With most of my tax clients that come into our Richardson, TX, tax office, they get their tax returns filed timely, and are either able to pay their taxes timely, or we immediately get them set up a payment alternative early on and minimize the problem. However, I often do meet with taxpayers who come to us and who 1) did not file their returns timely, and due to a variety of circumstances, 2) did not pay the balance due. Often years go by, and eventually they get a point of a bank or wage levy, a seizure of an asset, or some event triggered by the IRS’s enforcement actions, that creates chaos in their lives. At that point, they’re terrified, or sometimes incredibly angry, don’t know what to do and come to us.
The goods news is there is help. The IRS is more than happy to work with taxpayer to find a viable solution that is reasonable for the taxpayer, but they need the taxpayer’s attention and willingness to work with them. So, what do you, the taxpayer, need to do to resolve the problem. Below is a roadmap for resolving the issues effectively.
Tax Compliance
The Taxpayer must be in Tax Compliance before the IRS will work with them. Compliance means that the taxpayer must have all of their tax returns for the last 6 years filed and have made payments for the current year. They must have proper payroll withholding if a W-2 employee or have made current estimated payments if they are self-employed. Once in Compliance, the taxpayer can work on a resolution alternative of the debt with the IRS.
Collection Alternatives
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An Installment Agreement is where the taxpayer agrees to pay their taxes over time. The three options are below. We can help you to identify which is best for your personal circumstances.
- Streamlined
- Regular
- Partial-Pay
- With an Offer-In-Compromise (OIC), the IRS agrees to accept, and the Taxpayer agrees to pay, a settlement of less than full amount of the debt. The taxpayer must stay in compliance for 5 years after the OIC is accepted. The IRS calculates the amount of offer that they are willing to accept based on Reasonable Collection Potential (RCP). It is imperative that the Taxpayer or representative have a firm grasp of the RCP calculation to make an acceptable offer, but not more than is required.
- Currently Uncollectible Status is when the IRS determines that the Taxpayer is unable to make payments. While the IRS may still file a Tax Lien, they will not take active enforcement action such as levies or seizures.
If You Need Help
If you or you know someone else that is having an issues resolving their Federal Tax Issues and needs help to end their IRS nightmare, call us at (972) 821-1991 or email bob@jablonskyandassociates.com.
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