At ZenBridge Solutions, we stay updated with the latest IRS data to help taxpayers navigate common tax challenges. Here’s a breakdown of the most pressing tax issues and how you can resolve them effectively.
Table of Contents
- Tax Penalties
- Unpaid Taxes
- Math Error Notices
- Non-Filers
- Tax-Related Identity Theft
- Underreported Income
- Tax Audits
1. Tax Penalties
Failing to comply with IRS tax regulations can result in penalties, whether due to late filing, underpayment, or incorrect reporting. While most penalties are civil, severe cases may lead to criminal prosecution.
Key Statistics:
- In 2021, the IRS issued nearly 41 million civil penalties totaling $37 billion.
- 82% of penalties were assessed on individual, estate, and trust tax returns.
- The most common penalties:
- Failure to Pay (51%)
- Estimated Tax Penalty (33%)
How to Fix It:
- Read any IRS notice carefully and follow instructions.
- If you owe a penalty, you can either pay the amount or request a waiver.
- Gather supporting documents if you plan to request penalty relief.
2. Unpaid Taxes
Millions of taxpayers file their returns but fail to pay what they owe, leading to penalties and accumulating interest over time.
Key Statistics:
- More than $120 billion in assessed taxes, penalties, and interest remain unpaid.
- Over 9 million delinquent accounts are currently tracked by the IRS.
How to Fix It:
- Pay your outstanding balance as soon as possible to minimize penalties and interest.
- Apply for a long-term payment plan if you can’t pay in full.
- Consider an offer in compromise to settle for a lower amount.
- Request a temporary delay in collections if you’re experiencing financial hardship.
3. Math Error Notices
Math errors on tax returns can lead to IRS adjustments. These errors include calculation mistakes, missing entries, or incorrect eligibility claims.
How to Fix It:
- Review the IRS notice to determine the changes made.
- If you owe additional taxes, pay by the specified deadline.
- If you disagree, respond within 60 days with supporting documentation.
4. Non-Filers
Each year, millions fail to file their tax returns on time. The IRS identifies these individuals using third-party data, assesses their liability, and applies penalties.
How to Fix It:
- File your tax return as soon as possible to avoid penalties.
- If you owe taxes, pay in full or set up a payment plan.
- If you are due a refund, file within three years to claim it.
5. Tax-Related Identity Theft
Fraudsters use stolen Social Security numbers to file fraudulent tax returns and claim refunds.
Key Statistics:
- Nearly 5 million Identity Protection PINs (IP PINs) were issued by the IRS in 2021 to help prevent tax fraud.
How to Fix It:
- File your tax return on time using your IP PIN.
- If you suspect fraud, report it to IdentityTheft.gov.
- Respond immediately to any IRS notices regarding identity theft.
6. Underreported Income
If your reported income does not match IRS records, you may receive a Notice CP2000 for underreported income.
Key Statistics:
- The IRS closed over 2 million underreporting cases in 2021.
- The annual tax gap due to underreported income is estimated at $600 billion.
How to Fix It:
- Review the IRS notice carefully.
- If you agree with the adjustments, pay any owed taxes immediately.
- If you disagree, respond with supporting documents explaining the discrepancy.
7. Tax Audits
Though tax audits sound intimidating, less than 1% of taxpayers were audited in 2021. The IRS conducts audits to verify tax return accuracy.
How to Fix It:
- Review the IRS audit letter to understand what information is needed.
- Gather the necessary documents and submit them promptly.
- Understand the possible audit outcomes:
- No Change: The IRS accepts your return as filed.
- Agreed: You accept and pay the proposed adjustments.
- Disagreed: You dispute the findings and may request an appeal.
How to Solve Tax Problems: 4 Essential Tips
1. Get Started Immediately
- Respond to IRS notices promptly to avoid escalating issues.
- Gather and submit all required documents to speed up resolution.
2. Understand the Problem
- Carefully read your IRS notice to determine what actions are needed.
- If you disagree, follow the proper appeal process with supporting evidence.
3. Explore Your Options
- Look into penalty waivers and payment plans if needed.
- Seek professional assistance if dealing with a complex tax issue.
4. Work with ZenBridge Solutions
- Our tax professionals at ZenBridge Solutions specialize in helping individuals and businesses resolve tax problems efficiently.
- Whether you need help with penalty relief, audits, or tax planning, we’ve got you covered.
For expert assistance, contact ZenBridge Solutions today! 📞 (800) 789-2549
🌍 www.zenbridgesolutions.com
