CASE OF THE WEEK: OUTSIDE FIRMS CAN'T REDUCE YOUR IRS DEBT

This week, a fairly sophisticated businessman we’ll call “Trevor” came to our San Francisco office for tax relief help. He requested we research the best firm out there to assist people and businesses when they fall behind on their taxes.

Trevor’s visit would be brief with no retainer or funds being exchanged.

The people that work in our company are former Federal agents of the FBI, DEA, IRS and Secret Service. To that end, all of our former IRS agents would tell you unequivocally not to be taken in by the idea that a firm can reduce the amount of your tax liability. In the vast majority of cases, this is a fairy-tale, and a way for unscrupulous businesses to take your hard-earned money.

Let me be clear: There is a very, very small percentage of cases that actually have the amount owed reduced. Be be prepared for a Cecil B. DeMille-type production with long tedious battles and a plethora of paperwork. In almost every single one of these cases, a good tax preparer or CPA will accomplish the same goal with a huge monetary savings to you, your family and business.

Ask your tax preparer and/or consultant if they have previous experience in dealing with the IRS. If not, you can avail yourself of CPA referrals who can represent you at www.aicpa.org.

The process is made even simpler for you to do everything yourself and online. You are eligible to apply for an online payment agreement and plan if (a) as an individual, you owe less than $50,000, or (b) as a business, you owe $25,000 or less.

If you do not meet the standards for an online payment plan, you can still establish, quite easily, a payment plan.

Our former IRS agents will tell you what you already know. The IRS has numerous and clever ways to collect whatever you owe them. It is almost never a question that you don’t owe the money. If so, amend your tax return and reduce the taxes owed. If you owe the money, be proactive and communicate with IRS personnel. Trust me, they are charged by law to collect what is owed and their DNA makeup is to not roll over because you don’t want to pay.

Don’t think hiring a firm you see on television, hear on the radio or see on the Internet is going to intimidate anyone charged with collecting the debt you owe. You owe the money, so figure out a way to pay them.

The IRS makes it really easy for you to obtain information and navigate the rules and regulations at www.irs.gov. Check out individual payment plans and installment agreements, offer in compromise (settling for less than the full amount-don’t spend a lot of time here), temporarily delaying the collection process and a great section of what-ifs for struggling tax papers.

As the saying goes, the only two things for sure in life are death and taxes. There is no reason to put your head in the sand and think your case will fall through the cracks. The IRS appreciates you contacting them and your goodwill effort to pay the debt you owe.

Next week:
A child sexual abuse case involving a Catholic priest.