Wednesday, September 6, 2017

What Are Back Taxes? How to Negotiate Back Taxes With IRS?

Definition of Back Taxes:

Unpaid back taxes can be a serious issue for many taxpayers who don’t have the means to pay them. The Internal Revenue Service (IRS) has recently turned over the collection of unpaid back taxes to private collection agencies. Taxpayers who lack the means to repay back taxes may often negotiate a lesser settlement with the IRS through the offer in compromise program either directly or through a tax lawyer.

Currently, per IRS statistics, the IRS is approving 42% of all Offer in Compromise applications.

95% of Flat Fee Tax Service, Inc.'s Clients have Received a Successful Offer in Compromise.

One of the most common questions our team will hear during our consultations is “I owe the IRS years of back taxes, what are my options?” Many taxpayers gravitate towards the Offer in Compromise (OIC) program, possibly falling victim to the late night television commercials that claim “we can get you a settlement for pennies on the dollar.”

No reasonable person with back taxes due would pass up the opportunity to settle their back taxes for “pennies on the dollar,” but the reality is those types of resolutions not for everyone. You need to be both qualified and eligible to settle your back taxes. While an Offer in Compromise may work for some, it certainly does not work, or make sense, for everyone.

The good news is the IRS has many other options available to alleviate an individual’s back taxes. If you cannot pay the IRS for your baxk taxes, the IRS will encourage you to charge the extra amount on your credit card. This may be a bad idea, because the interest on your credit card will probably be a lot higher than the interest and penalties the IRS will charge if you reach an agreement with them.

The IRS is particularly focused on the following changes:
  1. Significantly increasing the dollar threshold when liens are generally issued, resulting in fewer tax liens.
  2. Making it easier for taxpayers to obtain federal tax lien withdrawals after paying back taxes.
  3. Withdrawing federal tax liens in most cases where a taxpayer enters into a Direct Debit Installment Agreement.
  4. Creating easier access to Installment Agreements for more struggling small businesses.
  5. Expanding a streamlined Offer in Compromise program to cover more taxpayers.

From a taxpayer’s point of view, it’s great to see the IRS offering more options for Americans struggling to keep up with their tax payments. But if you do fall behind, don’t just stand there – take the following steps to resolve your debt with the IRS.

Suggested Read: Why An IRS Lawyer Is A Good Idea

Always File Your Tax Return

If you owe the IRS an amount that you cannot pay in one lump sum with a return, it is important to file the return anyway, says the best IRS help team at Flat Fee Tax Service, Inc.

This will reduce some of the penalties. “Occasionally clients tell us during our initial consultation that they did not file a return because they were unable to pay the back taxes due. This usually causes them to create IRS penalties that are significantly greater than they would have paid had they at least filed the return.”

Back Taxes - Gets Worse with Age

It is always best to deal with IRS tax problems in a proactive manner. The IRS will not immediately pursue you for delinquent tax penalties and interest. In many cases it will take months before the IRS begins collection efforts.

At first, IRS collection efforts can seem benign, consisting of only computer generated letters. At some point, however, the IRS will begin very aggressive enforcement tactics, including the IRS garnishing wages. The IRS will order your employer advising that you have delinquent back taxes and that any wages that would be paid to you should be paid to the IRS.

Go For an IRS Installment Agreement?

We are always surprised to find out how few taxpayers consider entering into an installment agreement to pay off their IRS back taxes if you ahve the ability and assets to pay your back taxes.

When To Enter Into An IRS Installment Agreement. 

The easiest way to answer this question is to list when an installment agreement should not be used, which is when another option is far superior. As an example, if a taxpayer has a large balance owed to the IRS and can only afford to make minimal installment payments another resolution option is more desirable because the taxpayer would barely be paying off the principal of their debt. That being said, the fact remains that an installment agreement should always be considered, even if only as an interim solution while considering other methods.

Pros: Makes IRS content; prevents IRS from taking further collection action; flexible; almost always available.

Cons: Interest continues to accrue; could take years to pay off your back taxes. You must remember to make payments or else default (not an issue if utilize the direct debit option).

Stick to Your Payments

Do not fail to make your payments on time to the IRS. If you violate the terms of your payment arrangements, the IRS will attach and seize property that you own, including bank accounts and even the mortgage on your home. However, if you speak with them in the event that you are having problems making your payments, you should be able to work through it.

Get Professional Help For Your Back Taxes

A professional representative can usually be of significant help in negotiating the most favorable possible compromise or installment agreement. That said, beware the “pennies on the dollar” firms or tax relief firms that advertise on late-night television, In many instances these tax relief firms will simply take a client’s money and perform no or minimal services. Many of these firms have been prosecuted in their states of origin for unlawful and deceptive business practices.

Make sure that IRS collection resolutions is the backbone of their practices. Many attorneys and Certified Public Accountants (CPAs) do tax planning but rarely interface with the IRS. It’s important that your tax relief representative has deep experience negotiating with the IRS in back taxes payment cases.


If you haven’t filed your taxes in many or a few years, you may be wondering what tax relief options you have. You may be surprised to learn that filing your tax returns can be the quickest way out of tax trouble. But you need to protect yourself.

Above all, the one thing you shouldn’t do is to do nothing. Taxpayers who don’t take action will find themselves embroiled in the IRS collection process. 

Did you know? The IRS can and will levy your wages and bank accounts. The IRS will even place a Federal tax lien on your property! If you’ve received an IRS notice about a levy or lien, it’s still not too late to get tax debt help. 

