• I have not filed my tax returns for several years. What is going to happen?

    If you fail to file your returns, you could be subject to IRS Substitutes for Return, or you could be criminally prosecuted for federal tax evasion.  You should know however that the IRS would greatly prefer that you file your returns, and that you get back into the system.

    If you cannot locate your income and expense information from those years, then we can obtain from the IRS all of your W-2 and 1099 tax  information as well as your interest and dividend records as well.   This information will be used to to prepare your returns.

  • How many years of back tax returns will I be required to file?

    In general, we focus on filing the last 3 years of returns first, and we explain to the IRS that these are the last returns that you have filed and that you want to resolve your tax problems.   The IRS may ask for an additional 3 years of returns to be filed at that point
  • Will I be required to communicate with the IRS?

    No, once you hire me to represent you, then you will not need to speak or write to the IRS and I will handle all communications with them.
  • Will the IRS consider me to be a tax evader?

    As a general rule, the IRS is looking for taxpayers to get into compliance with the filing of all returns and the paying of the underlying taxes.  Nevertheless, if there has been willful evasion of the filings, then you may need the assistance of a criminal defense attorney.
  • I cannot possibly pay all of my delinquent taxes. What are my options?

    You have many rights as a taxpayer.   We will evaluate your circumstances and determine which program best suits your needs.   You can be considered for an Offer in Compromise, an Installment Payment Agreement, Uncollectible Status, or even a Tax Bankruptcy such as Chapter 7 or Chapter 13.
  • I have heard about the IRS settling tax debts for pennies on the dollar. What is that program?

    This is the IRS program called Offer in Compromise.  The IRS will look at certain taxpayers who it feels cannot pay their taxes in full.   There are 3 categories:  (1)  Doubt as to Collectibility; (2) Doubt as to Liability, and (3) In the Interest of Effective Tax Administration.

    As a general rule, when a taxpayer is struggling financially to pay their household bills, and they have little equity in real estate and household property, then they may be good candidates for the Offer in Compromise Program.   If you have limited income and have otherwise depleted your assets, then you may be a good candidate.   However, you must be advised that

  • Can the IRS garnish my wages and how quickly can this be stopped?

    Yes, the IRS can absolutely garnish someone’s wages for back taxes.   The IRS must first send you a “Notice of Intent to Levy” prior to taking action to collect on your delinquent taxes.   But, once you contact a tax professional, then an IRS levy on wages can be stopped very quickly provided that all tax returns have been filed.
  • What is an IRS Tax Lien and what can a tax lien affect me?

    An IRS Tax Lien is basically a Notice filed in the County Court where you reside that provides a signal to others that you have IRS tax debts for the year in question.  A Tax Lien can be devastating to your credit rating, and will prevent you from selling or transferring your property without paying the tax debt in full.
  • I owe the IRS for back income taxes. Will I owe this for the rest of my life?

    No, there are actually time limits for IRS income tax collections.  These are known as Collection Statutes Expiration Dates (“CSED”), which are 10 years from the time that your income taxes have been assessed.   An “assessment” of taxes is when the IRS has reviewed your tax return and put the tax amount on its books as being owed.   For example, if you filed your tax return on a timely basis on April 15, 2011, then the IRS will likely have assessed the taxes a couple of months later.  You can find out the exact assessment date (and thus your CSED) by obtaining a copy of your tax transcript from the IRS.   One big problem though is for the person who has never filed a tax return.   Because they never filed a return, the IRS has not had the opportunity to assess the tax, and thus the 10 year time period has never started.   So, that’s yet another reason to get those returns filed.
  • I owed the IRS for back taxes. I’ve heard that the IRS makes deals. How does this work?

    The IRS does settle tax debts, but it’s not in a traditional “deal-making” manner.  There is no back-and-forth bartering that you might have if you’re purchasing a car or house.   Instead, the IRS has the Offer in Compromise Program, in which a very complete financial disclosure must first be made (IRS Form 433).  Then, a formal Offer is proposed to the IRS, which is an amount of money that you offer to pay either over a 5 month or 12 month period.   So, an Offer in Compromise represents to the IRS the taxpayer’s best effort to repay as much as possible on the tax debt
  • What are the disadvantages of filing an Offer in Compromise?

