IRS Representation Services For When The IRS Is Looking at YOU

• Tax Resolution is finding mutually agreeable resolutions to past tax debts

• Offers in Compromise is settling a tax debt for less than you owe

• Installment Agreements are paying either some or all of your tax debt over time.

• Back-door Offer in Compromise is using a combination of an installment agreement with the IRS statute of limitations to collect a debt to pay less than you owe

• Strategies to reduce the amount you pay are often most effective when you own a business and require a professional that understands what monthly expenses you’re allowed to reduce the amount the IRS can collect from you.

Nav­i­gat­ing the com­plex world of tax res­o­lu­tion can be over­whelm­ing for many indi­vid­u­als and busi­ness­es. As a ded­i­cat­ed tax attor­ney, I spe­cial­ize in offer­ing a wide range of tax res­o­lu­tion ser­vices designed to help clients resolve their tax issues effi­cient­ly and effec­tive­ly.

This is an overview of the most com­mon tax res­o­lu­tion ser­vices I offer, includ­ing Offers in Com­pro­mise, Install­ment Agree­ments, and more.

1. Introduction to Tax Resolution

Tax res­o­lu­tion encom­pass­es a vari­ety of strate­gies and ser­vices aimed at resolv­ing tax debt issues with the Inter­nal Rev­enue Ser­vice (IRS) and state tax author­i­ties. Whether you’re an indi­vid­ual strug­gling with back tax­es or a busi­ness fac­ing pay­roll tax issues, the right tax res­o­lu­tion approach can pro­vide relief and a path to finan­cial sta­bil­i­ty. The pri­ma­ry goal of tax res­o­lu­tion is to find the best pos­si­ble out­come for the tax­pay­er while ensur­ing com­pli­ance with tax laws. For the most part, a tax­pay­er with past-due debts should NOT attempt to resolve their issues on their own, or use a ‘tax res­o­lu­tion mill’ that promis­es the moon and isn’t pre­pared to deliv­er.

Let me also start out with I have a bias. I’m a tax attor­ney, and both CPAs and tax attor­neys can rep­re­sent you in front of the IRS. How­ev­er, most CPAs don’t work in the field of tax res­o­lu­tion. In fact, some CPAs may know lit­tle regard­ing tax­a­tion and may not even file tax returns as part of their prac­tice. If you have a seri­ous tax prob­lem that requires seri­ous skill and knowl­edge, you ONLY want to work with some­one that focus­es on tax­a­tion.

My law prac­tice focus is on tax­a­tion, includ­ing tax advi­so­ry, tax prepa­ra­tion (fil­ing tax returns), and tax res­o­lu­tion. I don’t focus my atten­tion on fam­i­ly law, speed­ing tick­ets, DUIs, etc… my focus is on tax­a­tion and busi­ness law (includ­ing trade­marks, albeit that’s sec­ondary). Also, CPAs aren’t taught the same skill sets as attor­neys in so much as under­stand­ing US Code, case law, and reg­u­la­tions in the same way as attor­neys (just as attor­neys aren’t nec­es­sar­i­ly trained cor­po­rate finance and book­keep­ing).

In oth­er words, dif­fer­ent pro­fes­sion­als have dif­fer­ent skill sets. And because tax res­o­lu­tion isn’t dif­fi­cult from a book­keep­ing (or math for that mat­ter), the skill set in my opin­ion that is best for resolv­ing an issue with a tax­ing author­i­ty is one where the pro­fes­sion­al is trained to under­stand the law and how to apply the facts to it in the capac­i­ty to rep­re­sent some­one in the best pos­si­ble light.

I should also add for com­plete­ness that there is a third cat­e­go­ry called an Enrolled Agent (EAs) that is licensed by the IRS to rep­re­sent peo­ple. And while there are many very very good EAs (and I know a few), my expe­ri­ence is that on aver­age, a CPA or Tax Attor­ney will have a high­er lev­el of train­ing, knowl­edge, and abil­i­ty to resolve your tax prob­lem.

Also, a tax­pay­er will nev­er have the same lev­el of attor­ney-client con­fi­den­tial­i­ty that is enjoyed by hav­ing a tax attor­ney rep­re­sent you. This becomes espe­cial­ly true when you’re fac­ing poten­tial crim­i­nal lia­bil­i­ty expo­sure. If you dis­cuss your tax issue with an attor­ney regard­ing crim­i­nal con­cerns, you like­ly don’t have a wor­ry that an attor­ney can be made a wit­ness against you, unlike poten­tial­ly the case with a CPA or EA. In fact, only a tax attor­ney can rep­re­sent you in a crim­i­nal mat­ter and is bound by the high­est lev­el of con­fi­den­tial­i­ty pro­tec­tion you can have.

