Oftentimes in my practice in Lufkin, TX we meet with potential clients who have opted to employ the "ostrich strategy" to resolve their tax debts. They ignore the IRS letters and levy notices until something happens to yank their head out of the sand - like the IRS draining their bank account. The ostrich strategy, however, is not a good tactic to employ when dealing with the IRS (of all governmental entities), and we advise a more proactive approach. There are three key steps to resolving an IRS tax debt - contacting the IRS, getting in compliance and proposing a tax resolution.
Call the IRS - Calling the IRS shows a good faith effort to resolve the outstanding tax debt, and in some situations the IRS can put collection efforts on hold while the taxpayer works to get in compliance or make payment arrangements.
Get in Compliance - In order to be compliant taxpayers need to file the last 6 years of tax returns and ensure they are making their current year tax payments (through federal withholding, estimated payments, or payroll tax deposits).
Propose a Tax Resolution - Once the returns are filed and the tax is assessed the taxpayer has several payment options available. They can set up an Installment Agreement to pay the balance due out over 6-7 years. If the taxpayer does not currently have the ability to repay the balance due but has hard assets (i.e. real estate with no mortgage) the IRS will assign them a status of Currently Not Collectible (CNC), but will continue to assess penalties and interest on any outstanding balance. Taxpayers without the ability to full pay the balance due and no assets that can be levied, can file an Offer in Compromise (OIC) to settle their tax debt for less than the full balance due.
It is critical that taxpayers take these proactive steps to deal with past due tax situations. If you have outstanding tax returns or tax debt and you need assistance resolving those issues, contact us today at 903-631-0317 or email@example.com