IRS and state tax problem resolution is a special area of professional practice involving unfiled tax returns, unpaid taxes, tax liens or levies, audit representation and any other type of tax controversy. We are members of the American Society of Tax Problem Solvers (ASTPS) and one of our principals, Tanya R. Baber, EA has earned recognition as a Certified Tax Resolution Specialist (CTRS). This means we are uniquely qualified to represent taxpayers before the IRS and other taxing authorities. Some of the specialized services we provide in this area include:
We will secure your IRS file without raising any red flags. Filing under the Freedom of Information Act (FOIA), is one way we can review and interpret the IRS transcripts for you. This record reveals your history with the IRS (according to them). Additionally, if you find yourself needing help with the IRS, the states are usually not far behind. We can also gather information in your state file using similar methods. We may also anticipate their moves based on this information posted to your account.
Many taxpayers fail to file required tax returns for many reasons. What they may not be aware of is failure to file a tax return is a criminal offense! This type of criminal act is punishable by one year in jail for each year not filed! It is one thing to owe the IRS money, but it is another to potentially lose your freedom for failure to file a tax return.
In most situations we can prepare and file delinquent returns avoiding exposure to such harsh penalties. In some cases, the IRS may even file “SFR” (Substitute For Return) tax returns for you. This is the IRS’s version of an unfiled tax return. Because SFR returns are filed in the best interest of the government, the only deductions you’ll see are standard deductions and one personal exemption.
On a SFR return, you will not get credit or deductions that you may be entitled to like exemptions for spouses, children, interest and taxes on your home, cost of any stock or real estate sales, and business expenses, among others. Therefore, the amount of tax assessed is higher than the amount we would calculate considering appropriate deductions and exemptions.
Taxpayers often find themselves in trouble with the IRS because of their spouses or ex-spouses actions. The IRS realizes that these situations do occur and to help taxpayers that are subjected to IRS collection actions because of their spouse’s actions, special new rules went into effect under the 1998 IRS Restructuring Act. These new rules created guidelines where a person may qualify as an Innocent Spouse.
This means if a taxpayer can prove they fit those guidelines, they may not be subject to the taxes caused by their spouses or ex-spouses.
The IRS is currently considering additional new regulations, which would make it even easier to qualify as an Innocent Spouse. If the IRS is trying to collect tax related to the income of a spouse or ex-spouse that you believe you don’t owe, call us for a free consultation.
The IRS increases the amount a taxpayer owes by adding penalties and interest to the unpaid tax amounts. In many cases a taxpayer could pay the tax, but thanks to the penalties and interest, the ever-growing balance quickly becomes unmanageable.
There is hope! Taxpayers that are hit with IRS penalties can request the penalties to be abated, which means to completely or partially remove. Often we are able to have the penalties and interest abated by providing reasonable cause. We may be able to include penalty abatement with an Installment Agreement as well.
The IRS has a limited amount of time to assess the tax they want from you. Then, once they make this assessment, there is a limitation on the time they have to collect all taxes, penalties, and interest from you. This is known as the Statute of Limitations. You do not owe the IRS anything after this statute of limitations date has passed.
As part of our engagement, we use copies of your IRS transcripts to verify the assessment date, so we can compute when the statute of limitations will expire, taking into consideration special circumstances that could affect this statute date. In addition, we use this date to determine its effect on other remedies as well, such as Partial Pay Installment Agreements as explained above.
Once expired, we inform the IRS that they no longer have the right to collect this tax liability, and they must write off all the tax liabilities which have expired.
The IRS may take money from your paycheck or bank account, seize assets, or place a Lien on your home or other assets. We can often prevent this or have these lifted so you can afford to pay your bills. If you are presently dealing with, or concerned about a lien, levy, or garnishment we can help. Remember, the earlier we address the problem the more successful we are likely to be. Ignoring a tax problem is usually asking for a bigger problem, and may limit our ability to help you out of it.
A Lien is filed by the IRS on your home or other assets that you have now, as well as future assets you acquire during the duration of the lien. Liens are filed to protect the government’s interests. If you then sell an asset with a Lien attached, the IRS tax debt is settled with the proceeds before you receive the remainder (if any). This also affects your Credit, since it becomes public record, affects your credit report, and will affect your ability to get credit. Even if you file for bankruptcy, your lien may continue after the bankruptcy.
