The IRS is one of the most controversial and notorious government agencies in the world, perhaps because of how it affects our lives in daily basis. We are taxed in almost every activity we do, whether you’re shopping, doing work, or drinking coffee. There’s always tax.
Because of its popularity, many different pieces of information are available online, but sadly, not all of them are true. In fact, even the IRS collection agents themselves provide wrong information to taxpayers, which can be dangerous since a simple question can mean a potentially huge error and a lot of money for back taxes.
Here are true and important facts to remember about the IRS by my IRS Team :
1. The IRS isn’t in charge of calculating how much you owe. You are responsible for it. That’s why the forms are available online so you don’t have to miss the filing date and you can work on them as soon as you can, thereby eliminating calculation errors due to time pressure. However, it is mandated to verify the data you have provided and in so doing determine how much you actually owe to the government. Most of all, it is established to collect taxes in whatever way possible.
2. The IRS can run after your assets. The IRS is like a typical creditor. When you cannot pay your financial obligations, it can be provided by the court with the ability to run after your assets. The IRS can add a lien to your real estate property such as a home as a form of security. In the process, you may not be able to sell or refinance it. It can also garnish your wages up to 70%. This simply means that only 30% is given to you by the company, and we haven’t talked about other types of deductions yet. Worse, they can levy your assets or seize them to collect debts.
3. It is considered a crime not to file your taxes. You don’t really get imprisoned if you still have a tax liability to pay. But not filing at all is a completely different story. It’s a clear form of tax evasion. Al Capone was sent to Alcatraz not because he was a gangster but because he tried to evade paying his taxes.
4. You can end up paying more than what’s due. Your tax liability can balloon and be worth twice or even thrice as much as your initial due because of the penalties. The IRS has over 100 of them. By simply not filing on the deadline, which is on April 15, you are slapped with 25% penalty on the amount due. If you fail to pay the liability including the penalty and other fees, an additional 25% is charged.
5. You have control over your taxes. You cannot do anything about these taxes as they are mandated by law, but you can control how much you pay without going illegal about it. For instance, you can maximize the deductions and credits. You can also avoid the 25% penalty by filing on time or early. A tax lawyer can be extremely helpful since he can create a viable tax plan that fits your needs and answers your concerns.
6. The IRS can file on your behalf. If for some reason you didn’t file any return for the past years but the IRS can get hold of your income sheet, the agency can file on your behalf. Take note, however, that it doesn’t take into account deductions, benefits, exemptions, and credits, so you can end up paying a lot of money.