Expert advice on dealing with unpaid taxes, uncollected refunds
By Russ Merrick Special to the Acorn

Tax season will roll around before you know it. Your family and friends will soon start collecting and organizing their tax documents.

If it's been awhile since you filed a tax return and need help, or if you can't find all your receipts and tax documents, don't panic. There is help for you.

Filing delinquent returns

Taking the time to file the missing tax returns is better than waiting for a letter from the Internal Revenue Service.

Because the IRS receives copies of all W-2s and 1099 forms, the revenue service will usually send you a letter stating they have prepared a substitute return based on the information they have. You will have a limited time to respond before the tax is assessed.

On the other hand, there is a good chance the IRS might owe you money in the form of a refund. But if you wait too long to file, you risk losing your refund altogether.

The threeyear statute of limitations prohibits the IRS from issuing you a refund after that time with very limited exceptions.

But let's face it, sometimes "things happen." If you do have a valid reason for not filing a tax return, it is possible that some of the penalties can be reduced. Generally, if the IRS owes you a refund, there are no penalties at all.

If the IRS decides to come looking for you, there is a chance that your employer might be requested to send part of your paycheck to the IRS instead of handing your paycheck to you. Your bank account could be frozen or even seized. A lien could be placed on your wages, retirement income or even your home. In the worst case, you could face criminal prosecution.

Unpaid taxes If you owe money, an installment agreement may be a viable option. If you owe less than $25,000 and can pay the full amount within five years, you may be able to set up a monthly payment plan and make regular installment payments.

But if you owe so much that you will never be able to pay your tax liability, you need professional assistance to help you work out a compromise where the IRS will accept less than you actually owe. If the IRS accepts your Offer-In-Compromise (OIC), your total tax liability- including interest and penalty- is considered paid in full. An OIC is a mathematical formula, not an amnesty program.

If you haven't filed your taxes in awhile, don't be afraid to ask for help. Your first step to solving these problems is to find an enrolled agent.

Russ Merrick of Camarillo is licensed by the federal government to represent taxpayers before the IRS for audits, collections and appeals. His website address is www.RussMerrick.com.