FREQUENTLY ASKED QUESTIONS – Tax Representation

Free Tax Debt Analysis

Why hire a tax attorney?

Where a taxpayer desires to engage a representative to deal with the IRS, the IRS recognizes Attorneys, CPA’s and Enrolled Agents as authorized representatives. The person who prepares your tax return may not be required to hold any of these credentials and may have training limited to preparing an IRS income tax return. Likewise, your bookkeeper is probably not a tax expert. Your CPA prepares tax returns for approximately three months out of the year and spends the balance of the time preparing books, records, and financial statements. Most, if not all enrolled agents are not tax lawyers. Attorneys may have a general or a specialized practice that does not include tax issues and problems. Nevertheless, accountants, CPA’s, bookkeepers, enrolled agents, and non-tax attorneys will usually agree to represent you if you approach them with a tax issue, even if they do not have the training or experience to handle difficult or complex tax issues, or tax issues requiring creative solutions.

What can a tax attorney do that an accountant cannot do?

An experienced tax attorney can thoroughly research the tax laws and master them – finding interpretations and loopholes that benefit you. The scope of tax research is not just limited to the Internal Revenue Code, but also Treasury Regulations, IRS rulings and court decisions. Your accountant may not necessarily have the training or experience that would permit him to penetrate the complexity of the tax law on a particular tax issue. Also, your accountant may not be able to devote time out of a busy accounting practice, working with numbers and preparing financial statements, to master the vast array of tax laws.

Because accountants are trained to be precise with numbers, most accountants admit that they can only see things as “black or white.” However, research and application of tax law typically involves working in the “gray areas,” because most of the time there is no answer that is right or wrong. Many times there are also legal issues that must be addressed as well. Tax attorneys are trained to seek and find the ambiguity in the law (i.e., the “gray areas”) and address all legal issues.

For example, in filing an Offer In Compromise, we will go beyond a mechanical submission of tax forms to the Internal Revenue Service. We will fully analyze your situation prior to the filing of any forms to determine the lowest acceptable offered amount and determine whether there are other options that would provide a more favorable result.

I filed my tax returns but didn’t have the money to pay what was owed. How do I reach a settlement to clear my back taxes?

When the Internal Revenue Service sends you a notice stating that you owe back taxes, the amount is usually much higher than what you thought because they have tacked on penalties and interest. Of course, you could just write a check and pay them the full amount, including those penalties and interest. Or even worse, you could just ignore them; meanwhile, the penalties and interest keep piling up. You could meet with the IRS and attempt to reach an agreement yourself, or you could hire a tax attorney who is experienced in the matters of back taxes. By analyzing your situation, we can determine your best course of action. For many taxpayers, this typically leads to an Offer in Compromise.

What is an Offer in Compromise?

An Offer in Compromise is an agreement between the IRS and the taxpayer to settle the taxpayer’s liability. The Internal Revenue Service has the authority to settle or compromise federal tax liabilities by accepting less than full payment under certain circumstances. These circumstances are:

  • Doubt as to liability
  • Doubt as to collectibility
  • Effective tax administration (i.e., economic hardship)

Why would the IRS want to settle a tax debt?

The IRS understands there are situations in which they will not be able to collect the entire amount of tax a citizen owes, no matter what they do or how hard they try. By agreeing to settle a tax debt, the IRS “brings the citizen back into the system.” The citizen is required to stay in compliance and pay their taxes on time after tax relief is granted. It’s a win-win situation for the citizen and the IRS.

Even though I am making installment payments, can I do an Offer in Compromise?

Yes! And in some cases the installment agreement can be suspended while the IRS is evaluating the Offer in Compromise.

When the Internal Revenue Service approves an Offer in Compromise, what happens next?

You may have up to ninety days to tender payment to the Internal Revenue Service of the offered amount. Once the IRS has received payment, they will release all tax liens and there is no further liability.

How long does it take for an Offer in Compromise to be approved by the IRS?

It generally takes six to twelve months. But no matter how long it takes the Internal Revenue Service to review the Offer in Compromise, during that time all further collection activities are suspended.

How do I know if I qualify for tax relief?

We can quickly determine if you qualify for tax relief. Even if we determine that you do not qualify for an Offer in Compromise, you may still qualify for other types of tax relief like Penalty Abatement, Innocent Spouse or Trust Fund Recovery. We can also arrange a manageable installment agreement with the IRS for you.

I have a bank levy or garnishment on my wages. What can you do about that?