Nobody is saying that the federal government is getting all warm and fuzzy about late tax payments. However, the IRS does offer more programs than ever before for Americans to get back on track with their taxes. The key is to act quickly and find a resolution as soon as possible.

The possibility of losing wages or property is very real. You should take all IRS notices seriously because even if the IRS are the ones who made an error, you are the one who will be paying for it until/unless it’s addressed. 




Monday, September 4, 2017

Tax Relief Attorney: When to Use IRS Tax Attorneys For Tax Relief


Choosing the right type of tax professional for your particular tax situation is an important decision because it can help ensure you the best outcome and can save you money. A tax relief attorney or tax debt attorney provides immediate benefits to you. Below are some benefits of using a tax relief attorney, typical situations they can be utilized for, and tax solutions they can help with.

Benefits of a Tax Relief Attorney or Tax Debt Attorney

Tax Attorney Client Privilege: The attorney-client privilege is a legal concept that is used between attorneys and their clients. This makes all communication kept strictly confidential. If a client discloses all information to their attorney, the tax relief attorney can provide better advice and will be able to represent their client in the most effective manner. This is a privilege that is not offered between accountants and their clients. 

Many times, individuals that use tax strategies that may be pushing the tax law boundaries may choose to work with a tax relief attorney instead of another type of tax professional since their tax relief attorney would never be able to testify against them.

Well Rounded Advice: A tax relief attorney will typically have the background and knowledge to offer a wider variety of solutions to a particular tax problem than other types of tax professionals. For example, a CPA or other type of tax professional cannot offer advice for filing for bankruptcy. A tax relief attorney will likely have a bigger arsenal of solutions than other types of tax professionals, which is a good thing when dealing with complex, technical tax problems.

IRS Representation: A tax relief attorney is one of the types of tax professionals that can act on your behalf and represent you before the IRS through power of attorney representation. With power of attorney representation, your tax relief attorney can represent you at meetings with the IRS, respond to IRS letters, and handle all other forms of IRS correspondence on your behalf. A tax relief attorney can also represent you before in tax court for tax issues. Being able to represent you in court is one benefit that other types of tax professionals do not offer.

IRS Tax Negotiation: Tax laws are complex. There is no standard formula to figure out what will be owed, which tax relief mechanism a taxpayer will qualify for or which penalties the IRS will make the taxpayer liable for. Many factors of the tax code can be negotiated. Tax relief attorneys generally have superior negotiation skills from their background and training than other types of tax professionals.

IRS Problems a Tax Relief Attorney Can Help With:

Unfiled Tax Returns: Unfiled tax returns can be a serious issue, especially if there is a large sum of unpaid taxes that go along with them. If the filing of your tax returns does not have an legal or complex issues, it may be a better option to use a CPA or an enrolled agent to help (for the purpose of saving money).

IRS Tax Penalties: Tax penalties can be a significant portion of the total tax debt amount owed to the IRS. Many times these IRS penalties can be significantly reduced by a Tax Relief Attorney when it can be shown to the IRS that there was a legitimate reason for not staying in compliance with IRS tax laws. Also, if all of these penalties cannot be paid it is likely that a tax relief attorney can find the next best solution for you which may be to settle your tax debt.

Federal Tax Liens: A federal tax lien is the government’s claim on your property. A federal tax lien will give IRS rights to everything you own over any other debtor and this will ruin your credit. If a federal tax lien is not resolved it can likely lead to a tax levy, which will allow the IRS to legally seize your assets.

IRS Tax Levy: The IRS can legally seize wages, bank accounts, real estate, cars, boats, 401K’s and more. When being faced with an IRS tax levy it is important to act immediately to limit the financial impact of it. A tax debt attorney can stop an IRS levy and prevent significant financial damage.
Unpaid Taxes: There are countless solutions to resolving unpaid taxes. Of these solutions, some are supported by the IRS and others the IRS would never recommend. Having a tax attorney assess your situation from every angle possible can ensure you will get the best financial outcome, whether it is IRS recommended or not.

Offer in Compromise Tax Settlements: An offer in compromise is a complex tax relief settlement that allows you to settle your taxes for less than the total amount owed. 

IRS Payment Plans: The IRS offers various forms of payment plans. A tax attorney can help analyze your financial situation and determine the best type of payment plan to use, determine the monthly amount to be paid, and handle all related filings to get it properly setup.

Penalty Abatement: IRS tax penalties can be partly or fully removed through penalty abatement. The IRS uses tax penalties as a way to frighten taxpayers into staying in compliance with tax regulations.  The only way the IRS will remove these penalties is if proof is shown that there was reasonable cause for not staying in compliance with IRS tax regulations.

Innocent Spouse Relief: An uncommon type of tax relief that many tax attorneys are aware of is called innocent spouse relief. When individuals are married and file a joint tax return, each spouse is then jointly and equally liable for the tax liability that is created. The IRS made innocent spouse relief because it realizes that at times it is unfair to hold both spouses liable for the tax liability that was created.
The Tax relief attorneys or tax debt attorneys at Flat Fee Tax Service, Inc. are highly trained tax professionals that will: 

1. Stop an IRS wage garnishment in one day.

2. Prepare your missing tax returns.

3. Settle with the IRS through the Offer in Compromise program.

4. Will protect you from IRS collection enforcement.