Owing money to the IRS or state taxing authority is no picnic. The audit process is intimidating, time-consuming, and can be costly especially true if additional taxes are assessed. Not to mention, the stress it causes people who have fallen on hard times can impact their personal and professional lives.  Marriage, relationships, reputation and more.

Given the current economic climate, the IRS is now more willing to make deals with folks who have IRS back taxes.  If you have clients with these three characteristics below, then they could be a good candidate for tax resolution.

• owes $10,000 in back taxes
• over three years of unfiled tax returns
• is under audit

Learn how to take a client's tax burden off their dining room table and into your offices to resolve.

• If your client owes $10,000 or less - has all their returns filed and can pay the balance back in 36 equal monthly installments the IRS GUARANTEES acceptance into their Installment Payment Plan Program. You can call the IRS or attach form 9465-FS, Request for Installment Agreement.

• If your client owes up to $25,000 - has all their returns filed, is not under a wage garnishment or bank levy and can pay the full amount in 72 months (or until the Collection Statue Expiration date, whichever is shorter ) or less, the IRS will grant them a monthly Installment Payment Plan under their “fresh start” initiative.  Limited financial disclosure is required. You can call the IRS’s Automated Collection System (ACS) to get this done or attach Form 9465-FS.

• If your client owes between $25,000 and $50,000 – has all their returns filed, is not under a wage garnishment or bank levy and can pay the full amount in 72 months (or until the Statute of limitations on Collections expires, whichever is shorter) through a direct debit Installment Agreement (“DDIA”), the IRS will grant a monthly Installment Payment Plan under their “fresh start” initiative.  The client must have a bank account designated for the IRS to automatically debit on a monthly basis. Limited financial disclosure is required. Form 433-D, Installment Agreement is required.

• If your client owes over $50,000 – tax resolution is still possible, but the IRS wants more financial information. You will need to submit Form 433-A (collection Information Statement) which requires full financial disclosure and proof of income and expenses. The IRS then computes your client’s ability to pay.  Important note: It is unwise for the taxpayer to represent themselves at this juncture.  A capable tax resolution professional who can advocate on a client's behalf may be worth its weight in gold when going up against the IRS.

If your client is unable to pay a liability owed to the IRS in full through a lump sum or through a monthly installment payment plan, they may eligible for the IRS’s Offer in Compromise Program. An offer in Compromise is an agreement between the taxpayer and IRS where the IRS agrees to take less (sometimes, much less) than the amount owed to settle the matter. The IRS looks at the debtor’s income and assets to determine what they can pay and client's are obligated to prove they don’t have the money to pay the tax debt even over time. But while the Offer in Compromise is an invasive intrusive paper blizzard, if your client is a good candidate it can help save their financial life!

The very worst step client can take is to ignore the IRS

Every letter/notice sent by the IRS requires a response.  Sometimes, the correct response is NOT to respond.  How does the average taxpayer know what to do when?  They simply don’t. That's where you come in.  Remember, the IRS is the only federal agency where you are “guilty” until proven innocent. They also happen to be the most brutal collection agency on the planet.  Their mission is to assess (via audits) and collect the tax. Period. This is where being a competent tax resolution expert who understands IRS procedures and protocol becomes a valuable asset to your clients in resolving their tax issues.

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