Tax Debt Reduction – Part II

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THE DETAILS OF TAX DEBT REDUCTION. 

How do I get my tax debt reduced?

It’s definitely a process that takes time but it has the potential to offer real relief. To complete this process we use the Offer in Compromises program through the IRS and NY State. Please allow me give you a brief overview. First off the taxpayer must owe a large amount of Income Tax, Sales Tax or Payroll Tax (generally over $5,000).

Next there must be a hardship case of why they owe this money and why they can’t pay it back within a reasonable amount of time. Once we establish that the tax payer falls into these categories we collect a list of all their income and expenses: thus confirming their financial situation that makes it difficult to repay the amount owed. We then set the client on a mission to get all their back up for this information, collect it, and fill out multiple IRS forms. This process takes between 10 – 20 hours to prepare properly. Once we have collected everything, and filled out the proper forms, we submit it to the IRS. From there, it will take an average of 6-12 months for the IRS to respond.

Can the IRS deny the offer?

Absolutely, they are the IRS, and have the final say. However, here at Puma Accounting, we discuss the possibilities before we even get started. We will look at how much a client owes, list out their income and expenses, and then advice them properly.

Let me give you a few examples.

  1. Client A sits in front of me owing over $7,000. He tells me he is unemployed, social services does not want to assist him with rent. He is borrowing money from a friend. It’s hard for him just to survive. I could tell this was a slam dunk. I told him that I believed his possibility on this was 99.9%. Again, it is the IRS, so I can never say 100%. We put everything together and the IRS accepted $400. Now he has a good job, and is able to survive.

     
  2. Client B sits in front of me owing well over $15,000. We start talking and I find out they make a good amount of money and have many assets. So I ask them, why do you owe this much. They respond very truthfully, we don’t like to pay taxes. I can appreciate that. However, this isn’t a hardship, its reality. We talked things over for a bit and I let them know the possibility of success on this was very low. Although they were hoping to save some money, I know they appreciated my honesty. They come to me religiously, every year, to have their income taxes filed.

     
  3. Client C sits in front of me owing over $17,000. This client went to a “Tax Lawyer”, and paid him $8,000. After 3 years, the lawyer hadn’t resolved anything. When he first came into me, he was very timid, and afraid to trust me. I couldn’t blame him. He explained his situation; he owed this money because of an IRS Audit which was a result of his previous tax preparer filing fraudulent returns. Not only that, but he was living on Social Security, and the bank was about to foreclose on his house. I assured him, the best I could, that this was also a slam dunk. I charged him a fraction of what the tax lawyer charged him, and in 6 months, the offer was accepted for only $1,000. He was literally dancing out of my office!

Our success rate is well over 90%. Knowing that I helped a client, for me, is the real reward. Tax debt reduction is possible and real. If you have a tax situation that you would like to discuss, you can contact or call us today.

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