Four of the Most Common IRS Tax Problems
For years, politicians have been talking about simplifying the process of filing federal taxes, but despite the promises, the process continues to be complicated and stressful. But as bad as preparing taxes can be, it pales in comparison to the sinking sensation of receiving an IRS notification telling you that you’ve done something wrong.
The IRS reviews each tax return for accuracy and to ensure that taxpayers have paid the amount that they owe, and when they find something wrong, they immediately send a letter alerting the taxpayer of the problem. Though there are several issues that can arise, the four situations listed below are common reasons for the IRS to contact — and demand action — from you.
- Failure to file a return at all
Every American is supposed to send in a tax return, whether you owe the government money or whether the government owes you. Failure to file can lead to you not getting the refund money you’re owed — you only have three years to get your paperwork in to get money back, and if you’ve shortchanged the government then your failure to file can lead to fines adding an additional 25% of what you owe, charged over five months.
- Failure to pay taxes
If you receive a form CP14 from the IRS it means that you have shortchanged the government on your taxes and you owe them the difference. If you both fell short on your payment and didn’t file a return, you’re likely to have to pay penalties and interest too. If your debt is substantial the agency will allow you to negotiate a Partial Payment Installment Agreement (PPIA) to break your payments into monthly installments.
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