There are several myths about the IRS that are often circulated, but they are not true. Here are some common IRS myths:
- The IRS can arrest you: The IRS has the authority to file a criminal complaint against taxpayers who deliberately evade taxes or engage in fraudulent activities, but they do not have the power to arrest people. Only law enforcement officials can make arrests.
- The IRS always audits people who earn a lot of money: While it’s true that higher earners may have a higher risk of being audited, the IRS uses a complex formula to determine which tax returns to audit. A high income alone is not enough to trigger an audit.
- Filing a tax extension increases your chance of being audited: Filing an extension does not increase the likelihood of being audited. The IRS uses the same criteria to select returns for audit regardless of whether they were filed on time or with an extension.
- The IRS can take your entire refund for a past-due debt: The Treasury Offset Program (TOP) allows the IRS to offset all or part of a taxpayer’s refund to pay for past-due debts, such as unpaid taxes or child support. However, the IRS can only take the amount owed, and any remaining refund will be issued to the taxpayer.
- You can’t settle your tax debt with the IRS: The IRS offers several options for taxpayers who are unable to pay their full tax debt, including installment agreements and offers in compromise. These programs can help taxpayers resolve their tax debts for less than the full amount owed.
In summary, it’s important to be aware of IRS myths and to seek accurate information to avoid unnecessary stress and confusion.