Lower Your Taxes

1. You May Be Able to Negotiate a Lower Amount If You Owe Back Taxes – Although the IRS is aggressive in its collection efforts, it does acknowledge on its website that if you do not have the ability to pay your back taxes in full, you may be eligible to settle for a lesser amount through an Offer in Compromise. 2. They Don’t Want To Seize Your Assets – Usually it’s too expensive to seize your physical property and hold a public auction, unless there are large sums of money involved and expensive property. But you still don’t want to be delinquent, because it’s relatively easy for them to seize a bank account or garnish wages, and they will if you are in default on your taxes and don’t work out a payment arrangement with them. 3. They Don’t Want to Take You to Court – A trial is relatively expensive so they will probably try to exhaust all avenues and be open to a settlement before going to court. If you have a dispute, there is an appeals process designed to resolve tax controversies without litigation. Remember though, the law is on the side of the IRS if you are at fault. 4. Their Agents Can Make Mistakes – The IRS is not infallible and when you are dealing with lots of numbers there’s always going to be mistakes. If you are convinced that they made the error, not you, file a complaint. 5. You Need to be Persistent and Organized – The IRS is a huge bureaucracy serving hundreds of millions of taxpayers, so don’t expect them to cater to you with outstanding personal service. If you have an issue, it pays to document as much as possible to support your case. And pay attention to dates and deadlines, because once they notify you of a hearing, etc. they aren’t going to send you friendly reminders, it’s up to you to be there. Note: This is not to be construed as tax or legal advice. If you have questions concerning your situation, you should consult with your tax and/or legal advisor. There may be additional information that you can use on the IRS website.

If you donated a vehicle to charity in 2011, good for you! The charity will benefit and you'll get a nice tax deduction, but be aware of the tax implications. If the vehicle had a claimed value of more than $500, your deduction is limited to the gross proceeds from its sale by the organization. In years past, some taxpayers abused this deduction by overstating the value of vehicles they donated to charity. The IRS scrutinizes these deductions more closely now.