I’ve worked on tax debt reduction and tax problem resolution for years and I’ve helped many people with lowering / eliminating their tax debt, when they are eligible. The key words are ‘when they are eligible’.
Had a case this week that could be the ‘poster child’ for tax problem resolutions. Client got a letter from IRS stating that he owed about $106,000 for a 2 year period. Walked out of the meeting with the IRS and he’ll probably owe about $3,200. Even got a payment plan ready to go for about $45 / month… Sounds like one of those deceptive commercials, but it does happen – when the facts / situations line up.
In this case, my client is a truck driver who was audited – he didn’t respond to IRS notices over several months, so the IRS disallowed all deductions (fuel, tolls, repairs, etc.) and this resulted in huge tax bills, plus penalties & interest that came to about $106,000.
He was referred to me and after discussions, realized all he had to do for those 2 years was recreate his tax return – spoke to the return preparer and got copies of the return and got the client to go through his papers. He was able to put things together while I did some comparative analysis, fact checking, etc. and things came together. He had the materials to support his deductions, and I was able to argue the remaining items, with the exception of 1 item that neither he nor the preparer could remember. We’re still looking into that to see if there is backup, but if not, he’ll owe tax based on losing that $19,000 deduction – hence owing the $3,200.
So, I coached my client on how to act and talk, plus keep calm & look confident while putting together overwhelming evidence to support his position. End result is a win for him and a much smaller tax bill.
If I was doing TV or Radio ads, I’d have a legitimate reason to say my client paid ‘pennies on the dollar’ based on the results, but what happened here? Working diligently with my client, we put together figures to support his position, and this could have been done when the IRS first sent letters back in the spring. Any tax preparer who practices before the IRS should have been able to do something similar. To me, this was ‘normal work’, nothing spectacular.
Not all cases are this simple – often tax debt is caused by not paying taxes, not realizing additional tax may be owed (like on premature withdrawals of pension monies), or tax fraud. Those cases are much more complicated and usually warrant professional help.
So if you are in a situation where the IRS is knocking on your door, don’t panic & look at your situation – if you need help with things, that’s fine but don’t fall prey to those deceptive ads you hear. Contact an accountant / tax preparer who can go before the IRS (not everyone does this) and discuss your situation and figure your best course of action.
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Thomas C. Hodge, CPA
The Hodge Group
3040 N. Menard Avenue
Chicago, IL 60634