IRS Tax Relief to Tax Problems
General Approach to Resolving Tax Problems
An IRS tax problem should be dealt with cautiously and with the seriousness it deserves. If you receive an IRS notice of collection action, you must act immediately upon the notice. You have two options: either you call the IRS yourself and seek the tax relief in Houston that is appropriate under the circumstances or you engage professional tax help such as a tax attorney or a CPA. If the amount of tax debt is minimal, then there is no harm in attending to the tax problem yourself.
If the amount of back taxes is substantial, then a better course of action may be to engage a tax professional. Engaging a professional has the added benefits of insulating you from the IRS questions that may be fraught with traps that you should avoid. Not to mention the expertise the professional bring along through his or her education and training.
Throwing Away the Baby With the Bath Water to Solve Your Tax Problem
In an IRS negotiation our marching orders are not just to get an agreement but to get the best agreement. That means either the lowest amount to be paid monthly in the case of an installment agreement, or the lowest amount to offer the IRS in order to erase the debt as in the offer in compromise (a few cents on the dollar as some may have it.)
Many a time taxpayers negotiate agreements on their own that either obligate them to pay more than they can afford, depriving them of getting rid of their tax problems without having to give everything in their life away.
In seeking their tax help they rush into the lap of the fox that is guarding the den. The IRS employee will not tell you about all the options available to you. The first thing they may ask you is: “How much can you pay?” knowing that you qualify for the currently not collectible or better yet the offer in compromise. And in the panic you throw a big number to show good faith and that you are in earnest. But alas, you may have to renege on the agreement, not because you necessarily don’t want to pay but simply because you cannot afford to pay. This is a classic case when you should use a professional if you can afford it.
When You Should Submit An Offer in Compromise for Tax Relief
Offer in compromise is a precise calculation that should be mastered. Although it requires some technical knowledge, many taxpayers are able to do such calculations on their own. There are, however, other nuances that will require tax expertise. The simplest of those is timing the offer to obtain the optimum tax relief without an undue burden that will prevent you from getting the tax help that you thought you could get with such offer.
There are two considerations that you must consider in that regard. The first is the amount of estimated tax payments that you should deposit in order to comply with the offer. This amount could be prohibitive if you submit the offer in the second half of the year. You will then have to catch up with the amount of estimated tax payments that should have been deposited in the first half but that you were not aware of.
The second consideration is the new tax debt that you may incur with the coming tax year. If you think that you will incur a major tax liability with the new tax season, perhaps you are better off to delay the offer so that you can include the subsequent tax debt in the offer. Otherwise, either you pay the new tax liability or default on the offer. A CPA or a knowledgeable tax attorney may provide the best tax help in that regard.
Tax Help Without an IRS Tax Lien
Although sometimes a tax lien is an inevitable event when you negotiate a tax settlement with the IRS, sometimes it is in your power to avoid the tax lien if you know what you are doing. Tax lien sometimes is devastating especially for those whose credit is very important to them. You can solve your tax problem without having a tax lien leveled against you. You tax professional should be able to provide you the tax help to restructure your financial position to enable you to avoid a tax lien in the instances when it can be avoided.
IRS Audit and the Inevitable Fight
In just about all the IRS audits we must be prepared to put up a good fight because a fight will inevitably take place. The sources of dispute with the IRS agent are many. The IRS may include income that should not be included. You might have to challenge them to take that income out.
Similarly they may deny expenses that we deem legitimate, either because they consider the evidence to be insufficient or because in some instances the hostility of the IRS representative. You must stand your ground even if you take them to audit appeal.
Last but not least is the question of the penalty. Tax penalty are not necessarily inevitable in all cases. You can request an abatement of penalty and in many instances you may be able to get it. The tax help afforded by a knowledgeable professional is invaluable.
The guide in making the decision to engage the tax relief afforded by hiring the professional tax help depends on the amount of the tax owed, seriousness of the issue, and the degree of the technical expertise required. If these are not so important you may be able to avoid the fees that tax professionals charge.