It is undeniable that the IRS is one of the most powerful collection agencies that exists. The IRS has the ability to access every U.S. financial entity in order to collect back taxes that are owed. The IRS can even go beyond the cloak of corporate anonymity in order to affix personal liability to its officers, with the final goal of being able to decide specifically who is responsible.
You have probably watched the commercials on television: A pitchman says that you can settle your tax bill for just a small fee. All you have to do is contact the law firm shown in the commercial and the law firm will use their special skills in negotiating with the IRS to get you off the hook.
However, in real life, it is not as easy to get the IRS to settle your tax debt for a reduced sum. It may happen in certain cases, but only when the taxpayer does not have the assets or the income to pay off the tax debt in an amount of time that is reasonable. If you have the funds available to pay the IRS, or may have those funds in the future, there is no amount of negotiating that can convince the IRS to settle for a lesser amount than you owe.
Depending on the amount that you owe, and your own financial situation, working with a professional might be the suitable choice versus doing it on your own. However, you must obtain some information on the agency that you will be dealing with.
The Power of the IRS
Although there are some limits, the IRS has vast power, that is defined by the voluminous nature of the Tax Code. The specific authorities of the IRS include:
- attaching a lien to your property in order to protect the government's ability to collect your delinquent taxes,
- apply a levy, which freezes cash, securities and investment accounts, including whatever property the taxpayer has for sale to pay the tax debt, including a major portion of the taxpayer's paycheck.
The IRS will file a lien notice with the taxpayer's local courthouse. It will act as the official notification that the IRS has first call to the taxpayer's property. Other third-parties that are caught up in the IRS lien or levy—including bank officers, employers, insurance brokers that provided permanent life insurance policies to the taxpayer—have no other options than to comply with the IRS legal sanctions on the delinquent taxpayer.
Facing Tax Debt Realistically
Obviously, you paying your income taxes on time—or later with penalties—will prevent IRS liens and levies. The IRS auditor works under the idea that if the taxpayer has assets and owes taxes, that the tax debt takes precedence over any natural desire to preserve wealth.
Time Is Not On Your Side
On one hand, taxpayers that are in dire financial straits have the ability to get out of tax debt. However, these options should never include ignoring the IRS, because time is not on the side of the taxpayer.
The IRS Paper Trail
A formal notification process will begin once the IRS has determined that the taxpayer owes back taxes. It takes roughly six weeks from the beginning of the first formal IRS notification (CP2000 or other) until the final notice has been issued. At that point the taxpayer has 30 days to submit an appeal.
Once a lien or levy has been issued, the IRS has provisions to lift or remove them. Each provision comes with the goal of freeing up the taxpayer's assets in order to make it easier to pay off the incurred debt.
Offers in Compromise and Time Payments
A tax professional that is experienced in working with the IRS can submit a time payment plan that will settle the delinquent tax debts in monthly installment payments that are manageable. The IRS prefers direct bank debts. However, taxpayers also have the ability to mail in paper checks or money orders.
Another option is an IRS Offer in Compromise, which, permits taxpayers to settle delinquent tax bills by only submitting a fraction of what is owed. As you can imagine, there are some strict requirements for eligibility to quality. The bottom line is that the taxpayers must be able to indicate that there has been significant financial hardship for the IRS to approve an Offer in Compromise.
Pay Attention to the Expiration of the Statute of Limitations
The IRS has ten years from the date of the assessment (usually close to the filing date) to collect all taxes, penalties and interest from you. In certain cases, you can help to resolve your back taxes and problems with the IRS by strategizing how to wait out the 10 year expiration date.
Get Assistance from a Tax Professional
It is difficult to figure out how to navigate the complex IRS regulations, voluminous and confusing instruction booklets without professional help. Owing money to the IRS can be fraught with confusion and quite intimidating. It is difficult to figure out what you must do in order to settle the tax debt.
If you are faced with the immediately threat of a levy, or you wish to submit an offer of compromise, you should get help from a professional. This is where our services come in. It is our job to assist you with eliminating IRS tax debt.
Let NationStar Tax Advisors Help You
We actually work directly with IRS and state tax authorities every day on behalf of our clients and we can use our knowledge to benefit you. From the first day, our experienced staff is ready to offer you representation so that we can provide you with the full legal protection that is needed while we perform the negotiations on your behalf. Further, we are also able to help you understand what you should and should not say to the IRS.
Your tax issues are not too large or too small for us. If you need help, or you have questions about preparing the paperwork for your taxes, we can assist you. If you have been faced with liens, levies, wage garnishments, penalties, or criminal charges, we can help you with these concerns as well. In addition, if you need someone to negotiate for you or represent you in front of auditors or revenue officers, we can do so without fear.
Now is the time to rely on the experience of NationStar. Give us a call today at 888-842-1366 to find out more about how you can settle your IRS tax debt.