What is my balance with the IRS? How can I be sure my IRS account is correct?
When you owe money to the IRS, most people will inevitably ask the question, “How much do I owe the IRS?” The IRS has created an online tool to help you check your account and make sure everything looks accurate. This tool attempts to provide your total amount owed through the current date, but the amount is only based on current data, and not on data that is still being processed. If you are not able to access the online tool, you can also call the IRS or visit one of their local offices around the country.
Is My IRS Account Balance Accurate?
When retrieving your IRS balance, it’s important to understand that the IRS calculations may not include information about the following:
- Recently filed tax returns or tax returns that are being processed
- Pending payments to the IRS or adjustments. IRS payments may take 1 to 3 weeks to be posted to the account.
- Information about your business account. The information provided by this tool is limited to your individual tax account.
- Installment agreement fees
It’s possible that just waiting a few business days for your account to update will display the correct balance. Unfortunately, your IRS balance may also be incorrect due to other factors.
Checking your IRS Balance for Accuracy
Like a credit report, your IRS account balance may not be correct, have problems, or present an incomplete picture of your tax situation. A tax account should be completely reviewed to ensure accuracy by evaluating the following additional factors and correcting or resolving these items in your tax account.
Substitute for Return Assessments
If your account has any Substitute for Return assessments, this is usually an indication that the IRS filed one or more tax returns on your behalf and assigned or assessed the tax to you – even if the tax return is incorrect. Our experience has found that the tax reported to be owed on a substitute for return is usually incorrect. Accordingly, you will need to correct any Substitute for Return errors in your tax account which usually corrects your IRS balance once the IRS has reconsidered the tax return for your changes.
A CP2000 Letter or Notice
A CP2000 letter or notice is issued when the information received directly by the IRS does not match income or payment information reported on your individual tax return. When a CP2000 Notice is issued, you will need to quickly respond according to the instructions contained in the letter. Usually, the CP2000 notice acts like a pending tax assessment, and additional amounts can potentially be added (sometimes in error) to your account for additional taxes, penalties, or interest.
Penalty Relief Situations
We often find situations that allow us to reduce accrued penalties in IRS accounts. Eligible penalty relief situations should be pursued to reduce your balance owed to the IRS.
Sometimes, an active tax audit has just been opened for a tax year that hasn’t been closed by the statute of limitations for adding taxes to your balance (known as the ASED). You will want to know if a tax audit is about to be opened and identify the ASED date since this information can dramatically impact your future account balance.
Collection Statute Expiration Date
There is a statute of limitations for collecting tax debt known as the CSED. Generally, this statute of limitations is 10 years, but it can be extended by certain events. You will want to identify when a CSED is approaching for a tax balance since the IRS will be prevented from collecting this debt after the CSED date. We’ve seen extremely large tax balances go away once a CSED date passes.
Unposted Accrued Penalties and Interest
The IRS almost always has accrued penalties and interest that have not yet been posted to the account – depending on the day you pull your account balance. We attempt to calculate the accrued, but unposted penalties and interest, when you use us to pull your IRS account transcripts.
Incorrect Tax or Penalty Additions
Occasionally, we find Incorrect tax or penalty additions in an IRS account. They are sometimes difficult to identify, but such situations should be corrected so that you aren’t overpaying your tax balance.
Why a Good Tax Representative Can Help Settle Your IRS Balance
All of the situations identified above can be identified by a qualified tax professional and need to be corrected in your IRS account. A good tax resolutions representative will pull a full set of IRS transcripts and decide the most effective means for correcting and resolving the IRS account balance.
In evaluating your account balance, IRS representatives also usually consider settlement options and tax resolution opportunities. If a settlement option is available, you may not even need to correct an erroneous IRS balance: saving you and your tax professional valuable time and effort.
Understand Your Real IRS Debt Situation?
If you have tax problems or unpaid tax balances, Private Tax Solutions will conduct a full IRS account analysis and review your transcripts and consult with you about any account problems before you hire us. This review is critical to understanding your tax problems and your real IRS debt situation.