Back tax debt problems come to the forefront during tax season

As tax season rapidly speeds by, it's probably a good time for those with tax problems from prior years to take some action to try and resolve those issues. A person who struggles with tax debt often falls into a deep cycle of self-perpetuating procrastination. In California and throughout the country, there are some options open to a person who faces intimidating back tax debt.

There are today promotions from numerous private companies contending that they can solve your tax dilemmas almost instantly for pennies on the dollar. All too often these companies without credentials have been able to coax significant retainer fees out of consumers without delivering on their enticing message of a quick and easy fix. Although this option may have panned out for some, it's like entering into an unknown land without a map or a personal guide. You might just end up lost and increasingly frustrated.

However, that doesn't mean that it's best to take no action. The fact is that the tax bite is getting bigger and bigger with each new day of penalties. The imposition of penalties begins to take on an exponential escalation that few persons could resolve in a single lifetime.

Therefore, an average consumer facing back taxes may benefit by first trying to resolve the situation with the IRS directly. In the past, that has proved to be a slippery slope in many instances due to the massive layers of inefficiency and unresponsiveness built into the IRS bureaucratic culture. There may be some improvement in that respect. A recent 'Fresh Start Initiative' offered by the agency may be helpful. Although it's presently unknown if this option is reasonably viable, it's worth a try.

The IRS also provides an Offer in Compromise program that can result in a reduction of your overall tax debt if you qualify. This may possibly result in acceptance of a discounted up-front single payment or a monthly installment amount. However, for those facing more critical problems not amenable to simple solutions, a resident of California facing a crisis of mounting severity may find relief by consulting a tax professional who specializes in tax cases. If the issues in question are approaching critical mass, it may be time to protect your rights and position by obtaining appropriate counsel.

Source: The Motley Fool, "Need Help With Back Taxes? Here's How to Get It," Dan Caplinger, March 22, 2013

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