How to Resolve Tax Problems

Do you think your work ends with filing your tax returns? It may not. In this article, we delve into the types of issues you could face as a taxpayer even after filing your annual returns and how to resolve them.

The IRS routinely conducts tax audits to augment its tax collection efforts. If they find any discrepancy in your return, they could send you a notice asking for quick remedial action. That’s why accurately filing your tax return is important!

Here are a few reasons why the IRS could send you a notice on your tax return and what you can do to save yourself from hefty fines and penalties.

Types of tax problems

Tax penalties

We already took a deep dive into different types of tax penalties you could face a few days ago. The tax authorities could seek a penalty if you have made a mistake in filing, reporting, or paying taxes. The typical consequences are that you may be asked to pay a fine and rectify the return. As we saw earlier, over 80% of such notices are for failing to pay taxes or for paying an incorrect amount.

How to resolve it?

Several remedial measures are available including appealing for a reduction or waiver of penalty with the help of tax experts, if needed.

Unpaid taxes

If you have forgotten to pay your taxes or paid less than the specified amount, you can be hit with a 0.5% penalty for every month. Any balance to be paid is also subject to interest. If you fail to address the situation, interest and penalty will continue to accumulate.

How to resolve it?

Some options available include a long-term payment plan that allows you to pay the taxes in monthly installments without the added burden of interest. Alternatively, you can explore an offer in compromise.

Math-error notices

Filing taxes can be a complex affair, especially if you are doing it by yourself. There is a lot of scope for simple computational errors, missing entries and incorrect values. In many such cases, the IRS corrects the error and processes the return without you having to do anything. However, in some cases, they may send you a notice requiring action on your part.

How to resolve it?

Solutions depend on the kind of math error reported. You may need to pay more taxes or receive a refund where applicable.

Non-filing of taxes

You will receive an IRS notice if you have missed the tax filing deadline. The notice could demand a penalty for non-filing of returns if the tax authorities deem fit.

How to resolve it?

Filing returns is essential to resolve this issue, with a full payment of taxes owed where applicable.

Underreported income

If you have failed to declare any income, this is considered underreported income and the IRS can send you a notice to remedy the situation. This happens when the income reported on your tax return fails to match with income consolidated from third-party sources.

How to resolve it?

Additional payment of taxes and/or penalties may be needed to remedy this notice. If in doubt, consult a Tax Expert for advice.

This is not an exhaustive list of tax problems you could face after filing your return. If you get a tax notice, the best thing to do would be to work with the authorities and/or Tax Experts at KnowVisory and resolve it at the earliest.

Whether you need expert advisors to aid decision-making or help in preparing your returns, Knowvisory’s Tax Planning & Return Preparation services are here to help. We can help you understand your tax deductions, and liabilities, and optimize your tax strategy for maximum savings and benefits.

Contact us today and get expert help in filing your tax returns.