There­fore, while I may have a bias in favor of using a tax attor­ney to rep­re­sent you against the IRS, it does­n’t change the fact that the one per­son who can rep­re­sent you in both civ­il and crim­i­nal mat­ters (or civ­il mat­ters that may unfor­tu­nate­ly turn into crim­i­nal) is a tax attor­ney, and not a CPA or EA.

2. Offers in Compromise

Def­i­n­i­tion and Pur­pose

An Offer in Com­pro­mise (OIC) is a tax res­o­lu­tion option that allows tax­pay­ers to set­tle their tax debt for less than the full amount owed. This option is typ­i­cal­ly avail­able to those who are unable to pay their full tax lia­bil­i­ty or if pay­ing the full amount would cre­ate a finan­cial hard­ship. This type of tax res­o­lu­tion is the most com­mon­ly adver­tised on TV and the radio because (in my opin­ion) it preys on a tax­pay­er’s stress and wor­ry while also giv­ing ‘hope’ that your tax debt can be set­tled for pen­nies on the dol­lar.…

While it’s true that some­times a tax debt can be set­tled for next to noth­ing, what is more often the case is you don’t want to be a ‘real can­di­date’ for set­tling for pen­nies on the dol­lar because it means your assets and income rel­a­tive to the tax owed is very small. The entire pur­pose of the IRS is to col­lect mon­ey from tax­pay­ers to fund the gov­ern­ment, and they are not about to allow some­one to live a lav­ish lifestyle while also cir­cum­vent­ing the tax owed.

Eli­gi­bil­i­ty Cri­te­ria

To qual­i­fy for an OIC, tax­pay­ers must meet spe­cif­ic eli­gi­bil­i­ty cri­te­ria, includ­ing:

• Inabil­i­ty to pay the full tax debt with­in a rea­son­able peri­od.
• All required tax returns have been filed. The tax­pay­er must be con­sid­ered ‘in com­pli­ance’ with the report­ing require­ments. This gen­er­al­ly means that the tax­pay­er must have at least filed for the last SIX YEARS of tax returns.
• All nec­es­sary esti­mat­ed tax pay­ments have been made for the cur­rent year.
• No ongo­ing bank­rupt­cy pro­ceed­ings.

Types of Offers in Com­pro­mise

1. Doubt as to Col­lectibil­i­ty: This is the most com­mon type of OIC, used when the tax­pay­er can­not pay the full amount due to finan­cial hard­ship.
2. Doubt as to Lia­bil­i­ty: Used when there is a gen­uine dis­pute about the amount or exis­tence of the tax debt.
3. Effec­tive Tax Admin­is­tra­tion: Applic­a­ble when the tax­pay­er can pay the full amount, but doing so would cre­ate an eco­nom­ic hard­ship or would be unfair or inequitable.

Process and Doc­u­men­ta­tion

The process of sub­mit­ting an OIC involves:

• Com­plet­ing and sub­mit­ting Form 656, Offer in Com­pro­mise.
• Pro­vid­ing detailed finan­cial infor­ma­tion using Form 433‑A (OIC) for indi­vid­u­als or Form 433‑B (OIC) for busi­ness­es.
• Pay­ing an appli­ca­tion fee (unless qual­i­fy­ing for a low-income waiv­er).
• Mak­ing an ini­tial pay­ment with the offer.

Ben­e­fits and Draw­backs

Ben­e­fits:

• Poten­tial­ly sig­nif­i­cant reduc­tion in tax debt.
• Relief from the bur­den of unman­age­able tax lia­bil­i­ties.
• Improved finan­cial sta­bil­i­ty and peace of mind.

Draw­backs:

• Rig­or­ous qual­i­fi­ca­tion process.
• Exten­sive doc­u­men­ta­tion and finan­cial dis­clo­sure required.
• Impact on cred­it score and finan­cial his­to­ry.
• Tolls the statute of lim­i­ta­tions on col­lec­tions.

You should have at least a 90% or more cer­tain­ty of being approved BEFORE apply­ing. A good tax pro­fes­sion­al should be able to know this ahead of time. This is where many of the ‘tax mills’ fail peo­ple in my opin­ion. It’s not dif­fi­cult to know what the out­come should be ahead of time because the math is rel­a­tive­ly sim­ple.

3. Installment Agreements

Def­i­n­i­tion and Pur­pose

Install­ment Agree­ments (IAs) are arrange­ments that allow tax­pay­ers to pay their tax debt over time in man­age­able month­ly pay­ments. This option is suit­able for those who can­not pay their full tax lia­bil­i­ty upfront but can afford to make reg­u­lar pay­ments.

