your property when you fail to pay your tax debt. This lien attaches to all your assets—including real estate, personal property, and financial assets—and it can significantly damage your credit. Tax liens make it difficult to sell property, refinance, or take out loans, as they are a public record. If left unresolved, a lien can escalate into a tax levy, where the IRS can seize your property, such as bank accounts, cars, or even your home.

How to Resolve It:
The fastest way to remove a lien is by paying your tax debt in full. If full payment isn’t possible, there are other options, such as Lien Withdrawal or Lien Discharge, depending on your circumstances. For example, you may qualify for a withdrawal if you’re on a direct debit installment agreement, or you may be able to discharge certain property from the lien to sell it. In some cases, Subordination may allow other creditors to move ahead of the IRS lien, which can help if you need to refinance your mortgage. Working with a tax professional ensures you explore all available options and take the right steps to protect your financial future.

4. IRS Audits

An IRS audit can happen to anyone, and it doesn’t always mean you’ve done something wrong. The IRS may select your return for audit due to errors, discrepancies, or simply through random selection. However, audits can be stressful and time-consuming, especially when you’re not familiar with the process or don’t have the necessary documentation to back up your return.

How to Resolve It:
If you’ve been selected for an audit, the most important thing is to stay calm and respond quickly. Gather all relevant documentation to substantiate the claims made on your tax return. This could include receipts, invoices, bank statements, or contracts. If your records are incomplete or inconsistent, a tax professional can help you prepare your response and guide you through the process to minimize any potential penalties. In some cases, an audit may result in additional taxes owed, but in others, you could actually receive a refund. A qualified tax professional can represent you in front of the IRS and negotiate on your behalf to achieve the best possible outcome.

5. Wage Garnishment and Asset Seizure

When you have unpaid tax debt, the IRS has powerful collection tools at its disposal, including wage garnishment and asset seizure. Wage garnishment allows the IRS to take a portion of your paycheck directly from your employer, while asset seizure involves taking funds from your bank accounts or even physical assets like cars or homes. These aggressive actions can leave you with little to live on, making it crucial to act fast.

How to Resolve It:
To stop wage garnishment or asset seizure, you need to contact the IRS and make arrangements to resolve your tax debt. A tax professional can help you negotiate a payment plan or an Offer in Compromise to reduce the amount you owe. In certain cases, you may be able to claim financial hardship, which can temporarily halt collection actions. Acting quickly is essential, as ignoring IRS collection efforts can worsen the situation. A Certified Tax Resolution Specialist can advocate on your behalf, ensuring the best possible outcome while protecting your assets and income.

Take Action Today: Resolve Your IRS Tax Problems with Professional Help

If you’re dealing with any of these common IRS tax problems, it’s crucial to take action now before the situation escalates. Ignoring the problem only leads to more severe penalties, financial strain, and stress. At EAS Income Tax Services, we specialize in helping individuals and businesses find the right solutions for their IRS issues, from unfiled returns to tax debt settlement and audit representation. As Certified Tax Resolution Specialists, we have the expertise to guide you through even the most complex tax situations and negotiate favorable outcomes with the IRS.

Don’t wait until it’s too late. If you know of anyone in need of assistance with an IRS problem, please have them call us at (404) 719-0330, or send us an email at GLG@eas.tax.

Let Us Handle Your IRS Problems So You Can Focus on What Matters Most!