Advice for Wiping Away the Fears of the IRS

Too many people fear the IRS. On April 15^th they rush and make silly mistakes to file their taxes even if they are eligible to get an extension. If some people receive a letter from the IRS for an audit the way they respond you may think that there is a death or a divorce in their family. For several years during tax time the IRS would release stories to the media about someone who is well known to the general public who was penalized by the IRS. In some cases, the person assets were seized for unpaid taxes. They may go bankrupt as a result of their tax liability or may be even going to jail for tax evasion.

Given the above the fear seemed to be justified but becoming knowledgeable about the tax system may remove all your fears. First, only those who owe taxes should file and pay their taxes on or before April 15^th to avoid late payment and late filing penalties and interest. If you can’t pay all the taxes you owe then you should make an arrangement with the IRS and make a payment plan. You will avoid the late filing penalty but you will pay interest on the amount due.

Secondly, and audit by the IRS is nothing but a reconciliation by the IRS of the information you file on your tax return. You should avoid entering estimated income and expenses on your tax return. You should have documents that support every item you enter on your tax return and your entries should be in compliance with the tax laws. So when you prepare your return you should do so as if you will be audited. If you follow that simple advice when the IRS requests an audit all you have to do is to present them with your supporting documentation and there will be no need to fear.

Finally, most people who get into trouble with the IRS violated the principles discussed above. In many cases, they disregard the many correspondences sent to them by the IRS. Many of the worst case situations could be avoided if the tax laws were complied with and timely responses were made to the IRS to resolve any controversy or disagreement. It is very important to follow the tax laws or work with a professional who knows what he/she is doing. The above discussion is also applicable to those States that have an income tax system.