The IRS sent a notice saying you need to contact them to resolve the issue stated in the letter. If you’re in trouble, the LAST person you’d trust is the person that says you’re in trouble. That’s how most people feel when it comes to getting tax advice or offers from the IRS.
It’s the fox telling you how to guard the chicken coop.
On the other hand, since they are the folks that make the rules, it seems to reason that they could have access to options that you may not have thought about. They can remove certain barriers that might affect a similar offer that you, the taxpayer, presented to the IRS.
I’m usually leery of “deals” made with the IRS, but, with the power of the law and firm documentation, if you find yourself in trouble with taxes, partnering with the IRS might be a solution, albeit a nerve-wracking one.
How’s it work?
In this scenario – where the taxpayer owes far more than could be reasonably repaid, the IRS can make what is called an Offer-in-Compromise or OIC. This compromise settles all the debt, all the fees, and any interest owed by requiring the taxpayer to pay the entirety of the OIC and then everything is “back to normal”.
Here’s the problem – cheap attorneys on late night television and local radio have made the OIC appear to be easy to get. It’s not. The IRS has strict guidelines on how they will make or accept an OIC and in many cases, they would rather negotiate from the point of view that you will be back on your feet financially so they can wring so more money out of you.
In other words, get ready to jump through some hoops.
What are they? Well, no more than you’d reasonably expect – your returns have to be legally filed, your payment and tax deposits have to be current, and you cannot be in bankruptcy proceedings.
Of course, if you have all that, then you might not be in dire straits to begin with, right?
The important thing to remember is that if you are in a situation where you might qualify for an OIC, then you need to have representation AND your finances must in order. The best way that my team and I have found to stay ahead of tax problems is simple – don’t put yourself in a situation to run afoul. Sure, that’s simple advice, but it still works.
What are the causes of tax issues? Not having a professional team, trying to use software that isn’t really calibrated for your actual needs, and, of course, business failures. Of those three, by far the biggest challenge is when a business folds or when an executive suddenly finds themselves out of a job. They may have the cash reserves to handle the bills, but the taxes on the assets may prove to be overwhelming and as a result, they find themselves in an escalating morass of tax problems with the IRS.
My advice as a professional? If you ever feel like you are in a position to be in trouble with your taxes – for any reason – then start a conversation immediately with us. There are actions that can be taken long before the filing deadlines and as a result, you can save yourself money, time, and a lot of sleepless nights. Time becomes a precious commodity after the problem comes to light.
During the course of your daily interactions with clients, friends and family, remember that as a Tax Controversy expert I am here to assist you from the first notice to the final letter from the IRS. Should a person come to you for advice make sure they ask the right questions before commiting to a firm. Click here for a copy of “5 Things to Ask Resolution Companies” . Fore warned is fore armed.
Call me at the office: Patrick LeClaire @ 407-287-6638. I will be here when the time is right.