Don’t Let A Tax Problem Lead To A Health Problem

By John S. Wood, CPA

Falling behind on tax payments to the IRS is something that millions of Americans have dealt with at one time or another. Owing money to the IRS can be very intimidating.

Tax problems can impact all aspects of your life. They can take a heavy toll on you both financially and emotionally. Tax problems are stressful. That stress can lead to health problems. And much like medical issues, early intervention is the key when dealing with tax problems.

We know the story: things are tight financially, so you either 1) do not file the tax return or 2) file the return but don’t pay the balance due. But do not worry, you tell yourself, next year will be better. Now it is 2 to 3 years later, and a letter arrives from the IRS. The threats start. Maybe it has even gotten to the point of actual levy seizure activity. Now the IRS is wreaking havoc on your financial life, and you simply do not know what to do.

We know. We have helped many clients with that exact scenario. Fear not; there is a light at the end of the tunnel.

Many Americans end up in a situation where they owe more to the IRS than they can afford to pay. Lots of people end up with significant debts to the IRS. The IRS is the world’s most powerful collection agency. They can do some scary things like seize your home or bank accounts, garnish your wages, and a bunch of other things that no other collection agency can do. Your options often look something like this: pay the amount in full or pay it back over time with interest and penalties.

The IRS does not like to be ignored. They want their money, and they want it now.

As it turns out, the IRS is actually happy to work with taxpayers, but there are some ground rules you need to be aware of and a roadmap to follow.

What to do if you cannot pay the taxes?

1. Tax Compliance
The first step in resolving your tax issue is to get into “tax compliance.” Compliance means that you have filed all tax returns due for the last six years and have made your current tax payments. Once you are in tax compliance, we can now work on resolving the back tax issue.

2. Collection Alternatives
There are three main collection alternatives to resolve a back tax debt: 1) Installment Agreement, 2) Uncollectible Status, and 3) Offer In Compromise.

Installment Agreement
An installment agreement is an agreement to pay the taxes back over time. There are three variations of the installment agreement: 1) Regular, 2) Streamlined, and 3) Partial Pay. Which type of agreement that works best for you will depend upon your personal circumstances and is something we can help you address when you are ready.

Uncollectible Status
Uncollectible status is when the IRS determines that you are unable to make current tax payments. When a taxpayer is deemed, the IRS may still file a Notice of Federal Tax Lien to secure its position in the taxpayer’s assets but will not otherwise take enforcement action to seize (or levy) the taxpayer’s assets or income streams.

Offer in Compromise
An Offer in Compromise is an agreement where the IRS agrees to accept less than the total amount owed to it, and the taxpayer agrees to pay the amount negotiated as well as maintain their tax compliance for five years following the acceptance of the Offer in Compromise (“Offer”).

The basis for an offer is a formula referred to as “Reasonable Collection Potential” or “RCP.” RCP is effectively the net equity in assets plus the taxpayer’s excess future income for 12 or 24 months, depending upon how the Offer is structured. There can be significant planning done to help a taxpayer maximize the potential for the Offer’s acceptance.

Suncoast Tax Solutions has helped many Florida residents get back on track with the IRS. We can help you reach a tax relief agreement with the IRS. Using proven strategies, along with our knowledge and experience, we can assist you through tax audits, help you reduce your tax debt, and stop wage garnishments and bank levies from happening. In some cases, you may be able to settle tax debts for much less than you originally owed. We are available to be your dedicated resource to save you the most money while resolving your tax problems quickly and efficiently. When you are ready to learn more about what we can do for you, we encourage you to contact us.

If you, or someone you know, has an issue with paying their federal taxes and needs help to end their IRS nightmare, please contact us by either phone at 813-463-8348 or email at johnwood@suncoasttaxsolutions.com.

Suncoast Tax Solutions
813-463-8348
www.suncoasttaxsolutions.com