Don’t panic…..you have options! The first piece of advice I would give is do not ignore the IRS. Contrary to what many people think, they will work with you. The IRS does not want to take your car, house or seize your bank accounts. They want you to pay your taxes.

Therefore, if you cannot pay, you can make payment arrangements. The IRS will allow you to pay your balance off in monthly installments. As long as you make your monthly payments as scheduled, they will not bother you.

Here’s how it works.  You determine how much you will be able to pay each month and what day of the month you’d like your payment to be due.  You then submit this information to the IRS and they have the option to approve or deny your installment.  However, most installments are approved.  Others are slightly altered.  If the payment amount you are requesting is too low, they might suggest you pay more.  Keep in mind, when requesting an installment agreement, make sure you request a monthly payment you can afford. It is better to pay more than less. If you miss a payment or pay less than your scheduled amount, it forfeits the installment agreement. If that happens, you will have to setup another installment agreement. Although, setting them up is not difficult, they are not free.   Each time you have to setup an installment agreement there’s a fee.

You can request an installment agreement online, over the phone or by completing Form 9465 and mailing it in.

I often times get forwarded emails from clients asking “is this true?”.  They generally have an email “supposedly” from the IRS saying that they have a refund and all they have to do is….”click on this link” to claim it.  YEAH RIGHT!!!

BEWARE!!!!!  It’s a scam!!!!!

Here are a few facts about the IRS that you might find useful: 

• They don’t want to pay tax refunds, so they will never send you an email (or a letter) for that matter saying…. “We owe you money”. PERIOD!
• The IRS generally communicates via snail mail and telephone (and of course, the occasional in person visit….to the people who ignore them….that’s another post!!)

Keep in mind the IRS does not send unsolicited emails about your taxes.  If you get an email that appears to be from the IRS, it may be an attempt to steal your private information.  Don’t click on any links in the message!!!  Forward the email to: phishing@irs.gov.

 Knowing and following this advice just might save your life.

TAX SECRET #4

 

AVOID IRS AUDITS, AND IF YOU GET AUDITED — END IT QUICKLY

 

You can avoid most IRS AUDITS by doing a number of things.

 

THEY ARE:

 

            ∙ File on Time

            ∙ Report all Income for which you received 1099’s or W-2’s

            ∙ Avoid schedule “C”

            ∙ Set up some type of record keeping system

            ∙ Do not make your return look absurd

            ∙ If you are running a business, set up a company

 

 

TAX SECRET #5

 

DO NOT PAY THE IRS UPON RECEIVING A TAX ASSESSMENT LETTER,

TRY TO CUT A DEAL!

 

The IRS does “do deals” related to taxes owed to them.  They can (and will) reduce all penalties and interest on your account. Their requirements are rigid, but if you qualify the results can be great for you!

 

In most cases, to qualify for “a deal” with the IRS, the taxpayer usually has to owe the IRS over $20,000.00.  Also, if the taxpayer has very little in the way of equity and assets this will make a big difference in your favor as well.  If the person (or family) who owes the IRS can show he/she uses most of their monthly income to pay for necessary living expenses and they would have very little money left over to pay back taxes, then there is a possibility they might only have to pay IRS as little as ten cents (10 cents) for every dollar owed.  (That’s huge!)

 

Why would they do this?

 

The IRS wants you back in their system so you can keep paying taxes like other current taxpayers.  If the IRS doesn’t settle, they are not going to see any more money from you for a while anyway.  Oh, and before you think these IRS agents are “nice guys” — the fine print in these kinds of deals require you to file your tax returns on time for the next 5 years. If you do not file on time, the IRS will revoke the deal and will bill you for the original amount.  (Now that’s some weasel clause language you need to pay attention to!)

 

Our tax business has helped various types of taxpayers over the years in situations just like this.  We have prepared several OFFERS IN COMPROMISES and have had them accepted. We really enjoy seeing the taxpayer and their families get a fresh start.

 

So if you qualify, I’d strongly consider making an offer to compromise the amount of tax you owe.  If you get accepted, it is the best tax savings deal available!

 

OK, there’s 5 of the most common tax savings and stress reducing secrets for taxpayers living and working in the United States.  You can use this information to avoid making any potential IRS difficulties worse or help you stay out of trouble with Uncle Sam all together!

TAX SECRET #3

 

PAYROLL TAXES NOT BEING PAID ON TIME

 

[WARNING:  All check signers on company Bank accounts

can be held responsible for payroll taxes!]

 

If you are a check signer on the company checking account, it is your responsibility to make sure all payroll taxes are paid to the IRS monthly.

 

Sometimes businesses get behind on the payroll taxes due to cash flow problems. The penalties and interest assessed by the IRS are excessive for this type of delinquency. These problems worsen with IRS penalties and interest, and the total amount owed can grow by 50% to 75% in a short period of time. If the Company is in cash flow trouble or is approaching the DANGER ZONE, it may never be able to pay off the total amount owing. Each check signer listed on the bank signature card is responsible for the tax; this often includes spouses, secretaries, employees, relatives, office managers or yourself.

 

HEADS UP:  You should get all non-essential check signers deleted from the bank signature cards before the company gets into trouble.

 

The IRS takes a very serious approach to collecting delinquent payroll taxes and may levy or seize company assets in short order. The best advice I can give to you if you find yourself in this situation is, DO NOT meet with the IRS Revenue Officer who calls or comes to the door to collect these taxes. Often, how you answer the first 5-10 questions they may ask you will determine whether you stay in business and if you or others will become personally responsible for the payroll taxes. One of the most important services we offer our clients is to meet with the IRS officers ourselves. This allows our clients to continue concentrating on running their business and improving the cash flow.

           

In my experience, I rarely have seen a good outcome when the Client meets with the IRS Revenue Officer.

TAX SECRET #2

 

DO NOT PAY IRS PENALTIES!

 

The IRS has close to 200 different types of penalties, and they like to hand them out like a salesman does his business card.  The worst part is that the IRS also charges interest and additional penalties on the original penalty.  (This is where the big bucks pile up!)

 

TIP:  Always try and get all penalties reduced or completely abated.

 

It makes sense (in almost every case) to request penalty abatement before you pay the IRS. If you have already paid the bill, it will not hurt to ask for penalty abatement and refund. Remember:  Your chances of getting a rebate is greatly reduced after you have paid the IRS.

 

These penalties can, however, be reduced to ZERO if you have “REASONABLE CAUSE”.  What makes up REASONABLE CAUSE you ask? Well, in my experience in negotiations with the IRS, anything may qualify as long as it is reasonable.

 

I’ve seen the IRS abate penalties for medical reasons, bad accountants, ignorance of the tax laws, ex-spouses, helping to provide care for a loved one, military call-ups, fire, floods, alcoholism, drug abuse, death, and even for relying on IRS advice.  (Did you know the IRS gives out the wrong tax advice over the phone almost 40% of the time?)

 

Penalties can be such a high percentage of the total amount owing to the IRS; it usually makes sense to consider requesting the IRS to reduce all penalties to Zero.

 

YOU MAY BE PLEASANTLY SURPRISED YOU HAVE NOTHING TO LOSE AND THE SAVING COULD BE HUGE!