An IRS Levy is the action taken by the IRS to collect taxes by seizure. For example, the IRS can issue a bank levy to obtain your cash in savings and checking accounts. Or the IRS can levy your wages or accounts receivable. The person, company, or institution that is served the levy must comply for face their own IRS problems. The additional paperwork this person, company, or institution is faced with to comply with the levy usually causes the taxpayer’s relationship to suffer with the person being levied. A levy can also be issued to seize other assets. Levies should be avoided at all costs and are usually the result of poor or no communication with the IRS.
The IRS wage garnishment is a very powerful tool used to collect taxes owed through your employer. Once a wage garnishment is filed with an employer, the employer is required to collect a large percentage of each paycheck. The paycheck that would have otherwise been paid to the employee will now be paid to the IRS. The wage garnishment stays in effect until the IRS is fully paid or until the IRS agrees to release the garnishment. We can assist with getting the garnishment released so your paycheck goes to you and not to the IRS!
We can secure an agreement with the IRS to allow monthly payments on your tax liability. This agreement keeps them from filing liens and levies as long as the payments are made. Without an agreement, the IRS may take money from your paycheck or bank accounts, and they can file liens against your home or other property. We may even be able to combine an Installment Agreement with Penalty Abatement, described below.
One thing to keep in mind, in order to arrange an installment agreement, the IRS will require all tax returns to be filed (with some special exceptions we can explain). It is okay to owe, but these returns must be filed (See the section on unfiled returns).
The total dollar amount you owe usually dictates with whom the negotiations will be handled. Typically, this amount is determined by owing less than or more than $25,000. Also, there are some cases that IRS Revenue Officers are directly involved, but this is usually cases where the amounts owed are more than $25,000.
There are also circumstances that can occur that will allow them to set up an installment agreement for less than the usual amount, called a partial pay installment agreement. In these cases, as long as you pay as agreed, the remaining tax leftover at the end of hte payment term may be forgiven.
Being declared “currently not collectible” is another way to help resolve your tax issues. This means a taxpayer has no ability to pay their tax debts, and after the IRS receives evidence, usually in the form of special financial statements, A taxpayer can be considered Currently Not Collectible. At this point, the IRS must stop all collection activites, including levies and garnishments. Additionally, while in this status, the 10-year Statute of Limitations on tax debt collection is still running. This may eventually allow for these debts to expire and be written off permanently. (see section on Statute of Limitations)
However, with any IRS program or possible solution, there are potential drawbacks and things to consider about this program. We can provide you all the information necessary to decide if this program may be suited to your situation.
The IRS Offer In Compromise (OIC) program is the government’s “Let’s Make A Deal” plan. It provides taxpayers that owe the IRS more than they could ever afford a chance to pay a small amount as a full and final settlement. Yes, this means the amount you pay is based on what you can afford, not what you owe!
This program also offers taxpayers that don’t agree that they actually owe the taxes in the first place a chance to file an Offer in Compromise and have those tax liabilities reconsidered, as well as those that agree they owe, and may be able to pay, but an exceptional circumstance exists.
The Offer in Compromise program allows taxpayers to get a fresh start. All back tax liabilities are settled with the amount of the offer. All federal tax liens are released upon IRS acceptance of an Offer in Compromise and payment of the amount offered Taxpayers can compromise all types of IRS taxes, penalties, and interest. Even payroll taxes can be compromised. If you qualify for this program you can save thousands of dollars in taxes, penalties, and interest.
You shouldn’t consider going before the IRS or your local taxing authority without representation any more than you would go to court without a lawyer. We know how to properly represent taxpayers under audit. We also understand the implications of “friendly inquiries” from auditors and the red flags that may not be obvious to taxpayers representing themselves. We are able to close audits quickly and avoid expansion of the audit scope. Generally, the cost of representation is far less than the tax amount, penalties, and interest that you could encounter without qualified representation.
The IRS can audit you by mail, in their offices, or in your office or home. The location of your audit is a good indication of the severity of the audit.
Typically, correspondence audits are for missing documents in your tax return that the IRS computers have attempted to find. This type of audit can be handled through the mail with the correct documentation.
The IRS office audit is usually with a Tax Examiner who will request numerous documents and explanations of various deductions. This type of audit may also require you to produce all bank records for a period of time so the IRS can check for unreported income.
The IRS audit scheduled for your home or office should be taken even more seriously due to the fact that the IRS auditor is a Revenue Agent. Revenue Agents receive more training and auditing techniques than a typical Tax Examiner.
All IRS audits should be taken seriously because they often lead to other tax years and other tax deductions not originally stated in the audit letter. This is called expansion of the audit scope. It is best to have a tax professional represent you at our offices rather than the IRS coming to you!