We can remove the levy in most cases on the same day you call us, if you qualify. We can also place a “collection hold” on your tax account to give us time to work out a tax relief solution for you.

The IRS keeps sending me letters and calling me. I don’t know what to do or what to say to them. Will I have to see or speak to the Internal Revenue Service if you take my case?

No! We protect and represent you to the IRS. No more upsetting calls or threatening letters. This means that you will not have to speak to the IRS – we will negotiate on your behalf and provide you with the relief you need now.

Can I file bankruptcy and discharge my taxes without entering into an Offer in Compromise?

Generally, personal income taxes that are at least three years old, and were assessed at least 240 days prior to bankruptcy filing, and voluntarily filed at least two years ago, can be discharged. The trust fund portion of employment taxes is not dischargeable in bankruptcy; therefore, an Offer In Compromise is the only way to effectively eliminate the burden of the trust fund portion of employment taxes.

I have not filed returns for a number of years and have lost all my records. Is it too late to reach a settlement and make a fresh start?

All tax returns must be filed to do either an Offer in Compromise or an Installment Agreement. We can secure all income and expense information reported by third parties to the IRS and then work with your tax preparer to bring you current and formulate a strategy to pay off the balance due. For many taxpayers, this typically leads to an Offer in Compromise.

Is an Offer in Compromise best for me?

That depends on your situation, which is different for each taxpayer. That is why we offer a free consultation to assess your needs and to recommend what would be best for you in your particular situation. We suggest that you complete our prequalification form and email or fax it back to us so that we can analyze your situation. Click here to complete an Offer In Compromise Prequalification Form.

When do I have to pay the amount being offered in an Offer in Compromise?

Upon receiving an approval letter from the Internal Revenue Service you may then have as long as ninety additional days to pay the offered amount. No matter how long it takes the IRS to approve your Offer, the underlying offered amount remains fixed. There are no accruals of interest or penalties tacked on. After receiving payment, the IRS writes off the balance of the liability and releases all tax liens previously filed.

Can the IRS ever revoke an approved and paid Offer in Compromise?

Your Offer will not be revoked as long as you comply with the requirements relating to filing returns and paying required taxes for five years after the date your Offer is approved by the Internal Revenue Service.

What about these commercials I see that promise to settle my case for “pennies on the dollar?”

When most people hear the phrase “pennies on the dollar,” they think “2 or 3 pennies on the dollar.” You will notice that the advertiser does not mention “how many pennies on the dollar” they can settle your case for. Some citizens indeed qualify to settle their cases for 2 or 3 cents on the dollar. The IRS average settlement is for 12 ½ cents on the dollar. Depending on your circumstances, you may qualify to settle for more or less.

Can the IRS take my house?

Since the IRS Restructuring and Reform Act of 1998, property seizures are rare. However, the IRS still threatens taxpayers with seizures of their home, cars and retirement accounts. We can stop these threats and provide the protection you need to make a smart decision.

HOW MUCH DO YOUR SERVICES COST?

Many people think that they cannot afford to hire a tax attorney to assist them with their IRS back tax matter. They are wrong! The great news is that we have made our fees very affordable. Our fees in many of our cases are structured on a flat fee basis so that you know the total amount of our legal fees before you hire us.

We know that many of our clients are under a great deal of financial stress. Therefore, we try to work with our clients as much as possible by allowing them the opportunity to pay their legal fees to us over time. This is important so you know for sure how much you will pay even before you hire us!

As you can imagine, the amount of our legal fees depends on the facts and circumstances of your case. For example, some factors that will affect the amount of our fees depend on such issues as whether you are a wage earner, self-employed, and the type of taxes that you owe. Also, our fees vary depending on the type of service you hire us to perform for you and at what stage of tax enforcement you may be under.

It is very important that you contact us to receive your free and confidential tax analysis. Why? It is during your tax analysis that we will discuss the fees that we will charge to help you with your IRS back tax problem. We quote fees only after learning enough information about your situation and the type of service that we may be able to provide you. You should be cautious of any tax professional who quotes their fees to you before fully learning about your IRS back tax situation.

I AM LOCATED OUTSIDE THE SAN FRANCISCO BAY AREA. CAN YOU STILL HELP ME?

Yes! The IRS has offices all over the country and every office is subject to the same guidelines. With today’s instant communication, mail, phones, facsimiles, and e-mail, it has become relatively easy to accommodate taxpayers who reside anywhere in the country.

I have more questions. How can I contact you?

Call our offices toll-free at 866.494.6829 or send us an email for your free and confidential analysis.