Back Taxes – Secrets of the IRS
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Do you Owe Unpaid Taxes to the IRS?
Is the IRS demanding that you make full payment of back taxes or are they demanding that you agree to a payment plan that is more than you can afford? Don’t hide from the IRS or fall into the trap of deciding to talk to the IRS yourself without professional representation.
Many taxpayers contact the IRS themselves trying to negotiate a monthly payment plan, but don’t realize that doing so could cause them more problems. When you begin speaking to the IRS, they will ask you probing questions to find out detailed information about your income, place of employment, banking information, types of vehicles you own, the amount of your rent/mortgage payments, etc.
IRS employees are trained to get as much information from you as possible to later use against you when they go after you for your back taxes, if you fail to agree on a payment plan amount. The IRS will use this information as a roadmap to help them decide where and when they want to levy, seize or place liens against your various assets. The IRS Collection officer may want you to commit to a payment that you can’t afford. Then if you disagree you’ll then find that you’ve given the IRS all of the information they need to go after your wages, bank account, house, car and other assets.
The IRS Manual says that if you agree to a higher monthly payment amount disregarding the National Standards, the IRS is not required to inform you of your rights or any alternative programs that might be beneficial to you. This may sound unbelievable, but it’s true. National Standards were put into effect by Congress in 1998 to protect taxpayers like you from the heavy handed tactics of the IRS. The regulations state that a taxpayer, who enters into a payment plan with the IRS, is allowed a certain allowance amount for food, clothing, housing, transportation and medical expenses. These allowances are used as part of a complicated analysis that’s designed to come up with the “appropriate” monthly payment amount.
Solutions for Back Taxes
Don’t despair! We’re very familiar with all of the strategies that we can use to resolve you back tax problem.
National Standards will again be considered and if you have no disposable income, the IRS must declare you as non-collectible, and will stop any further collections for approximately 1-2 years. The IRS will review your subsequent tax returns to determine if your income has increased, and if so, the IRS will consider resuming collection actions. Being declared non-collectible allows you the ability to get back on your feet financially.
A Payment Plan is an agreed upon monthly settlement between you and the IRS. The amount you pay to the IRS monthly is determined greatly by incorporating the National Standards allowances for food, housing, clothing, medical & transportation expenses into a complicated mathematical formula to come up with the “appropriate” monthly payment. From our experience, we know that, in most cases, the National Standards don’t have to be used for the first year, allowing us to use your actual expenses to come up with a lower monthly payment amount. Again, this is not something that the IRS will inform you of or assist you with. This is another reason why it’s essential that you obtain professional help.
An offer in compromise is an offer to settle your debt to the IRS for less than what you owe. This doesn’t mean you can simply offer the IRS 10 cents on the dollar. We use a mathematical formula to determine your net monthly income and equity in assets to come up with the minimum acceptable offer amount. The Offer in Compromise Program is very complicated and cumbersome. After all, the IRS would rather collect all of the taxes you owe rather than agree to take a lesser amount. Knowing this, we spend considerable time and effort reviewing your unique financial situation when we analyse whether or not an Offer in Compromise is the right solution for you.
Requesting an Abatement of Penalties is a method we use to reduce the amount you owe to the IRS. In many cases 30-40% of the taxes you owe to the IRS consist of penalties and interest compounded on top of the penalties. Our elimination or greatly reduction of these penalties gives us the ability to negotiate a much better settlement with the IRS.
Stopping IRS’ aggressive Collection Division
We know how to deal with even the most aggressive Collection officers. We use two main forms of appealing IRS enforced collection actions: a CDP Appeal and a CAP Appeal.
A CDP appeal must be filed within 30 days of a final notice of intent to levy. This allows a Senior Technical Advisor within the IRS to review the case before it’s forwarded to Appeals. This means that your case will be taken out of the hands of a possibly aggressive Collection officer, and given to experienced IRS employees who are willing to resolve the matter.
If perhaps you’ve failed to timely file a CDP appeal, you have the right to file a CAP appeal.
A CAP appealis very rarely considered by the IRS. In fact, many IRS Collection officers don’t know what a CAP appeal actually is. We utilize this tactic as an effective strategy against the IRS a great deal of time. We immediately file a CAP appeal if the IRS hasn’t filed a wage garnishment or levy against you. This immediately takes the case out of the hands of the Collection officer, and puts it into the hands of a Technical Advisor before being forwarded to Appeals. This is very important because a Technical Advisor is someone who has been with the IRS for several years and will approach things in a professional manner, following IRS’ required procedures. Our CAP appeal also puts the brakes on a Collection officer instituting wage garnishments and levies against your social security and payroll monies.
The crucial part of filing any of these appeals is that you must first be in full compliance with the IRS, meaning that you have filed all required tax returns. We can prepare your unfiled tax returns, file the necessary appeal to stop the IRS Collection, and get your case resolved.