9 Tips to Avoid a Visit from IRS Collections

Just the name is enough to inspire shivers: IRS collections agency. Here are some tips for this tax season to avoid getting a knock from IRS collections.

1. Take Heed When Choosing Your Tax Preparer: If you're paying someone to do your taxes, you better make sure that you trust them. If they claim fraudulent deductions then you, the client, could be at risk for an audit. And when you have to call upon an NY tax attorney for tax debt relief, you'll wish you had found a solid tax preparer in the first place.

2. List Your Monies: Match your income with the W-2s and 1099s that the IRS collections surveys. If there's a discrepancy, the IRS collections will hunt you down and audit you. If you think that they missed something, or you realize that you did, you can contact and pay them before the situation gets out of control.

3. Answer Everything: If you don't leave any questions blank, suspicion dims. If you have special circumstances, a detailed description doesn't hurt.

4. Don't Claim What Isn't Deductible: Sole proprietors are especially at risk. For business use of your home, you may need to file a different form, or double check to make sure you qualify for the deduction. If you're going to claim deductions, be ready to provide the appropriate paperwork.

5. Avoid Certain Forms: Form 5213 prevents an audit for the first five years of your business, and is usually used for side ventures. This guarantees an audit after five years. In order not to get in trouble, you have to have a profit for three or more years. Or you can bypass this issue altogether and file a for-profit business.

6. Be Meticulous: Social Security numbers and tax ID numbers should all match. If they don't, you're practically asking for the IRS collections to come a-knocking. Math errors are practically impossible if you electronically file.

7. Business Status: Incorporation can make you much less liable for an audit and give you greater protection as an individual.

8. The State Too: State taxes are shared with the IRS Collections and if you have omitted anything on your state return, you will almost surely be audited by the federal collections agency.

9. Prepare: IRS collections performs audits sporadically, such as a random audit for employment tax returns scheduled every three years, for example. Thus, keep all your numbers in order, keep your receipts and make sure you haven't been using your business credit card for personal expenses.

Following these nine steps will help you avoid a trip to your NY tax attorney and the unpleasant visit from the IRS collections agency. Good luck!


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JosephYBalisok.com is the office of a NY tax attorney who specializes in innocent spouse relief, levies, payment arrangement, tax debt relief and IRS collections.