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Are IRS Notices Robbing You of Sleep?

Most people who have received a notice from the IRS would agree that it can cause an uneasy feeling in the pit of the stomach. And depending on the content of the notice, can also cause sleepless nights. Let’s face it, the IRS has a reputation that, quite frankly, creates fear in the hearts of many people. Prior to spending countless hours learning about tax law and working for clients, I was one of those people. Now, I welcome the challenge.

My name is Tom Strauss, and I created Tax Help Now, which is a “Doing Business As” for my tax preparation business Prime Accounting Services, to help people navigate the daunting process of satisfying the IRS when they question something on a tax return, decide to audit you, levy your paycheck, or come calling when you get behind paying your taxes or filing tax returns. Taxpayers deserve an advocate, and I want to fill that role. You don’t have to deal with the IRS alone.

There are many people, some you probably know, or maybe even you, who have had the misfortune of not being able to keep up with their tax obligations. Any number of financial setbacks can cause you to fall behind or not have the ability to pay the tax bill when you file your tax return. In many instances you’ve done nothing wrong to get into this position, and you want to pay the tax you legally owe. But here you are, and now the IRS has begun sending the notices.

Your first instinct might be to ignore the notices and not open them, hoping it’ll be a while before they take any serious action against you, giving you some time to figure out what to do. Believe me, that’s the wrong approach to take. Penalties and interest pile up every day you wait. The best approach is to be proactive and obtain the assistance of someone who knows the system and can work it to your benefit.

The IRS actually WANTS to help you get into compliance if they can. But they have very strict procedures that must be followed. I’ve earned the Enrolled Agent designation from the IRS, which gives me the privilege of representing taxpayers in all tax matters. I’ve learned that for any situation there is a right way and numerous wrong ways to handle it. Choosing and properly executing the right way leads to getting tax-compliant and stopping the notices, and in some instances settling the tax debt for less than you owe. Choosing the wrong way, or not properly working the process, can result in paying more than you should or not getting a solution in place at all.

Dealing with the IRS can be intimidating. If you have received a notice from the IRS regarding back taxes, penalties, liens, levies, or a possible audit, I can help you properly respond. I’ve put together a document entitled to give you some basic tax resolution information, which you can download below. The process to get compliant with the IRS can be tricky, so I don’t advise anyone to go it alone. I’m ready to assist you in making the right decisions and executing the correct strategy to keep the amount of tax, penalties and interest you owe as low as possible while getting the IRS off your back. Please contact me today for a free 20-minute phone or Zoom consultation.

Get “21 Facts About Getting Your IRS Debt Resolved”, a free download, by providing your contact information here.

The IRS Collection Process – Part 3

Hello there, this is Tom Strauss, owner of Prime Accounting Services and Tax Help Now.  My companies offer tax return preparation and tax resolution services to individuals and small businesses nationwide.

In the last post I discussed the Installment Agreement, which is the most common form of tax resolution used by taxpayers.  Now I want to provide information about the option you’ve likely heard about on television. I’m talking about the Offer in Compromise.

When Things Are Looking Really Bad, Make an Offer

Let me get this out of the way right up front: the Offer in Compromise (OIC) is just about the last resort when trying to find a solution to your tax debt.  As the name implies, the OIC is a request to the IRS that they compromise to some extent the amount of tax you owe.  While this may sound like the first option you should pursue, it isn’t.  Your finances are thoroughly scrutinized to determine if it’s in the best interest of the US government to write off part of your tax debt.  If they determine you have ANY means of paying off the entire amount before their collection deadline, they won’t compromise.

There are three basic versions of the OIC.  They are:

  1. Offer in Compromise – Doubt as to Collectibility
  2. This version is exactly what it sounds like; if there is doubt that the entire tax can be collected by the Collection Statute Expiration Date (CSED) through the sale of assets, future anticipated income, or a combination of the two, the IRS may decide to accept a lesser amount.  Form 656 (OIC) and Form 433-A (Financial Collection Information Statement for Individuals) must be completed and submitted along with a non-refundable application fee and initial payment.  The initial payment amount is based on whether you are asking for six months or twenty-four months to pay.
  4. Offer in Compromise – Doubt as to Liability
  5. If there is a genuine dispute as to whether the amount of tax you were assessed is accurate, this is the OIC version to file.  You apply by submitting Form 656-L, a statement of explanation as to why the tax amount in question is incorrect, and supporting documentation to prove your explanation.  The offer amount must be more than zero, but it can be as low as $1.  No application fee, Form 433, or initial payment is due with this particular offer.  If your OIC for doubt as to liability is accepted, you can then submit an OIC for doubt as to collectibility if you still can’t pay the amount that was accepted.  Or you can request an Installment Agreement.
  7. Offer in Compromise – Effective Tax Administration
  8. When a taxpayer agrees with the amount of the tax and has the ability to pay it, but as Form 656 states, “due to my exceptional circumstances, requiring full payment would cause an economic hardship or collection of the full liability would undermine public confidence that the tax laws are being administered in a fair and equitable manner”, this OIC version might be a viable option.  This type of OIC is rarely used, but in the right situation, will be considered by the IRS and their legal counsel.

All versions of the OIC require that you’re current in filing your tax returns, paying any required estimated taxes, and have made all required federal tax deposits.  An OIC won’t be considered for taxpayers in bankruptcy proceedings or if you’re in the process of being audited.  Businesses can also submit OICs.  The major difference is the Financial Collection form; businesses complete Form 433-B rather than 433-A.

Offer in Compromise Application Isn’t for The Faint of Heart

The Offer in Compromise application for doubt as to collectibility is complex, to say the least.  Not only is Form 656 a bit difficult to decipher, but Form 433-A is a nightmare to complete.  Every aspect of your personal and self-employment finances is asked for on the Financial Collection form, and you declare and sign it as being accurate under penalty of perjury.  Trust me, you don’t want to be found guilty of lying, intentionally or not, to the IRS.  Unless you want to know what being incarcerated feels like.

Additionally, the preparation of the OIC paperwork takes a good bit of knowledge of what the IRS allows, what they are looking for, what they’re willing to accept, and what will get an OIC rejected.  I don’t say this just because I want you to pay me to complete the paperwork for you.  I say this because I’ve found it to be true.  Taxpayers attempt to complete the forms themselves, only to have their offer rejected for simple reasons that easily could’ve been avoided.  The IRS isn’t always difficult to work with, but when asking them to reduce your tax bill, you most certainly want experience on your side.

What If You Can’t Pay Anything Now?

There is one other method of relieving the burden of paying back taxes, and that’s having the IRS determine that you should be classified as “Currently Not Collectable”.  This status designation usually requires a Form 433 to show you can pay absolutely nothing currently.  For truly hurting taxpayers, obtaining this status means you could potentially go years without paying on overdue taxes, and in the end pay little or nothing in total.  However, be aware that the IRS will want an updated Form 433 every year or so to monitor your ability to start making payments.

Thus far I’ve highlighted the methods of getting the IRS off your back by entering an agreement to pay back some or all of the back taxes you owe.  In the final segment of this series, we’ll look at some of the notices you may receive during the IRS collection process, and how you should respond.  Until then, if you want to discuss your particular situation, feel free to contact me.  You can call me at (317) 804-1174 or send an email to tom@taxhelpnow.org.