The Hard Facts on Qualifying for the Tax Programs


We see this time and time again in our practice. Taxpayers come in with high or unrealistic expectations. Of course all taxpayers want their penalties and interest abated. Who wouldn’t love to settle for pennies on the dollar? Yes these programs do exist, but no not everyone qualifies for them. The hard truth that we have to break to our clients’ every day is that often times program they want and the program they qualify for may not be the same thing.

First Myth

I do not have to file the IRS or State will give me a payment program. No this is incorrect. It is a criminal offense not to file your tax returns. True Resolution only happens after all required tax years are filed and received by the appropriate agencies. If you don’t file your tax return how does the IRS know what you owe? Without knowing what you owe how can a plan that includes the entire past due tax debt be established? You must file tax returns in order to be compliant in the IRS’s eyes. You must file to close out the statute of limitations and protect yourself from audit. You must file your tax returns in order to enter into resolution.

Second Myth

I think the IRS charged me unfair penalties and interest I want an attorney to get them waived. It is no secret that the IRS charges exorbitant amount of penalties and interest. Many of our clients come in with what started out to be a small back due tax debt that has now compounded into a real big tax problem. But simply put-no you cannot just say these are high I want them waived. It is simply not how things work. If you file late and owe federal taxes, two penalties may apply. The first is a failure-to-file penalty for late filing. The second is a failure-to-pay penalty for paying late. Ask yourself these questions: Did I truly file late? Did I fail to file? If the answer is yes, then you are probably guilty of these two “oversights”. Why do you believe you should have these fees removed? If people could just waive penalties and interest why would anyone file and pay on time? With that being said some clients genuinely do have extenuating circumstances that will allow them to reduce or abate penalties. If we can show reasonable cause for not paying and not filing on time, we may be able to abate those monies. If we can prove IRS made a mistake, we may be able to wipe out those penalties. It is very difficult to get interest monies canceled unless there was an error or it was due to IRS delays. If you are a chronic non-filer or non-payer the IRS will take this into account when establishing reasonable cause. If you are a taxpayer who normally files on time and in full the IRS may show more leniency when deciding your case. Reasons to attempt abatement can include death in the family, destruction of your records, business errors, unavoidable absence, divorce, etc. If one of these events truly did occur and your tax record is in good order you may be able to get a reduction or elimination of penalties.

Third Myth

It doesn’t hurt to try for an Offer in Compromise. The Fresh Start Initiative, Fresh Start Program, Offer in Compromise, or OIC is one of the greatest misunderstood programs that exist. This is the catchy program you hear about in Tax Resolution advertisements. Many firms that sprouted up in the late 1990’s and early 2000’s were even sued for their false promises and false advertisement. Settle for less with the IRS, Settle for Pennies on the Dollar programs do exist and are very attainable…IF you qualify. The truth of the matter is many taxpayers do not qualify for this program. If you are unfiled you cannot get this program, if you can afford to pay or have the assets to pay in full you probably will not get this program, if you owe a very small amount of money and make a large salary you are more than likely not going to get this program. I see clients that come in and have made their situation worse. They have tried for file for an OIC on their own and have failed. In my estimation taxpayers who try to file for OIC on their own may succeed less than 10% of the time. What happens more often is they file for the program and actually hurt their chances for a more favorable outcome. Attempting to slow the process of collections entering in wild claims to abate or reduce are only going to hurt your case. Also the IRS is trained in collection tactics. You may provide a statement of assets and expenses and lead the revenue officers directly to your “pot of gold”. You filled out a declaration of your assets and now the IRS knows about that old 401k just sitting there that can pay your debt. You have given up more information than necessary and really hurt your case. If you truly qualify to settle for less with the IRS and have an attorney guided OIC I estimate about 95% of our firm’s first try and OIC get accepted. I always advocate for my clients, I want them to know their rights and get them the best resolution possible. On the flip side I feel it is my duty to inform clients what programs they DO NOT qualify for.

The Bottom Line:

If you can afford to pay and you truly owe the IRS will have a good chance at getting most of their money. We can’t wave a magic wand and make your IRS problems go away. We are lawyers’ accountants and tax professionals. We will work within the law to get you the very best program that you qualify for. Don’t be fooled by those who make guarantees or offer things too good to be true. Retain honest reputable representation, attorneys who deal with Tax Controversies every day and know what they are doing. Know your case and your specific situation. Don’t be misled by shiny ideas of what those tax shops offer. My experience is places that make those outrageous promises without analyzing your case can’t deliver. They may continue to ask you for more and more money without providing much relief. Hire an attorney that will aggressively represent you and your case.

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