HOW TO SETTLE TAX DEBTS

It's amazing to us to watch the media. We're not certain if they don't pay attention to the full story, if they write and report based on their own headlines, or if they are truly incompetent. We thought it necessary to provide bit of clarity amid all the recent headlines about the IRS waiving fees and working with taxpayers who have fallen on tough times. Before you get lolled into a false sense of security, we want to make sure you understand the facts behind the media buzz.

IRS Compassion Does Not Extend to Those Already Dealing with IRS Debt There have been numerous reports over the past couple weeks discussing the IRS in terms of being compassionate during this time of economic downturn. These reports began after IRS Commissioner Doug Shulman's announcement on January 6 that IRS agents and revenue officers now have the authority to work with taxpayers who are having difficulty paying their bills. Some have taken this to mean the IRS will allow people with back taxes to skip payments or stop sending payments altogether. Shulman made it very clear in his announcement that any authority given to agents and revenue officers was to be used for individuals without a history of tax debt who, because of recent financial hardship, are going to have a hard time paying what they owe. Shulman is not giving you a pass on your debt, but rather anticipating a new crop of taxpayers who simply can't pay what they owe. If you are in trouble with the IRS, now is the perfect time to (contact US).

Because of the new authority to waive certain penalties and fees recently given to IRS agents and revenue officers, we will be able to negotiate better agreements than we could in 2008. If you are one of those who already owe a substantial tax debt and you have been contacted by the IRS about it, Shulman's announcement really means nothing. You are still in trouble and you need to contact us before your debt spirals out of control.

National Taxpayer Advocate Report Says Tax Representation Effective On page 457 in the Most Litigated Issues section of the National Taxpayer Advocate 2008 Annual Report, the National Taxpayer Advocate states that, “…overall, taxpayers have a higher chance of prevailing in litigation if they are represented.” While this statement may seem to be a recounting of an obvious fact, we are constantly surprised at the number of people who represent themselves in front of the IRS for tax debt relief or even in tax court. This statement from the report pertains directly to litigated tax cases, but it provides a good vantage point for us to look at all tax issues. If more taxpayers are winning their case with representation in court, it certainly stands to reason that more taxpayers are achieving more favorable results along the way if they have a representative. This confirms what we’ve known all along.

If you’re going up against the IRS for tax debt relief or trying to work out an affordable payment plan or other agreement with the IRS, you need a qualified tax representative in your corner. CODI and What No One is Saying, at Least Not Very Loudly If you have cancellation of debt income (CODI) from 2008, this is for you. CODI is not a new concept, but it is one that the National Taxpayer Advocate estimates will affect tens if not hundreds of thousands of taxpayers because of the economic downturn. Many of these taxpayers have no idea how to claim debt cancellation or forgiveness as anything other than taxable income, and others may not claim it at all. Lenders are required to report CODI to the IRS using Form 1099-C, and the IRS assumes the reported amounts to be taxable unless the taxpayer files a particular form to exclude the income from taxes.

A particularly bothersome aspect of this entire situation is that the IRS, the media, and no one else seems to be very interested in telling taxpayers about their ability to exclude at least portions of debt forgiveness income from their taxable income. So the person who can’t pay his mortgage files his taxes only to see that he owes $10,000 or more after going through foreclosure in 2008. And if he doesn’t claim the income, he gets a friendly reminder from the IRS in 2009 or 2010, just as he’s getting back on his feet financially, that his return was adjusted and he now owes $18,000 in back taxes, interest, and tax penalties. If you have any debt forgiveness from 2008, we strongly encourage you to have a qualified tax CPA or tax professional prepare and help you file your taxes and the debt exclusion form. If you don’t handle this correctly now, you will be calling later and you will already owe the IRS thousands. If you are already in this situation and have CODI from past tax years, contact us today and about how to refile to claim the exclusions you qualify for. Odds are we can get some of that money back for you if you claimed the CODI as income. And if you didn’t claim the income at all, it’s a matter of time before the IRS contacts you with an adjusted return or notice of audit.

It’s always better to beat the IRS to the punch, particularly now when IRS agents and revenue officers have the authority to waive penalties. Tax debt doesn't go away on its own. contact us right now. We're here to help. If you are already having issues with the IRS, you need to resolve them now. If you have not filed returns, it is in your best interest to call us now and file those before the IRS notifies you.

Tax law enforcement is on the increase. Beat them to punch or pay the difference in penalties and interest. IRS tax debt relief is here for you Whatever your tax problem or question, we can help. We know the law and we know the IRS. We help people like you every day protect themselves from the bureaucratic nightmare that is the IRS. If you receive a Notice of Intent to Levy and Notice of Right to a Hearing from the IRS, contact us immediately. You are in trouble and we can help. If you receive a phone call or visit from an IRS agent, know your rights before speaking to them. You cannot take back information you divulge to the IRS. If you have a tax representative, tell the IRS to speak with the representative (it is always best to have a third party). If you don’t, tell the IRS agent that you are hiring one and call us before giving them any information. After we get a Power of Attorney with the IRS, you have the right to insist that the IRS speak with us instead of with you, even if the agent states otherwise. This can save you significant dollars. Don’t underestimate the IRS. Their job is to collect revenue.

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