5 Dangerous IRS Myths Debunked by a Tax Attorney
There is perhaps no government agency surrounded by more misinformation than the Internal Revenue Service. Between misleading radio advertisements promising pennies-on-the-dollar settlements and advice from well-meaning friends, it’s easy for taxpayers to get the wrong idea about how the IRS operates.
Believing these myths can lead to severe financial consequences. In this week’s “5 on Fridays,” Milton Law Group Managing Attorney Mark Milton cuts through the noise to debunk five of the most common – and dangerous – myths about dealing with the IRS.
Myth #1: The “Fresh Start Initiative” Will Wipe Your Slate Clean
You hear it constantly on radio and TV ads: “Call now to qualify for the IRS Fresh Start Initiative!” Mark is blunt about this: This is marketing fake news. It doesn’t exist in the way it is advertised.
What does exist is the Offer in Compromise (OIC) program. While an OIC can allow certain taxpayers to settle their debt for less than they owe, it is a difficult program to qualify for and requires rigorous financial disclosure. It is not a magic wand that wipes away debt just because you called a toll-free number.
Myth #2: The IRS is “Mean” and Out to Get You
It is easy to villainize the tax collector, but Mark notes that this isn’t necessarily true. Most IRS employees are simply civil servants trying to do their jobs. The absolute worst thing you can do is ignore them. Burying your head in the sand forces them to escalate collection actions. Most agents are willing to work with you if you are proactive and communicative.
Myth #3: The IRS Behaves Like a Normal Creditor
If you owe a credit card company $50,000, you might be able to call them up and negotiate a $25,000 lump-sum settlement to close the account. The IRS does not work this way.
IRS settlements are not based on negotiation skills; they are based strictly on complex formulas determining your reasonable collection potential and your ability to pay. You need a tax resolution attorney who understands these formulas to navigate the process.
Myth #4: Failing to File Your Tax Return Will Send You to Prison
Generally speaking, the IRS prefers compliance over incarceration. Their primary goal is to get people back into the system. While tax evasion is a serious crime, simply being behind on filing usually doesn’t lead to prison time – it leads to massive penalties and interest.
Myth #5: Budget Cuts Mean the IRS Isn’t Enforcing Tax Laws
Many people mistakenly believe that if the IRS is underfunded, and they won’t have the resources to catch non-filers. Mark points out that the opposite is actually occurring. The IRS is increasingly adopting Artificial Intelligence (AI) and automated systems to identify non-filers and discrepancies. We have seen a distinct uptick in automated enforcement actions recently.
Facing Tax Issues? Deal with Reality.
Relying on myths will only dig you a deeper hole with the IRS. If you have unfiled returns or owe back taxes, you need a strategy based on the law, not marketing gimmicks. Contact the tax attorneys at Milton Law Group today to discuss real solutions for your tax problems.