Types of Install­ment Agree­ments

1. Guar­an­teed Install­ment Agree­ment: Avail­able to tax­pay­ers who owe $10,000 or less, have filed all required returns, and agree to pay the full amount with­in three years.
2. Stream­lined Install­ment Agree­ment: For tax­pay­ers who owe $50,000 or less and can pay the full amount with­in 72 months.
3. Par­tial Pay­ment Install­ment Agree­ment (PPIA): Allows tax­pay­ers to make reduced month­ly pay­ments over a longer peri­od, poten­tial­ly result­ing in par­tial for­give­ness of the remain­ing debt.
4. Non-Stream­lined Install­ment Agree­ment: For tax­pay­ers who do not meet the cri­te­ria for the oth­er types of agree­ments and require nego­ti­a­tion with the IRS.

Appli­ca­tion Process

The appli­ca­tion process for an Install­ment Agree­ment involves:

• Sub­mit­ting Form 9465, Install­ment Agree­ment Request.
• Pro­vid­ing finan­cial infor­ma­tion if required (Form 433‑F or Form 433‑A).
• Mak­ing an ini­tial pay­ment with the appli­ca­tion.
• Set­ting up direct deb­it pay­ments for con­ve­nience.

Ben­e­fits and Draw­backs

Ben­e­fits:

• Avoid­ance of col­lec­tion actions such as liens and levies.
• Abil­i­ty to pay off tax debt over time with­out severe finan­cial strain.
• Main­te­nance of com­pli­ance with IRS require­ments.

Draw­backs:

• Accru­al of inter­est and penal­ties on the unpaid bal­ance.
• Poten­tial impact on cred­it score.
• Require­ment to stay cur­rent with future tax oblig­a­tions.

4. Currently Not Collectible Status

Def­i­n­i­tion and Pur­pose

Cur­rent­ly Not Col­lectible (CNC) sta­tus is a tem­po­rary relief option for tax­pay­ers who can­not pay their tax debt due to finan­cial hard­ship. When a tax­pay­er is placed in CNC sta­tus, the IRS tem­porar­i­ly sus­pends col­lec­tion efforts, such as wage gar­nish­ments and bank levies.

Eli­gi­bil­i­ty Cri­te­ria

To qual­i­fy for CNC sta­tus, tax­pay­ers must demon­strate that pay­ing their tax debt would cause sig­nif­i­cant finan­cial hard­ship, leav­ing them unable to meet basic liv­ing expens­es.

Appli­ca­tion Process

The process of obtain­ing CNC sta­tus involves:

• Pro­vid­ing detailed finan­cial infor­ma­tion to the IRS using Form 433‑A or Form 433‑F.
• Sub­mit­ting doc­u­men­ta­tion of income, expens­es, and assets.
• Request­ing CNC sta­tus from the IRS, which will review the infor­ma­tion and make a deter­mi­na­tion.

Ben­e­fits and Draw­backs

Ben­e­fits:

• Tem­po­rary relief from IRS col­lec­tion actions.
• Oppor­tu­ni­ty to improve finan­cial sit­u­a­tion with­out the pres­sure of imme­di­ate tax debt pay­ments.
• Pro­tec­tion of essen­tial assets and income.

Draw­backs:

• Accru­al of inter­est and penal­ties on the unpaid bal­ance.
• Peri­od­ic review of finan­cial sta­tus by the IRS.
• Poten­tial loss of CNC sta­tus if finan­cial sit­u­a­tion improves sig­nif­i­cant­ly.

5. Penalty Abatement

Def­i­n­i­tion and Pur­pose

Penal­ty abate­ment is the reduc­tion or removal of penal­ties assessed by the IRS for var­i­ous tax-relat­ed infrac­tions, such as late fil­ing, late pay­ment, or fail­ure to deposit tax­es. This option is avail­able to tax­pay­ers who can demon­strate rea­son­able cause for their non-com­pli­ance.

Types of Penal­ties Eli­gi­ble for Abate­ment

1. Fail­ure to File Penal­ty: Assessed for not fil­ing a tax return by the due date.
2. Fail­ure to Pay Penal­ty: Assessed for not pay­ing the tax owed by the due date.
3. Fail­ure to Deposit Penal­ty: Assessed for not deposit­ing pay­roll tax­es on time.

