After the pandemic shut down and collection freezes by the IRS it is now time for the IRS to push their collection process. IRS notices have been and will continue to be sent to collect back tax liabilities owed to the Federal Government.
So, what do you do if you receive a notice from the IRS? There are four choices that you have.
First is to pay the amount due without questioning it and be done with it. While this may bring you peace of mind did you know that 70% of all tax notices sent are incorrect? Just because the IRS claims you owe them money doesn’t mean they are correct. They only have one side to the story. There may be deductions or other issues that may cause that amount to be reduced. You should never accept the amount without fully understanding what they are proposing to you.
The second option is to set up a never-ending monthly payment plan. The plan that will continue to accrue interest and may result in paying for many years.
The Third option, which seems to be the most common, is to ignore the notice. This “friendly” notice will turn into more threating notices and eventually lead to a tax lien and possibly a levy on your wages and/or bank account. These actions are very serious and can be very damaging to you.
The final option is to try and reduce the debt. How can that be done? All depends on the circumstances. Filing missing returns, amending returns that may have been filed inaccurately, looking to reduce penalties, these are all possible ways to help reduce tax liabilities.
So, should I hire a professional to help me resolve my IRS problems?
Sometimes taxpayers with IRS tax problems decide to face the IRS on their own. Sometimes they hire a professional like a CPA, Attorney or EA, but not someone who specializes in tax resolution. The best thing to do when faced with an IRS Problem is to hire an expert in tax resolution so you can get the best result possible.
Even if you owe $10,000 or less, have all your income tax returns filed, and are able to pay the amount due over 36 months with a guaranteed a monthly Installment Agreement (payment plan), it’s good to pay a small fee to have a professional set it up for you.
Here are the top 4 reasons why hiring a CPA, Attorney or EA is the smart thing to do if you OWE money to the IRS
1. Contrary to popular belief, you DO have rights as a taxpayer you probably don’t even know exists. One of those rights is the right to representation. If an IRS revenue officer or revenue agent calls or “visits” you, did you know you are under no obligation to answer any of their (very intrusive and condescending) questions? You politely respond by asking for their contact information and telling them you are in the process of hiring a professional to represent you and that this person will contact them directly. A CPA or EA that deals with IRS problems for a living knows the “ins” and “outs” and how to deal with the IRS so that your rights are protected. A tax resolution specialist also knows how to get you the lowest possible settlement. Generally, our clients never meet or speak with the IRS once we’re on the scene!
2. If you owe between $10,000 and $200,000 plus, the IRS has many NEW flexible programs available to taxpayers such as Offer in Compromise, Partial Pay Installment Agreements, Payment Plans, Penalty Reduction, and Currently Not Collectible Status to name a few. Each carries with it its own unique process, procedures and qualifications. Having an experienced Tax Pro in your corner ensures you are taking advantage of the best options available to you.
3. Having unfiled returns (on average our clients have more than 3 years of unfiled returns) qualifies for getting professional help. Not filing legally required tax returns when due is considered a federal misdemeanor which carries with it a $10,000 fine and potential jail time. Generally, the IRS won’t throw you in jail unless the taxpayer is deemed to owe a lot of money and is uncooperative about getting the returns filed. Hiring a professional to represent you is the smartest move you can make here!
4. If you are being audited or about to be – The IRS will ask you about 50 very intrusive questions in the initial interview with them. How you answer these questions will dictate the fate of your case. Having a tax resolution specialist conduct these meetings WITHOUT you is the best course of action I can recommend. Half of the referrals to the IRS’s criminal investigation division (CID) come from that “nice” guy or gal you’re sitting across the table from at the audit.
One last thing….ask yourself this question: Would you go to court without a lawyer? If you answered “yes” hopefully you know the law inside and out concerning your case, but if representing yourself doesn’t seem like a good idea it’s best to hire somebody who is well versed in the subject matter. Well, it’s the same thing with the IRS. Having someone who knows how to negotiate and deal with the IRS may be the best money you’ve ever spent!