tax, tax mistakes I’ve seen thousands of cases where the IRS grabs tax refunds from taxpayers. In most cases, there is one cause for this irritating IRS practice: The taxpayer didn’t respond to the IRS’s letters.

It’s as simple as that.

When you have a balance or a new assessment due, the IRS sends out a notice that gives you two ways to respond—by telephone or by mail.

To avoid the IRS keeping your refunds, all you need to do is respond and find out why there is an assessment. Sometimes the IRS made a mistake with your taxes and you owe nothing—by simply responding, you can make the new assessment go away. Or, you can correct whatever error caused the issue and resolve the problem that way.

When you actually owe the assessment

Sometimes, though, you may contact the IRS only to find that you do owe money. In these cases, things may get more complicated, and you may need to get a tax professional involved. Contact an enrolled agent, CPA, or tax attorney to help you identify the problem and solve it.

You may be facing an IRS balance for one of the following seven reasons:

  1. You owed money when you filed your tax return and didn’t pay it.
  2. You did not file a tax return. The IRS filed a substitute for return (made an educated guess about how much you might owe in taxes) and assessed a balance due.
  3. You ignored a notice, and the IRS went ahead and assessed a tax.
  4. You were audited, and the audit generated a balance due that you haven’t paid yet.
  5. Your spouse (or ex) generated a balance due that you cannot afford to pay, and you don’t really feel that you owe it.
  6. You were a victim of identity theft. Someone else stole your refund or withholding and the IRS won’t credit you for taxes you already paid.
  7. You owe other debts. The IRS is a collection agency for the Social Security Administration, state child support agencies, and federal student loans, among other things.

What you can do to get your refund

At this point, it’s too late for preventative steps—you already owe money. So, what is the cure? How can you get your tax refund?

Let’s look at solutions by the numbers above.

1 and 4: Call the IRS and set up a payment plan, called an installment agreement. Schedule the payments to come directly from your bank account. The IRS will stop grabbing your refunds or your paycheck.

If you can’t afford to pay the bill, see if you qualify for an offer in compromise. Not everyone does, so don’t pay thousands of dollars to a company that says it can help you get one. It will likely just make things worse.

2: File a tax return for the year in question. You might still owe money, but it will be a lot less than the balance the IRS made up on your behalf.

3: Go back and dig out the notice or source of the assessment. You still have time to fix the problem if the IRS was wrong, but you’ll probably need a tax pro.

5: If you believe you should not be held liable for the taxes of your spouse or former spouse, you may have an innocent spouse case. Pursue it.

6: Identity theft is one of the biggest problems the IRS is facing this year. It has an area of its website devoted to helping you. Use this resource, immediately, to figure out your next steps.

7: When it comes to other debts, the IRS is powerless to help you. You must resolve the balances due directly with the agency.

While you may owe money to the IRS, ignoring its notices won’t make the problem go away. It will only delay the solution.

 

Eva Rosenberg, EA is the publisher of TaxMama.com, where your tax questions are answered. She is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.