Here’s a hypothetical -- and, in many instances, a reality -- for some taxpayers in Minnesota and nationally: As an honest and conscientious person, you want to fully satisfy your currently owed tax debt, but you absolutely know from staring at the amount demanded that you cannot write a check to cover it.
Although the Internal Revenue Service is often regarded by American taxpayers as a stern and uncompromising agency (with that view obviously being justified in many millions of cases), that does not mean that the IRS is flatly unwilling to engage in good-faith negotiations and compromise on alleged tax debt owed in select instances.
Federal workers in the United States owe over $3 billion in back taxes, according to the Internal Revenue Service. That comes out to roughly 3 percent of federal workers having unpaid taxes. While this may seem like a high number, it is low compared to the overall population. The IRS said that at least 8.7 percent of the overall population owes back taxes.
When the Internal Revenue Service believes that someone has not paid his or her tax burden in full, the agency will likely issue a notice of deficiency. In essence, this means that IRS tax collectors will pursue a taxpayer to settle the outstanding bill. Although this is how tax collection has worked for quite some time, a congressional proposal could introduce dramatic change.
Few people want to go through the experience of being notified of delinquent taxes by the Internal Revenue Service. Many of those who wind up in this situation might also be dealing with other financial issues, so tax debt would only add to existing anxieties.
Many readers may have heard that they should keep paperwork from tax returns for three years. This rule of thumb is based on the idea that the Internal Revenue Service has three years to initiate a tax audit. Once this benchmark is reached, people might feel a sense of relief.
Many Minnesota residents make painstaking efforts to plan personal budgets and finances. However, no amount of preparation can account for unexpected, drastic changes in income or expenses. Knowing this, a person can fall behind on financial obligations. Along the way, a person could also fail to meet his or her tax burden.
As the new year continues to settle in, many Minnesota residents are beginning to think about their state and federal income tax filings. Of course, this means it's necessary to gather records of income related to work, investments and other financial instruments. What some people may not realize is that that canceled debt is also considered a part of overall income.
Over the last several years, Manny Pacquiao has earned his way to becoming one of the most successful boxers in the world. In fact, he was listed as the 14th highest paid athlete in 2013 by Forbes. Of course, these earnings aren't without sizeable tax liabilities.
Life can be full of twists and turns. Keeping this in mind, a person's financial fortunes can change almost overnight. A medical emergency could create a significant amount of debt, leaving an individual wondering what to do next. In this situation, it's not hard to understand why people may suddenly be unable to pay their bills, including those for the Internal Revenue Service.