How To Pay Back Taxes
According to Palm Springs attorney John Monkman of Monkman Law
, when it comes to paying income taxes, every case is very unique. Before an attorney can determine how much a client can or cannot afford to pay, he must first look at a number of factorsincluding the clients current income, other debts, and family size.
At my office, I often hear my clients who owe back taxes say they went years without filing income tax returns in the past, and then suddenly received a bill in the mail from the IRS one day. In some cases, my clients might not end up owing any back taxes at all especially if I am able to uncover any errors that were made in previous income statements and tax filings that could alter a clients status with the IRS.
What I Do at My Office
If a person fails to file a personal income tax statement with the IRS, then usually, the IRS will file one for him. However, the return that the IRS files will not include any deductions or credits that the person could very well qualify for. Therefore, the first step that I take in sorting out tax liability issues for my clients is to take a look at their IRS and state tax returns for the previous year, along with any W2s or 1099s they were given. Usually in these cases, the IRS would have just figured out what the persons taxes were and sent him a bill. And if he didnt respond to that bill, then the IRS will begin to assess the tax.
As a longtime attorney in Palm Springs, I have worked with clients who owed all amounts of back taxesfrom millions of dollars to a few thousand dollars. When sorting out these issues for them, I will first obtain either an IRS power of attorney or a state power of attorney, depending on the jurisdiction, in order to begin my investigation to discover exactly what went wrong. In doing so, I will see all the documentation that the IRS has on file and find out exactly what documents they have for my clients.
If the IRS has been filing tax returns for a clientbecause the client was not filing them on his ownthen I will take that information and spend time redoing the past returns myself. By doing that, I can get the tax reduced down in most cases. In my experience, the cases where the client simply failed to file one or more tax returns are usually the easiest to resolve, since all I need to do is work out the documentation and file an amended return for the client. For clients in the Palm Springs area, an attorney like myself should be able to resolve these issues from start to finish without much complication.
Offer in Compromise
In some cases, however, things can get trickier to resolve. Sometimes although I might file an amended return, the client still cannot afford to pay whatever amount the IRS claims it is owed. So I will do what is called an offer in compromise, wherein I attempt to negotiate with the IRS to lessen my clients tax bill. On the downside, these types of offer in compromise issues usually take more than a year to resolve, since that is how long it takes the IRS to approve or to disapprove the offers. On the upside, though, the IRS will not put any liens on the clients property or bank accounts for as long as the offer is on the table, which can give clients up to an entire year of freedom from liens and other IRS holds on their accounts.
In addition, I will sometimes deal with the collections departments directly, rather than waiting to hear back from a government agency. Collections departments in certain regions will compromise on the amounts that debtors owe, but the amount that they will agree to forgive can vary greatly from region to region.
Anyway, an offer in compromise is an excellent way to forestall any immediate action for someone who cannot afford to pay his taxes. If the offer is approved, then the client will be able to pay a reduced amount, which could make affording the back taxes much easier for someone on a tight budget. In cases where the client simply cannot afford to pay his back taxes, even if the compromise was accepted, most people will go to family or friends for help. A person can make a loan to a family or friend in this type of situation quite easily.
If you are struggling to pay back taxes, then it can be helpful to have a tax pro take a look at what went wrong and figure out if there are any figures that can easily be adjusted to lessen your liabilities. For clients in Palm Springs, I recommend contacting my office for immediate advice on what their next course of action should be.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
by: John Monkman
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