List of The Most Common IRS Tax Problems

List of The Most Common IRS Tax Problems


For years, politicians have been talking about simplifying the process of filing federal taxes, but despite the promises, the process continues to be complicated and stressful. But as bad as preparing taxes can be, it pales in comparison to the sinking sensation of receiving an IRS notification telling you that you’ve done something wrong.  


See Relax Tax’s Tax Audit Assistance at

The IRS reviews each tax return for accuracy and to ensure that taxpayers have paid the amount that they owe, and when they find something wrong, they immediately send a letter alerting the taxpayer of the problem. Though there are several issues that can arise, the four situations listed below are common reasons for the IRS to contact — and demand action — from you.

Here are 4 common IRS tax problems

  • Failure to file a return at all
  • Every American is supposed to send in a tax return, whether you owe the government money or whether the government owes you. Failure to file can lead to you not getting the refund money you’re owed – you only have three years to get your paperwork in to get money back, and if you’ve shortchanged the government then your failure to file can lead to fines adding an additional 25% of what you owe, charged over five months.

  • Failure to pay taxes
  • If you receive a form CP14 from the IRS it means that you have shortchanged the government on your taxes and you owe them the difference. If you both fell short on your payment and didn’t file a return, you’re likely to have to pay penalties and interest too. If your debt is substantial the agency will allow you to negotiate a Partial Payment Installment Agreement (PPIA) to break your payments into monthly installments.

    See this related post from Dennis Harabin: 10 Tax-Saving Strategies to Consider Before Year-End

    There are a number of smart tax-advantaged moves available. Though you may not be eligible to utilize all of them, it’s a good idea to take a break from holiday shopping to make sure you’ve done all that you can to minimize your tax burden and get all of the write-offs and deductions possible. There are ten of the most popular, most effective strategies available, including some important reminders that may save you from having to pay penalties.


  • Notification of tax levy

    Failure to pay taxes can lead to a seizure of your property known as a tax levy. The IRS does not descend upon your property unannounced: They will notify you using either the LT11, the CP504, the CP90, or the CP91 form.

  • Notification of tax lien

    The IRS also can use a tax lien to collect unpaid tax debts. If you receive a Letter 3172, it means that the government is asserting its rights to your property or assets. This letter also gets sent to your creditors, as a tax lien allows the government to get in line for your assets ahead of all others.



    See this related post from Dennis Harabin: The Different Ways to Pay Your Taxes

    Although most (74% in 2020) American taxpayers receive a refund each year when they file their income tax returns, there are those who for one reason or another end up owing. Of those who owe Uncle Sam many don’t have the means to pay what they owe by the return due date (usually in April). Generally, tax due occurs when a wage earner has under-withheld on his or her payroll or a self-employed individual failed to make adequate estimated tax payments during the year. This can be a huge problem for those who are unable to pay their liability.   



    If you receive one of these notifications from the IRS or any other form of correspondence regarding a mistake or monies owed, there’s no reason to panic. The best way to handle it is to speak to a qualified, experienced tax professional for guidance on your next steps. To learn more, contact us today at 551-249-1040.


    Do you need more information? You can reach out to Dennis Harabin at Relax Tax today!


    Recommended Readings:

  • The Benefits of Filing a Tax Return
  • A Special Tax Benefit for Inheritances to Enjoy
  • The Different Circumstances of Education Tax Credits
  • Tax Benefits for Holiday Gifts
  • Disability Tax Benefits and Tax Credits


    Relax Tax is your trusted financial partner. 
    We obsess about helping people retain more of what they earn. 
    We can provide you a set of solutions for your financial goals no matter your financial situation. If you want to learn more about taxes, obligations, investments, and how to handle them, download our FREE Playbook.
    (No credit card or payment method required and includes simple to follow and quick to digest video content)
    Or Click Here to schedule your initial meeting.