The Worst Case Scenario: What Happens if You Settle With the IRS
When it comes to your taxes, you have three options: 1) pay what you owe, 2) file for an extension or 3) settle with the IRS. So…which one should you choose?
If you’re considering settling with the IRS, you need to be aware of the consequences. This post will outline the worst-case scenario if you decide to go this route.
You’re thinking about settling with the IRS. Smart move. But before you do, there are a few things you need to know.
Settling with the IRS is always a better alternative than going to court. You’ll get a reduced amount of debt that you owe, and you’ll avoid additional penalties and interest.
But there’s always a risk involved when you settle with the IRS. The biggest risk is that you might not be able to pay back what you owe in the future. If that happens, the IRS could come after you with all guns blazing. They could seize your assets, garnish your wages, and basically make your life a living hell.
So is it worth the risk? Only you can answer that question. But before you make a decision, be sure to weigh all the pros and cons carefully.
What Is an IRS Audit?
An IRS audit is when the IRS reviews your tax return to make sure everything is correct.
It can be a scary process, but the good news is that it’s not as bad as you might think. The IRS has three levels of audits:
- Correspondence Audit: This is the most common type of audit, and it happens when the IRS sends you a letter asking for clarification on specific items on your return.
- Office Audit: This is when an IRS representative comes to your place of business to review your records.
- Field Audit: This is when an IRS agent comes to your house or office to review your records in person.
The key thing to remember is that the IRS is not out to get you. They just want to make sure that your tax return is correct. So don’t be afraid to reach out for help if you’re not sure about something.
How Can You Avoid an IRS Audit?
IRS audits can be intimidating. But if you’re proactive and take steps to avoid them, you’ll be in a much better position.
Here are a few things to keep in mind:
– First and foremost, always file your taxes on time. If you’re late, that’s a red flag for the IRS.
– Keep good records. The more organized your records are, the easier it will be to prove that you’ve been reporting your income correctly.
– Don’t make obvious mistakes. The IRS is more likely to audit someone who appears to be cheating on their taxes. So be careful to report all of your income and don’t try to hide anything.
What Happens if You Are Audited by the IRS?
If you’re thinking about settling with the IRS, you need to be aware of the risks involved. In particular, you need to know what could happen if you’re audited by the IRS.
The good news is that if you’re audited, and the IRS finds that you’ve underpaid your taxes, you won’t have to pay the full amount of taxes, penalties and interest. You’ll only have to pay the amount that the auditor determines that you owe.
However, if you’re audited and the IRS finds that you’ve overpaid your taxes, you’ll have to pay back the entire amount, plus interest and penalties. So it’s definitely a gamble.
How to Settle With the IRS?
You may be wondering, “How do I settle with the IRS?” Well, the process can be a little complex, but we’re here to help.
First, you need to calculate how much you owe. This can be done by reviewing your past tax returns and noting any outstanding balances or penalties and interest that have accrued.
Once you have an idea of how much you owe, you need to get in touch with the IRS. You can do this by visiting the website or calling the toll-free number. Once you’ve made contact, you’ll need to provide some information about yourself and your tax situation.
The next step is to submit an offer in compromise. This is basically an agreement between you and the IRS that states that you will pay a certain amount of money in exchange for the IRS forgiving the rest of your debt. Keep in mind that submitting an offer in compromise is not an easy process, and there’s no guarantee that the IRS will accept your offer.
If all else fails, you may have to consider bankruptcy. This is definitely not something we recommend, but it is an option that’s available to you.
Should You Settle With the IRS?
You might be wondering if you should settle with the IRS. The answer is: it depends. Every situation is different, and only you can decide what’s best for you.
But here are some things to keep in mind if you’re considering settling: the IRS will want to know how much money you owe them, and they’re not going to let you off the hook that easily. In fact, they may demand that you pay back the full amount plus interest and penalties.
And if that’s not bad enough, the IRS could also come after your assets, including your home, bank account, and retirement savings. So before you decide to settle, make sure you weigh all your options and understand the risks involved.
How Can Dreis Accounting Services Help?
No one wants to think about the IRS, but if you’re faced with an audit, it’s important to know your options. Settling with the IRS can seem like the easy way out, but it can come with some major consequences.
If you’re considering settling with the IRS, make sure you weigh all your options and talk to a tax specialist to see what would be the best course of action for you. Reach out to us for a consultation and get personalized tax resolution advice
