The Tax Man series began as a way to explain to taxpayers how tax resolution with the IRS works. Seasoned pros like my Tax Team best demonstrate this process by sharing how they are able to resolve even the most difficult client IRS tax problems. In this latest episode, the Tax Team of Tax Resolution Services gives examples of how they employ tax resolution tactics to find the best tax relief solutions for clients facing serious IRS tax problems.
The specific topics highlight payroll tax issues, Offer in Compromise acceptance and unfiled tax returns. Below the video is a brief analysis of these common IRS issues, how complicated the cases are and why you want a certified tax resolution specialist on your side to negotiate the best possible IRS tax settlement.
Payroll Tax Issues
Payroll tax issues are one of the most common and complicated tax issues facing our business clients. Why? Because payroll taxes are considered a trust tax meaning they are in trust by employers until the taxes are collected from employees and sent to the IRS. Non-payment of the trust tax is considered a federal crime resulting in some of the toughest IRS penalties, fines and collection tactics. So aggressive are the IRS actions, that if taxes are not paid in a timely manner, a business can be brought to its knees – even if non-payment was the result of a mistake.
Tax resolution Tax Team member Tiffany, describes one such payroll tax case where an error was made by the payroll tax service her client’s company employed. The service used an incorrect Employer Identification Number (EIN) to make the payroll deposits, appearing as if the company made no deposits at all. The mistake was discovered and resolved after many weeks of reviewing payroll tax deposits and returns. Thankfully, this client was able to put this IRS tax problem behind them and get back to their business.
Offer in Compromise (OIC)
Recent Offer in Compromise changes have allowed more taxpayers than ever to enroll in the Program and to help make eligible previously rejected thanks to the new “taxpayer friendly” guidelines. The Tax Team is currently witnessing the following positive OIC program changes:
Discretionary income: The IRS has changed the disposable income multiplier to 12 months from 48 for a “cash” offer (offer amount to be paid within 5 months of acceptance) and 24 months from 60 for a deferred payment offer amount (to be paid with 24 months of acceptance). The following example illustrates the favorable impact on certain taxpayers:
- Old OIC rules stated that if a taxpayer had positive cash flow (“reasonable collection potential”) of $500 per month, the minimum settlement amount (assuming there are no assets with equity to consider) the IRS would entertain a $24,000 OIC ($500 X 48). Under the new guidelines this same taxpayer could possibly submit an Offer of $6,000 ($500 X12) making the Offer in Compromise a much more viable a tax resolution tool for more people needing tax help. This is true for taxpayers who didn’t qualify or we rejected previously.
Delinquent Tax Returns: Tax Team member, Parham recently handled a case where the taxpayer had seven years of unfiled tax returns. First, all delinquent tax returns were filed for the client to determine his tax liability. This client’s total: $40,000. After discussing several options with the client, the best tax resolution was a negotiated Installment Agreement where he will pay $25/month for the next ten years. Not only does this client pay less than the original $40 thousand liability, the IRS is off his back and this tax matter is fully resolved – as long as he keeps up his payments.
Changes to the guidelines in the Offer in Compromise Program signal the IRS finally realizing that so many Americans are drowning in debt including tax debt. Making programs like OIC more available to more people during these economically challenging times could be a real step forward to helping taxpayers get out from under the huge debt burden and into tax compliance.
More Tax Help, IRS News and Tax Relief Tips:
- Delinquent and Unfiled Tax Returns? 8 Steps to Resolving Them
- Finding Tax Help for IRS Tax Debt
- New Changes to Offer in Compromise – More Flexibility
- Tax Expert Explains Six Common Tax Relief Myths
- Currently Not-Collectable Status – Status 53