Imagine a horrible nightmare, being young, finally employed, and receiving a letter from the IRS about taxes due. What do you do? You have limited experience with taxes, plus limited income, and therefore, seemingly limited options. We recently encountered a similar situation.
One morning, a young woman contacted our office. She inquired about services after having received a letter from the IRS. She had no idea where to turn or what to do. She had done a little research to find out more about the debt. In her investigation, she believed that her employment agency accidentally reported both her and another person’s income onto the young woman’s social security number.
What do you do at this point when you’re young, in school, and only work part-time? This is clearly a situation that requires a more thorough knowledge of tax law and IRS tax debt. But this help can come at a cost.
Finding a Tax Solution
One comprehensive solution would involve an in-depth investigation of the tax returns, the W-2 Forms that were reported to the IRS, and a full review of both the young woman’s personal bank accounts and her tax account with the IRS. But this solution would cost more than the young woman could afford.
There is also the option of establishing an IRS payment plan. This is not necessarily the best choice because in this case, the validity of the debt was questionable. However, a payment plan would help prevent any collection enforcement.
You also have the option of hiring an IRS tax lawyer to resolve the situation. But here is a word of advice: fees for competent attorneys may exceed the amount of liability. You have to measure whether hiring an attorney is necessary, given the amount of liability. We are just being fair and honest.
For people in situations like these, we understand how hard this can be. The job market is not the best right now. Wages are low, and the cost to live is ever increasing. Many jobs open to current college graduates are paying $10-$12/hour with scarce employee benefits offered—if any. Such a person, receiving an IRS letter during this already tough time, needs solutions.
What to Do
My recommendation is to go back to the source. If your company’s error caused the tax liability, contact your Human Resources or Payroll department to have them resolve the problem.
Next, I would recommend ensuring there were no errors in your tax return. If the return was filed by a paid preparer, have that person check it over. Many tax return preparers have an error policy that can be applied if there are issues with the tax return, or if you later owe more than shown on the return. If you can prove there was an error, report this to the IRS. There is an IRS advocacy program that can help to get the situation resolved.
With either of the options listed, action on your part is required. But the correct action will save you money, and hopefully, lead to a resolution. If you are in need of a tax attorney, please reach out to the team at Tax Law Offices today.
Written By: Shavonne Taylor. Ms. Taylor is a Tax Case Analyst and frequent blogger with Tax Law Offices