Chicago Bankruptcy Lawyers Warn of IRS Tax Audit Increase to Cover Debt
Uncle Sam is in a bind - and he might require your help.
To aid the federal government in covering its $1 trillion dollar deficit, the IRS has ramped up its focus on individual workers, small business owners and the self-employed in the form of "soft letters" and tax audits.
If you haven't reported all your taxes, made a mistake or otherwise raise a red flag at the IRS, you might get a "soft letter" - a polite but serious notice encouraging you to refigure your taxes. Your best bet is to quickly comply because, if the IRS doesn't get its funds, their next step is to mail a correspondence audit - a letter demanding payment for a certain item (sometimes more than you really owe) - or, even more scary, send out an agent for an actual audit.
No need to panic if you haven't received anything yet - your odds of an audit are still relatively slim, especially if your employer files a W-2. But it's best to be prepared. While your chance of being audited is small, it's twice as likely as it was 10 years ago. And just because you haven't gotten notification this year doesn't mean you're in the clear. It can happen any time during the year, even if you've already received a tax refund.
Sometimes, it's negligence that leads to tax underpayments. But often, it's a decision by someone in debt who doesn't think she can afford to pay taxes. If that's you, it's time to stop stalling - unlike other debts, these can actually land you in jail. Fortunately, you have options.
Bankruptcy can discharge certain income taxes, such as those that are at least three years old and voluntarily filed two years ago. If you can't already tell, tax debt can be particularly complicated. For that reason, it's advised that you contact a bankruptcy attorney to find out if your debts qualify. As for those other debts, bankruptcy can halt creditor actions like foreclosure and make your payments more affordable, so you can concentrate on taking care of your primary obligations - like income taxes.
Taxes can be confusing, but you don't have to be an expert to get them figured out - that's why our DebtStoppers attorneys are here. We'll answer your questions for free. Check us out online to sign up for our complimentary personal debt analysis. The economy is rough enough as it is - don't let taxes be the barrier between you and financial freedom.