    Not everyone is a good candidate for an Offer in Compromise.   I like to review all of the taxpayer’s IRS transcripts first before making a decision to enter into an Offer in Compromise.   But if you are a good candidate (in other words, the Offer would save you a lot of money and would actually be feasible for you to pay), then you must know the following:  (a)  there is a one time $186 filing fee for the Offer in Compromise;  (b)  you must make a non-refundable 20 per cent payment when you submit your Offer (for example, if your Offer is for $10,000, then you must submit a payment of $2,000 when you send in the Offer to the IRS);  (c) if your Offer is accepted, then if you have any federal tax refund for the following year, then the IRS will be permitted to take that entire refund and apply it to your liability, and (d)  you must file each federal return and fully pay your taxes for the following 5 years.
  • I’ve heard about the IRS’s Fresh Start Initiative. What exactly is it?

    The IRS has initiated a variety of changes in its collections practices in the past few years.  The Fresh Start Initiative refers to specific ways that the IRS has made it easier for taxpayers to repay their taxes and to be successful with Offers in Compromise.   For example, the IRS has expanded the time period for Installment Agreements from 60 to 72 months.   The IRS also changed its Offer in Compromise calculations, because it allowed taxpayers to deduct for items like credit card and student loan payments, as well as for delinquent State and Local taxes as well.  Another major improvement was that the IRS reduced its income calculator from 48 months to 12 months for Offers in Compromise    Let’s say that after deducting all reasonable and necessary expenses from your monthly income, you were left with $200 a month.   In the pre-Fresh Start days, the IRS would require you to multiply $200 by 48, which would have been $9,600 to repay.   Now, the amount is simply $200 by 12 months, which is a much easier amount of $2,400 to repay in your Offer.
  • I am behind on IRS payroll taxes. What should I do?

    The IRS regards delinquent payroll taxes as an extremely urgent collections matter.   This is because the employer is failing or has failed to pay the IRS certain Social Security and Medicare taxes that are being held in trust to the US Government.   The first thing is that you have to make an honest analysis of your business.   You must start withholding your current payroll taxes and remitting those funds to the IRS.  You must in other words immediately start to file (and pay the liabilities for) your 941 tax returns.   So, that’s the first step.    And if you can’t make that first step, then you should realize that the IRS will eventually seek to close down your business and seize the business assets to pay the obligation owed.   You should realize that the penalties and interest (non-filing and non-payment penalties) for payroll taxes are very significant.   This is why you do not want this problem to linger, because otherwise it will drain you financially.   Finally, you must know that the IRS will seek to assert Trust Fund Recovery Penalties against all of the responsible parties involved with your business, including the corporate officers or directors or bookkeepers or whomever it determines had decision-making authority.
  • I want to get into a repayment plan with the IRS. How does this work?

    The IRS has made it easier to enter into Installment Agreements.   For amounts of $50,000 and less, the IRS does offer Streamlined Installment Agreements, in which the IRS Form 433 does not have to be submitted.   Moreover, Agreements can be extended for up to 72 months.   And yes, as with all IRS resolution formats, you must first file all outstanding tax returns.  But once the returns are filed, then an Installment Agreement can be quickly submitted and all other IRS collections will be halted once the Agreement is in place.
  • Can I file bankruptcy and get rid of IRS tax debts?

    Yes, under specific circumstances, a bankruptcy filing can be the quickest and most efficient way to eliminate income tax debt.   Bankruptcy will not eliminate payroll tax or State sales tax obligations.   Moreover, with income tax debts, there are strict rules to follow:  (1)  the tax debts must be more than 3 years old;  (2)  the actual tax returns must have been filed at least 2 full years prior to the bankruptcy filing, and (3) the income tax debt must have been “assessed” by the IRS at least 240 days prior to the bankruptcy filing.   There are other events which could “toll” the 3 year tax debt time period, and as a result, you should only seek to discharge (wipe out) IRS tax debts by hiring an experienced bankruptcy attorney who is knowledgeable about these rules.

    But if these rules apply to your IRS income tax debts, then a bankruptcy filing can be completed within 4 to 5 months (Chapter 7 filing) and you may be able to protect (“exempt”) all of your property without repaying anything to the IRS on those tax debt obligations.