5 Common Tax Issues That Taxpayers Face
Updated: Nov 4
As the end of the tax year approaches, many taxpayers are scrambling to fill out their taxes. This is because there are so many different things that can happen to disrupt the process and create issues for your taxes. Tax season is always an exciting time for many individuals, but it can also be a stressful one. With so many people filing their taxes this year, there are bound to be some common mistakes that most taxpayers face. Every year, the IRS releases their Data Book in which gives insight on taxpayer issues by the statistics!
Penalties - The IRS has over 150 different sorts of penalties. Only around 11% of all fines are forgiven, with the remaining 80% involving individual taxpayers. The most common punishment is "failure to pay." Individual penalties for late payments, unpaid taxes, and failure to file account for 96% of all fines.
Non-filers - If you add small businesses, there are likely several million more non-filers identified through W-2s/1099s on top of the 60 million business and individual non-filers. The IRS can submit a "substitute for return" for a taxpayer using information it already has (W-2s/1099s).
Underreported Income - Out of 150 million individual filers, 27 million do not report all of their earnings on their 1099s or W-2s. This issue of underreported income is a simple fix for the IRS, and they'll usually take notice immediately. The IRS uses the IRS Automated Underreporter Program (CP2000 notice).
Wrong Calculations - The good ol' “I made an error and the IRS adjusted my refund/balance owed” excuse is utilized quite often. The most prevalent mistake is improper tax calculation. The IRS immediately modifies your return by sending you a notification.
Unpaid Back Taxes - Whether it be because they feel it is not a necessity or because they're not able to pay it off, the biggest problem that too many taxpayers face is their unpaid taxes. About $539 billion is owed to the US Treasury at the moment. Individual taxpayers account for 84% of all taxpayers (16.8 million owe the IRS). Over 90% of people get a simplified installment arrangement. The Internal Revenue Service is aggressively pursuing 11.2 million delinquent accounts.
Tax Relief Support
If you've found yourself in a nasty mess with the IRS, take a deep breath. It'll be okay. Unpaid back taxes may be the biggest issue that taxpayers face, but the resolution may be very simple. For taxpayers who may have difficulty paying off an excessive amount of tax debt, there's a relief program that consolidates many major relief programs into a one-size-fits-all assistance program; The IRS Fresh Start Program. Our clients are referred to our Fresh Start Program in order to avoid bankruptcy, acquire debt relief, and settle their debts in a quick manner. Let us give you a helping hand today!
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