Thousands of taxpayers hear from the Internal Revenue Service (IRS) every year about mistakes they made when filing. You are given the opportunity to correct these mistakes and remedy your tax situation before penalties make your situation worse. But, what about when the IRS makes mistakes?
Ultimately, IRS revenue agents and revenue officers are human. Human error is an element of life of which we are all well aware and for which we are able to prepare. So, what are some mistakes we frequently see from the IRS and how should you handle them?
Lost or Misplaced Tax Returns or Other Documents
The Internal Revenue Service isn’t immune to clerical errors. Some mailed taxpayer documents get lost in the process and this often puts the taxpayer at risk. Agents ultimately have a responsibility to apply penalties based on the information available to them, so if certain documents, returns, or payments are missing it creates additional challenges for taxpayers.
In order to minimize the risk of this happening (or to give you the ability to challenge it), you will always want to send documents through certified mail with a return receipt requested. Also, it’s important to always keep copies for your own records. This ensures accurate accounting on your end should a document go missing.
If you are being asked for a payment that you already made, it’s important to access the financial records and receipts to make sure you aren’t being double charged.
Incorrect Collection Statutes Due to Pending Installment Agreements
In general, the IRS has 10 years to collect taxes. Certain events “stop the clock” and give the IRS additional time to collect. When you ask for an installment agreement and the IRS determines that your request is legitimate, your status with the IRS should move to installment agreement pending status. This pauses the collection statute.
However, after your installment agreement is approved or denied, the IRS should take you out of pending installment agreement status. However, if the IRS forgets to take you out of pending status, the collection statute can be paused indefinitely, giving the IRS unlimited time to collect the taxes from you.
The rules state that you are only able to be in pending status for six months. But we have worked with clients who end up stuck in pending status much longer. If this happens we can review their IRS account transcripts to see whether the IRS has forgotten to update their status and whether the IRS is still allowed by law to collect the taxes. If you owe taxes that are more than 10 years old, it is important to review your IRS transcripts to see whether the IRS may still legally collect the taxes.
Excess Personal Penalties for Business Tax Issues
You may become the target of certain penalties and fines when you own a business that isn’t paying its taxes. These penalties pile up quickly, but they can also be taken care of if your business catches up on overdue tax bills.
If you are still being charged personal penalties after your business pays the taxes owed, you should be credited and released from those personal tax liabilities.
Talk to an Attorney to Correct IRS MistakesYour best bet to remedy these issues without incurring any additional penalties is to work with an experienced tax attorney. Give us a call or Schedule a Consultation when you end up in trouble with the IRS and need to resolve those issues.
Robert V. Boeshaar Attorney at Law, LL.M.,PLLC
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