Tax Debt Representation

 In Articles, Individual Taxes, Small Business Taxes

Even though tax season has officially ended, if you have tax debt and/or have been notified by the IRS, you need tax debt representation.

Let’s face it. If you have tax debt with the IRS, the situation is unnerving and stressful. The IRS is the largest collections bureau in the world and the tax code is extremely complex to boot. You need a professional you can trust to best represent your situation before the IRS.

We’re a small Firm offering tax debt representation services but we’ve had numerous successes in dealing with the IRS, and have successfully gotten refunds for Clients that the IRS claimed owed additional tax!

Because we’re small, we have an advantage in that we’re agile and we move quickly to determine a plan to address any immediate problems such as garnishment of wages or tax liens.

These Engagements are more complex because of the nature of tax law. In order to successfully resolve these issues, a representative must navigate the options available, and the procedures and processes that are detailed in the Tax Code.

Fundamentally, these Engagements can be broken down into three main phases:

  1. You need to get current and compliant. The Tax Code requires taxpayers to get current with past due tax return filings, and tax due in the current period. The IRS will not permit you to “pyramid” tax debt, meaning that you cannot pile on more tax debt on top of prior period tax debt. If the IRS has filed Substitute for Returns (SFR’s) on your behalf (that often lack deductions and credits that lower your tax liability) you need a tax pro to file returns and negotiate “acceptance” of these returns by the IRS.
  2. You need to determine your ability to satisfy your tax debt. Every tax debt issue involves an analysis of your finances – your gross income less your acceptable living expenses to determine how much of your tax debt can be satisfied within the collections period (normally) of 10 years. A representative should try and analyze the IRS’ position on the amount of tax assessed. Knowing how the IRS came up with the amount of tax assessed against you helps to determine whether you a). agree with their position and b). if not, how best to counter their argument.
  3. You need to follow through. Whatever agreement you ultimately reach with the IRS needs to be adhered to for the length of the agreement, whether it’s a payment installment plan, Offer in Compromise (OIC) or Currently Non-Collectable (CNC) status. Each agreement imposes rules and caveats that you need to follow.

A word about settling your tax debt for “pennies on the dollar.” These misleading TV and Radio Ads should be banned. Settling your tax debt for a fraction of what you owe is an agreement known as an Offer in Compromise or OIC. Only a fraction of 1 percent (that’s right – an extremely small number of cases submitted) are actually granted this option by the IRS every year. The bulk of the agreements will involve payment installment agreements requiring monthly payments toward reducing your tax obligation.

Whatever you decide to do, you need to hire a competent and dedicated professional to represent your interests. Contact us today to see if it makes sense for us to represent you.

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