I think some people have misconceptions about money. And if you think about it, we all have lots of misconceptions about lots of things, including the IRS.
I admit that sometimes I don’t realize that what I know is not common knowledge for everyone. (See misconception right there.) So, I thought I do my part in correcting that wrong and shed some light on the three most common misconceptions I hear when it comes to the IRS.
Misconception #1 – I will just call the IRS, and they will help me resolve everything.
Maybe that is true if you have a tax question and have the patience to wait long hours on the phone. But if you owe money to the IRS don’t kid yourself. The IRS is the largest collection agency in the country. Its mission statement is to collect as much as possible in the shortest amount of time. (I am paraphrasing here, but you get the gist.)
Misconception #2 – If I owe money to the IRS then my only options are to get into a payment plan or negotiate to pay 10 cents on the dollar.
That is what all the so-call “tax experts” like to say, but that is not true. Maybe you should review your tax return and see if there are some deductions you missed that could reduce your tax liability or maybe you are months away from the IRS having to write off the debt so you might as well stay put. I can think of another eight other options from the top of my head. So no, a payment plan or negotiating to pay less are not your only options.
Misconception #3 – If I can’t pay the taxes owed, then there is no point in filing my tax return. I will file it later.
While I understand why it may seem more practical to just wait, in practice, this is detrimental to you. For starters, you will end up paying more in penalties. Also, if you don’t file a tax return, sometimes out of the kindness of its heart, the IRS will prepare a substitute tax return with all the income, but none of the deductions and credits.
So those my friend are the top three misconceptions I hear all the time.
To your clarity,