As the quote from Ben Franklin goes, the only certainties in life are “death and taxes.” Despite the prevalence of taxes in our society, there are a lot of myths surrounding them, especially when it comes to resolving tax issues.
This article will dispel the most common myths about tax resolution services.
Myth 1: All Tax Professionals Have Experience Dealing with the IRS
The U.S. tax code is long and complicated, comprising about 9,000 pages as of 2021. To help Americans comply with the tax code (while keeping as much of their hard-earned money in their pockets as possible), there are dozens of professions that involve taxes. These include different types of accountants and advisers, lawyers, financial planners, bookkeepers, and more.
However, simply because someone understands taxes doesn’t mean they have experience dealing with the Internal Revenue Service. Being knowledgeable of the tax code and filing returns that comply with it is a different skill set than negotiating with the IRS regularly.
Before contracting with a tax professional, make sure you ask them about their experience with the IRS.
Myth 2: The Larger the Firm, the More Experienced They Are in Handling Tax Issues
It’s a common myth in a variety of industries and professions that “bigger is better,” but this is not always the case, especially when dealing with a tax resolution attorney. In fact, dealing with a larger tax resolution services firm can put you at a distinct disadvantage.
A local company may know more about specific tax regulations that apply to you. Plus, you’re likely to get more personalized service getting tax resolution help from a smaller organization.
Myth 3: Tax Professionals That Don’t Guarantee Results Aren’t Confident in Their Abilities
If a tax resolution lawyer guarantees a specific outcome, such as reducing your tax bill by a specific amount or promising a successful resolution, we highly recommend you run away as fast as you can.
The fact is that the IRS has the final say on how an issue is resolved. No matter how persuasive or experienced a tax resolution attorney is, it is impossible to know with certainty how a situation will turn out.
While a tax resolution attorney may be able to give you an idea of how your case will be decided, it is impossible to guarantee a specific result. Anyone who does is likely unscrupulous and could be trying to trick you into working with them.
Myth 4: Bankruptcy Is Not an Option for Discharging Tax Debt
Bankruptcy is a tricky issue, and you may have been told that you can’t wipe out your tax problems by declaring insolvency. Though you can’t completely zero out your tax burden with a Chapter 7 bankruptcy, you can significantly reduce your bill.
However, there are specific rules that apply to this strategy, including:
– The tax debt must be older than three years.
– Payroll taxes and some penalties cannot be waived.
– You did not engage in criminal activity such as tax evasion or fraud.
There are also timeline requirements about when you would have had to file the return for the tax liability to be eliminated, including a “240-day rule,” which has to do with the date the IRS assessed your debt.
Myth 5: You Cannot Negotiate with the IRS
People tend to view the IRS as an unfeeling organization out to squeeze the average taxpayer for every penny they’ve got. As a result, it’s a common myth that it’s impossible to negotiate with the IRS to reduce a tax bill.
On the flip side, there are others who view a tax resolution attorney as someone who can magically erase a zero or two from the amount of taxes you owe.
The truth is somewhere in the middle. Above all, the IRS wants to collect taxes owed by the population, and they are definitely relentless in this pursuit. While it is extremely unlikely that tax resolution services will result in erasing a tax bill, a tax resolution attorney can negotiate with the IRS to potentially achieve the following:
– Reducing fees and penalties associated with late tax returns
– Outlining a reasonable installment agreement
– Negotiating an Offer in Compromise to settle for less than the amount owed
– Applying for penalty relief
– Removing tax levies, liens, and wage garnishments
– The successful resolution of an audit
Myth 6: If I Ignore the IRS, They Will Go Away
While it might be tempting to ignore the IRS’s requests for money, it’s important for you to realize that they won’t accept defeat and disappear from your life. Instead, you can expect to receive a series of letters from the IRS reminding you of the taxes you owe.
Each notice from the IRS will increase in urgency until the third letter, which is a Final Notice of Intent to Levy. By the time you’ve received this letter, the IRS will already have a plan to collect what you owe, whether it’s by seizing property, draining your bank account, or any number of other methods they are able to exercise.
Believing any of the above myths can result in undue hardship and excessive penalties. However, now that you’re armed with the facts, you can take steps to resolve any tax issues you have the right way.
Depending on your situation, a tax resolution attorney can help reduce your tax bill by hundreds or thousands of dollars. Contact us at Levy & Associates today at 800-TAX-LEVY to schedule a consultation.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.