How to Make Deals with the IRS on Taxes Owed – Reduce Tax Debt Including Interest and Penalties!

I recently blogged about offer in compromise settlements and my guest appearance as the tax expert on Strictly Business on earlier this month. In addition to sharing some insider secrets of tax relief with business owners and individuals struggling to overcome their tax burdens, I also talked to host Anna Banks about how to end audits quickly and how to make a deal with the IRS on taxes owed, including interest and penalties.That’s right, if you have reasonable cause, you could have your penalties reduced to Zero!

What are some tax strategies we employ as tax resolution experts? Read the excerpt below!

Listen to the full interview here or check back for transcripts from the show!

Anna Banks: So the IRS decides to work with you and it’s decided that they need an installment agreement. What is that?

Tax Defense Partners: A payment plan or an installment agreement which are the same thing – there are 3 different kinds. If you owe $10K or less and have never been in trouble with the IRS before you are guaranteed a 36-month payment plan. All you got to do is call them up its a 5 minutes phone call most people can do that themselves. If you owe from 10K to 25K including penalties and interest that’s called a streamline installment agreement where they ask for very limited financial information you know where you work where you bank, but not a lot you don’t have to financially undress to get a streamline installment agreement.

And what they do is take the debt you owe divide it by 60 and that’s your monthly payment plans. The next one believe it or not once you owe $25K you’re in the major leagues in the IRS eyes because now you must admit complete financial disclosure before they determine what you should be paying back to them over that 60-month period.

AB: What does that complete financial disclosure entail?

That entails having to tell them all of your assets all of your liabilities all of your income and all of your expenses and support all of the figures that you’re going to put on this form, in other words you have to prove what your income you have to probe that your rent is x amount you have to prove that your utilities is x amount a month, you have to prove that do you know a home that the mortgage on it is $200K you may even have to get an appraisal on it to see how much it is worth because if there’s an equity in the house the IRS could force you to tap into the equity before they grant an installment agreement.

See that’s the other reason why you need professional tax help because we never ever allow our clients to tap into equity for a payment plan of $25K, sometimes that happens when the amount is over $100K, but from 25K to 100K we’re able to pretty much get the deal done, we treat it like a streamline were able to have the tax payer not really have to change their lifestyle and pay back the IRS.

AB: I don’t think people realize how important it is to have good representation, because then you don’t have to go around looking over your shoulder and the IRS coming and attacking, you need to get the help.

TDP: I mean they want to know your 401K your IRS any stocks or bonds, money market accounts, CDs, cash value of life insurance policies, time-shares, second homes, vacation homes, cars, boats, trailers, collections like coins, guns all of that is worth money.

AB: that’s pretty full and complete.

TDP: sometimes when you’re dealing with the IRS and each case is different and I’m speaking from experience that is what they ask for.

AB: The thing is when people are already in trouble and if they can deal with someone that can tell them exactly what they need to do, there’s much better chance for someone to get a resolution that they can at least live with. That’s why I wanted someone of your caliber to speak to people about what is going on and what they can do without living with that kind of fear.

TDP: The IRS is a brutal agency, I have seen them kill people literally people die out of stress, I have seen them circumvent the law, I have seen them violate the law because if there’s no one there to tell them they cant do it they’re going to do it. One of the reasons I do what I do is I’m a Brooklyn street kid and I have always loved a good fight and I love winning.

And the more I hear “No” from the IRS really means “Yes”, so were very persistent we negotiate hard were advocates for our clients and that’s what you need, its like going to court without a lawyer is dealing with the IRS on your own, like in a court room on your own without knowing the procedures is like dialing that IRS number on your own.

AB: Especially in line with what is going on with the housing industry and people losing they’re homes, there’s been a lot more of bankruptcy filings because of foreclosures, what are some of the things that can be done if they’re facing those kinds of circumstances?

They should consult a bankruptcy attorney, we provide from a tax aspect a lot of bankruptcy attorney a tax bankruptcy discharge analysis, because sometimes that taxes are dischargeable if they’re eligible. Again, the Congress passed the bankruptcy law in 2005 that new law, which is the worst law ever passed, because it prohibits a lot of people from filing a chapter 7, and chapter 7 is a complete discharge a full liquidation of your debts, but the new law you have to meet what is called a means test.

They look at the adjusted gross household income of a house of 4 in the county of which you live, and lets say that amount is 47K and your family income is 62K you’re automatically kicked out of doing a chapter 7, and now you’re forced into a chapter 13, in a chapter 13 is simply a repayment plan usually a 36 to 60 month to the bankruptcy trustee you make one payment and he divvies up the money to the creditors but I must say that in my 11 years of doing this very few chapter 13’s ever make it to the end and get discharged, because a lot can happen in 5 years and if you miss one payment to the trustee he can kick you out and discharge the chapter 13 and now you’re in worse shape.

Not only does the treasury have to look at loosening the screw at the offer in compromise program but they need to go back and jigger the bankruptcy law that they put in place because of the credit card folks who lobbied congress because they thought there was so much abuse, but when they really analyzed it there was only 10% abuse so they really penalized 90% of people who really deserved to get rid of medical bills and etc because of the lobbyist, and that’s going to blow up soon too that they haven’t talked about yet there’s going to be 150 billion dollars in unsecured credit card debt and that bubbles going to burst in ‘09.  I get a little over passionate about my work!

AB: Regardless of what it is – people need to be passionate about their work.

TDP: Exactly, its going to be a mess because a lot of people like I said wont be able to do the Chapter 7 although they did pass that law that forgives, you know it used to be a year ago that if you lost your home and the fair market value was more than the outstanding, if the outstanding mortgage was more that the fair market value of the house you got a 10-99 form the financial institution and that was taxable income so you got whip sawed.

You lost your house and now because there’s been a $100K difference between the mortgage and the market value you had to pay taxes on $100K. But they fixed that in the last 5 or 6 months so you can be foreclosed now and have the mortgage higher and you are not taxed on the difference. But that’s just recently.

More Tax Help, IRS News and Tax Relief Tips:

  1. Michael Rozbruch Interviewed in Opportunist Magazine
  2. Recipients of Stimulus Money Owe More Than $220 Million in Back Taxes
  3. IRS Debt Relief News: Resolve to Put Your IRS Problems Behind You in 2010
  4. Release Your IRS Bank Levy: How a Tax Attorney or Certified Tax Resolution Specialist Can Give You an Advantage
  5. IRS Tax Relief For Last Minute Filers as April 15th Approaches

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