The Process, Dealing With the IRS
June 23, 2016
Dealing with the IRS is a process. No single phone call will solve all the problems that can arise by accumulating tax debt. Things that can impact how quickly you get a resolution may include, how much you owe, how many tax periods you owe for, the amount of penalties and interest, your current financial situation, assets that could pay off your balance, how quickly you put information together as requested or required by the IRS, tax liens, filing all future taxes on time, new tax debt, getting the right help.
Besides waiting for months for the IRS to make determinations on an offer in compromise or penalty abatement request, one of the biggest delays in helping taxpayers get a resolution with the IRS is making sure all tax returns have been filed. There is very little you can do while dealing with the IRS when you have unfiled tax returns. As discussed here (Link to Penalty Abatement), penalties are added onto original balances when you fail to file a return on time, so even if you can’t pay the full balance when you file, you should still file on time to avoid additional penalties.
A business taxpayer has recently experienced an extremely long process in just trying to set up a payment plan for the business. When I first began working with this client they had just been levied by the assigned revenue officer, we then were required to disclose the financial health of the business and both individuals that were responsible for the operations of the business. After the Revenue officer reviewed their financials, they had to further disclose their ability to get loans and other various requests to assess their ability to pay a large portion of the liability.
Further requests and clarification regarding personal investment accounts and interviewing one of the spouses regarding her involvement in the business to determine if the spouse would also be held liable for the businesses tax debt, fortunately for the couple the spouse wasn’t also found liable. The IRS will assess the individual responsible for the business with a portion of the outstanding balance after conducting an interview with the individual, and that person is now personally liable. Under your personal social security number you are assess a Trust Fund Recovery Penalty, which is classified as a civil penalty.
After all of this occurred the business was required to submit financial form 433-B along with substantiating documents. It was clear from the bank statements, profit and loss statement and other documents that the business could pay several thousand dollars per month on a payment plan, further we offered to pay an initial sum which was 4 times the monthly payment amount as a showing of good faith. At this point even I had felt that we had turned a corner with the Revenue Officer, complied with all the requests, honestly answered all questions and avoided any delays and still 5 months had passed.
After almost a month of waiting for the Revenue Officer to make a determination, I was shocked that he Revenue Officer had determined off the same information we had provided that the business was able to pay 3 times the amount we had submitted on a monthly basis. I was shocked at the audacity and the lack of logical explanation as to how it was determined that the business could not only continue to operate the business but afford an debilitating monthly payment. Conversations with both the RO and the area Manager were of no avail and thus we exercised the businesses right to appeal the decision.
After being contacted by the appeals officer and submitting some additional documentation, I was able to have a sufficient conversation to understand how the RO made the determination which was completely unfounded and illogical, nonetheless the appeals officer remanded the decision to compromise between what we submitted and thought was reasonable and what the RO had already determined.
This is just one example and not all cases are similar, being patient and trusting in the system is the hardest part sometimes, has taxpayers want the security to know they are protected and not open to enforced collection and to see progress being made on their case. However because of the multitude of variables it can take a considerable amount of time. Another client experienced transition from multiple different revenue officers assigned to their case, which resulted in months of delays and re-submission of the same information time and time again, as each new office wanted to do their due diligence.
If someone tells you they can settle your case with the IRS in a very short time frame, be wary. Although not many of my clients have had to jump through the hoops as the above story, the different aspects that impact finding a resolution with the IRS can take time. Stay patient and vigilant; knowing that in most instances the time delays can play into your favor as well due the expiring (CSED) Collection Statute Expiration Dates. The IRS only has 10 years in general to collect on assessed taxes. Keeping perspective and knowing the ins and outs of dealing with the IRS can help you get through most situations.
Not all situation or results are the same, and thus can’t be guaranteed. If it would make sense for us to discuss your situation contact me for a free 30 minute consultation.
Tax Debt Consultant