As an avid DIY’er myself, I respect your right to handle your tax resolution matters yourself and truly wish you the best of luck on your journey.
If you have chosen this path I would like to take a moment to remind you of a few important facts and issues that may arise to help you along the way.
1. Make sure that you qualify for a Penalty Abatement.
Abatements are not automatic by any means and can only be justified by “Reasonable Cause Criteria”. If it doesn’t make sense to you, it probably won’t make sense to the IRS either!
2. If an Offer in Compromise has been proposed, make sure that you qualify.
If you have equity and potential income from either personal or business assets that are equal to or greater than your IRS tax liability, then YOU DO NOT QUALIFY FOR AN OFFER IN COMPROMISE!
3. State Settlement?
There is no such thing as a settlement or penalty abatement in regards to state sales tax liability unless there are extremely dire circumstances. Generally, the best you can hope for is a reasonable and affordable pay plan.
4. Do not let these issues linger.
No matter how great your efforts or how well intentioned, in the eyes of the taxing authorities you are not off the hook until they decide your case. Time is money to the taxing authorities and every day adds more liability (in the form of penalties and interest) to your case. If the resolution process seems to be moving slower than you feel comfortable with, it may be time to look for more proactive representation.
5. Be sure to check the progress of your case in an effort to reach a timely resolution.
It is not unheard of for a department to “lose” a file or a form. No news is NOT good news in this situation.
6. Confirm your case is closed.
If you believe that a resolution was reached and your case closed but you continue to get notices or your case worker has stopped communicating with you, something is wrong and you should seek a second opinion to your situation immediately. When it comes to large bureaucracies the left hand often does not know what the right hand is doing.
7. Be wary of certain resolutions offered to you.
If a resolution sounds too good to be true, it could be…..just like in all other aspects of life and business.
8. Get current and compliant.
Finally and most importantly, if you are not current with the most recent tax period, there is little that can be done to help you. Your most important obligation is to get current and compliant and keep it that way. Once current and compliant, many resolution options become available to you.
The IRS will not negotiate with a taxpayer that is not in good standing with its current obligations, regardless of what is conveyed to you over the phone by anybody in this industry.
At BDK Advisors we would be more than happy to answer any questions or concerns you may have about the tax resolution process.
We would also like to offer you a free, no obligation, tax case review so you can get a better sense of where you stand and what options you have.
Our hope is that this will provide some relief by removing some uncertainty from your tax resolution journey.