Cri­te­ria for Penal­ty Abate­ment

The IRS may grant penal­ty abate­ment if the tax­pay­er can demon­strate rea­son­able cause, which may include:

• Seri­ous ill­ness or injury.
• Nat­ur­al dis­as­ters or oth­er cat­a­stroph­ic events.
• Inac­cu­rate advice from a tax pro­fes­sion­al.
• Inabil­i­ty to obtain nec­es­sary records.

Appli­ca­tion Process

The process for request­ing penal­ty abate­ment involves:

• Sub­mit­ting Form 843, Claim for Refund and Request for Abate­ment.
• Pro­vid­ing a detailed expla­na­tion and doc­u­men­ta­tion of the cir­cum­stances that led to the penal­ty.
• Sup­port­ing the claim with rel­e­vant evi­dence, such as med­ical records or insur­ance reports.

Ben­e­fits and Draw­backs

Ben­e­fits:

• Reduc­tion or elim­i­na­tion of sig­nif­i­cant penal­ty amounts.
• Poten­tial reduc­tion in over­all tax lia­bil­i­ty.
• Oppor­tu­ni­ty to resolve tax issues with­out severe finan­cial con­se­quences.

Draw­backs:

• Strict eli­gi­bil­i­ty cri­te­ria and doc­u­men­ta­tion require­ments.
• Poten­tial denial if rea­son­able cause is not ade­quate­ly demon­strat­ed.
• Accru­al of inter­est on the under­ly­ing tax debt.

6. Innocent Spouse Relief

Def­i­n­i­tion and Pur­pose

Inno­cent Spouse Relief pro­vides pro­tec­tion for indi­vid­u­als who have been unfair­ly held respon­si­ble for their spouse’s or for­mer spouse’s tax debt. This relief is avail­able to tax­pay­ers who can demon­strate that they were unaware of the erro­neous or fraud­u­lent actions of their spouse.

Types of Inno­cent Spouse Relief

1. Tra­di­tion­al Inno­cent Spouse Relief: Avail­able to tax­pay­ers who were unaware of the under­state­ment of tax due to their spouse’s actions.
2. Sep­a­ra­tion of Lia­bil­i­ty Relief: Allo­cates the under­state­ment of tax between the spous­es, pro­vid­ing relief to the inno­cent spouse.
3. Equi­table Relief: Avail­able to tax­pay­ers who do not qual­i­fy for the oth­er types of relief but can demon­strate that it would be unfair to hold them respon­si­ble for the tax debt.

Eli­gi­bil­i­ty Cri­te­ria

To qual­i­fy for Inno­cent Spouse Relief, tax­pay­ers must meet spe­cif­ic cri­te­ria, includ­ing:

• Filed a joint tax return with the spouse.
• Under­state­ment of tax was due to the spouse’s erro­neous or fraud­u­lent actions.
• Lack of knowl­edge or rea­son to know about the under­state­ment.
• Request for relief made with­in two years of the IRS ini­ti­at­ing col­lec­tion actions.

Appli­ca­tion Process

The process of apply­ing for Inno­cent Spouse Relief involves:

• Sub­mit­ting Form 8857, Request for Inno­cent Spouse Relief.
• Pro­vid­ing detailed infor­ma­tion about the cir­cum­stances and sup­port­ing doc­u­men­ta­tion.
• Respond­ing to IRS requests for addi­tion­al infor­ma­tion and par­tic­i­pat­ing in inter­views if required.

Ben­e­fits and Draw­backs

Ben­e­fits:

• Relief from joint lia­bil­i­ty for tax debt caused by a spouse’s actions.
• Pro­tec­tion of per­son­al assets and finan­cial sta­bil­i­ty.
• Oppor­tu­ni­ty to resolve tax issues with­out undue hard­ship.

Draw­backs:

• Com­plex and lengthy appli­ca­tion process.
• Require­ment to dis­close per­son­al and finan­cial infor­ma­tion.
• Poten­tial denial if eli­gi­bil­i­ty cri­te­ria are not met.

7. Payroll Tax Issues

Def­i­n­i­tion and Pur­pose

Pay­roll tax issues arise when busi­ness­es fail to prop­er­ly with­hold and remit pay­roll tax­es, includ­ing fed­er­al income tax, Social Secu­ri­ty, and Medicare tax­es. Fail­ure to com­ply with pay­roll tax require­ments can result in sig­nif­i­cant penal­ties and inter­est.

Com­mon Pay­roll Tax Issues

1. Fail­ure to With­hold and Remit Tax­es: Busi­ness­es are required to with­hold tax­es from employ­ee wages and remit them to the IRS.
2. Fail­ure to File Pay­roll Tax Returns: Busi­ness­es must file pay­roll tax returns, such as Form 941, on time