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Tax Problems Are Even Tougher in Tough Times
President Elect Obama says its going to get worse before it gets better. Those who are short on cash may short their quarterly estimates, their payroll taxes, or fail to file returns, altogether. For those in trouble, some advice and some warnings.
When it comes down to paying rent, utilities, vendors, college tuition, car payments or taxes, too often taxes get delayed, again and again. It is all too easy to short Uncle Sam and hope to find a way to get the funds together later. Procrastination then turns into fear.
"We see it all the time. Self-employed, Independent Contractors and small employers haven't filed or paid taxes for two, three, or even several years,” explains Jim Demetriou, partner in Demetriou, Montano and Associates. "When someone loses a job, the economy stalls, or large emergencies occur, taxpayers who don't have enough money to pay all their personal expenses or business overhead have to make tough choices. The IRS seems to be easier to ignore than other creditor’s calls."
What seems like an easy way to save on cash in the short run turns out to be very difficult in the long term. Partner Mike Montano explains: "Once the taxpayer fails to pay his quarterly estimate payment or weekly payroll taxes, it becomes really easy to skip the next one, and the next one. It appears so logical, make the house payment, pay the college tuition, keep the business open, things will improve. We'll pay those taxes later. Soon the numbers are so big that dealing with it seems beyond hope. At this point, some taxpayers just stop filing returns all together, adding yet more penalties to the growing bill."
Eventually there is a day of reckoning. The taxes double because of penalties and interest and the amount becomes too big to pay in one lump sum. Then the threatening letters from the IRS start. Some people ignore the letters or some try to deal with the IRS on their own. If you owe only a few thousand dollars the IRS will enter into a Monthly Installment Agreement. If the amount is just too big or more current taxes accrue while you pay off the old, the dreaded combination of liens and wage garnishments start.
Demetriou, Montano, and Associates has been in the business of helping their clients get through these rough times since 1989. Mike Montano continues, "All of our tax specialists used to be IRS Collection Managers, so we know exactly how IRS works and doesn't work in solving issues having to do with failure to file, unpaid taxes, levies, liens, and the annoying letters and phone calls. We know what to say, and more importantly, what NOT to say to the IRS."
Almost all accountants, tax attorneys and business management experts agree that trying to work out a payment plan with the IRS on your own is foolhardy. Demetriou explains it this way: "The taxpayer goes into the first phone call figuring that he can pull the wool over the IRS agents eyes or give them a sob story. Of course, the agent has heard nothing but sad stories and less-than-true stories his entire career. And this may not even be the best one he's heard today."
Demetriou’s 35 years in the tax collection field warns against unrealistic expectations.
“On the other hand, there are ways to reduce the pain and get the best possible solution for your personal and unique financial situation. Moreover, a good resolution expert can get levies released and obtain long term payment plans that are within our clients ability to pay.”
President elect Obama has recently stated that he believes the current economic crisis will get worse before it gets better. Jim Demetriou has been helping clients get through a few recessions: "If you fall behind on payment of your taxes, when you recover, make sure your current taxes are paid FIRST to prove to the tax collector that you are no longer falling behind year after year. If you have not filed more than two or three tax returns, get professional help. If you owe the IRS more than $15,000 and cannot pay it off in 36 equal payments, again, get a professional involved early. Since the IRS agent is used to taxpayers who dodge, lie, and don't return calls, they are much more likely to be responsive to those who make every effort to get back on track."
Demetriou, Montano, and Associates has offices in Santa Monica and Orange County, and clients from all over the US. Mike Montano points out, "All of our work can be done by phone, fax, mail, even email. In many cases we never meet our clients face-to-face.
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Demetriou, Montano, and Associates has been helping private individuals and small business owners solve IRS tax problems since 1989. The company specializes in helping file delinquent returns, negotiate settlements, remove liens and levies, and work out payment arrangements in cases involving $10,000 or more.
A major source of clients for this company is tax lawyers and accountants who know that former IRS collection managers have the special expertise needed to resolve cases expeditiously and with maximum benefit to the taxpayer.
The company has offices in Newport Beach and Santa Monica.