IRS Tax Resolution

Tax Resolution

There are many understandable reasons why you might have issues with your taxes. Maybe your tax preparer made a mistake when preparing your taxes that caused you to underpay what you owed. Maybe you had a difficult year and were unable to find the time to file. You may even have prepared your taxes yourself and accidentally claimed deductions that you were not entitled to. Whatever the reason, it happened, and you’re now receiving letters from the IRS demanding payment. Tax resolution is the process through which attorneys and other authorized representatives can coordinate with the IRS on your behalf to help you resolve your tax problems as quickly and cheaply as possible.

Tax Resolution Power of Attorney

In order to represent you before the IRS, you will need to file out a form that authorizes an attorney or CPA to discuss your tax issues with the IRS as your representative. After this has been filed with the IRS, it is important to let your representative speak with the agent on your behalf. The process of tax resolution is essentially one of negotiation; the IRS wants to be paid as much of your tax debt as possible, while your attorney wants you to pay as little as possible. Having multiple people to talk to can make it difficult for an IRS agent to know who to negotiate with, and can cause issues for you. When you hire a representative, it is important to trust them to be your sole representative with the IRS.

Offer in Compromise

The Offer in Compromise is the main vehicle for tax resolution, but it is only available if you have filed your current year’s taxes (or paid your currently owed quarterly taxes if you are a business). If you are not able to pay, that can be included in the offer to compromise, but it is essential that you have filed a tax return for every year that you were required to file. After you have done that, you need to establish to the IRS what your assets are in total. If you are an individual, this could be your 401k, your house, your car, and your income. If you are a business, this could be business assets and business revenue. After some calculations involving the total monetary amount of your assets and your income, you will come to an offer amount. That is the minimum amount that you can offer to the IRS to handle your case. Essentially, the IRS cares more about getting paid than anything else. If you can show that you’re only able to pay a certain amount, and offer an installment plan that covers that amount in 24 months, the IRS is likely to accept that offer. They won’t always accept, at least not immediately, which is why it’s important to continue communications and negotiations with the IRS representative in charge of your case.

First Time Abatement

Generally speaking, every taxpayer is entitled to a one-time abatement of any penalties assessed due to non-payment of taxes. This is called First Time Abatement, and it is an essential part of tax resolution. Say you were assessed penalties of $20,000.00 because you failed to file taxes for 2017. If you have not previously filed for a first-time abatement, you could file for a first time abatement and have that $20,000.00 forgiven in full. In order to qualify, you must have an accepted Offer in Compromise and you must be current on your payments; if at any point you become delinquent, your Offer in Compromise will be rescinded and your penalties unforgiven, so once you have an accepted Offer in Compromise it is essential to remain in good standing.

Why Hire a Tax Resolution Attorney

An offer in compromise requires complex math, stiff negotiating skills, and a wide breadth of knowledge of tax law and the IRS handbook. In order to receive the best possible outcome for your tax situation, it is important to have a representative who has the skills, knowledge, and experience to deal with the IRS. For more information, read Tax Forgiveness IRS and Virginia Offer in Compromise.  If you’re in need of tax resolution services, contact us today.