Why Resolve your Tax Debt

Last updated on June 13, 2023

Many taxpayers feel that they can avoid paying tax debt by ignoring it. Even though initially, you may not find it bothersome to have a tax debt, but after the IRS takes notice of the non-compliance, they will initiate collection actions.

The IRS will initially send notices to inform you about the tax debt and how it can be resolved. Receiving a notice means that the IRS has taken note of the tax debt and begun collection actions.

It is important to initiate resolution efforts so that you may appropriately respond to IRS notice. The information on the notice will help you to understand the amount of tax debt you owe, but remember if you did not file your taxes, the amount stated on the notice is an estimate of your tax liability. The IRS does not include deductions that you qualify for when calculating your tax bill. You can file your tax return with deductions and credits that you qualify for to lower your tax liability. If you respond to the notice early, the IRS will correct their estimate of your tax liability.

Early resolution of tax debt helps taxpayers to avoid the piling up of IRS penalties and interest, as well as avoid collection actions. Even if the IRS has not yet sent a notice regarding the payment of tax debt, penalties and interest are being added to the original tax debt amount. Therefore, do not wait for the IRS to begin collection actions to resolve the debt. Make resolution efforts early to pay the least in back taxes.