Back Taxes- Real Facts IRS Doesn't Want You To Know

Sept. 5, 2009 - PRLog -- Many Americans owe significant amounts of monies to the IRS. You are not alone.

     There are several ways to handle back taxes owed to the IRS. Do not fall into the trap of deciding to pursue the IRS without professional representation. The reason being that the IRS is highly trained to obtain as much information from you as possible for the sole purpose of collections. You may try to contact the IRS to simply work out a payment plan. When you begin speaking to the IRS agents they will start asking you probing questions such as what your income is, where you work, who your bank account holder is, what kind of vehicle you drive, what your rent/mortgage payments consist of, etc. These are all benefits of the IRS inside information of how to quickly levy, seize or place liens on your various assets. For example, the IRS agent may wish to have you commit to a payment that you are unable to afford.

  In the IRS manual, it clearly states that if a taxpayer agrees to a higher amount that he/she is required to pay under the National Standards they do not inform the taxpayer of their rights. This may sound unbelievable; however, it is true. The National Standards were put into effect by congress in 1998 to protect taxpayers from the heavy hands of the IRS. The rules and regulations are that a taxpayer who owes the IRS shall have the ability for food, clothing, housing, transportation and medical. This is a very complicated issue and a mathematical formula that was enacted by congress in order to determine how much the taxpayer pays.

What are the solutions for back taxes?

  Being declared non-collectible. This is a procedure that is being used more and more by the IRS. JG Tax Group has been using this method for many years, especially in this economy. To determine if an individual is considered non-collectible, once again this refers back to the National Standards. If the taxpayer has no disposable income, the IRS must declare that individual as non-collectible. Which means the IRS will stop any further collections from the taxpayer for approximately 1-2 years. The IRS will review the taxpayers tax returns to determine if the income has increased. After that 1-2 year span, if the income of the taxpayer has increased, then the IRS will review the case to determine if they are able to begin collections once again. Being declared non-collectible allows taxpayers the ability to get back on their feet.

    Payment Plan. This is an agreed settlement between the taxpayer and the IRS based on the National standards as well to determine what amount the taxpayer will be paying the IRS each month but allowing the taxpayer to have the ability to afford food, housing, clothing, medical & transportation. This is also a complicated mathematical formula that has to be calculated. In most cases, the national standards do not have to be used for the first year. The actual expense of the taxpayer can be used and then they allow the taxpayer one year to come into compliance with the national standards. Again, this is not something that the IRS will inform you of or assist you with. This is the reason why it is essential that you obtain professional assistance with this matter.

 An offer in compromise, meaning an offer to the IRS for less than the amount that is owed. This does not mean you can simply offer the IRS 10 cents on the dollar. Again, it is a mathematical formula. For example, if your financials show that you have a disposable income of $100 per month, that means the IRS would want 48 months worth of your disposable income which equals $4,800 plus 100% of all your assets that would be calculated on a quick sale. This is approximately 80%. Giving this example, if you own a house and your home is worth $100,000 and you owe $75,000 you would deduct 20% of the value of your home leaving a quick sale of your home of $80,000. The IRS would require $5,000 of those assets. With this scenario, if the only disposable income that you have is $100 plus $5,000 in assets (being your home), your offer to the IRS would be $9,800. This could be paid out in usually up to a 24 month period to the IRS. An offer in compromise is a very complicated program with the IRS and the IRS does not prefer these types of programs due to the fact that they are not getting the full tax dollars from the taxpayer. They do everything in their power to stop this. Unfortunately only 16% of taxpayers truly qualify for an offer in compromise.

  Requesting an Abatement of Penalties. This method is used to reduce the amount of monies owed to the IRS. In most cases, 30-40% of the taxes owed to the IRS are consisted of penalties along with the compounded interest of the penalties. To have this eliminated or greatly reduced gives the taxpayer the ability to negotiate a much better settlement with the IRS.

Stopping the aggressive collection division of the IRS:

    Appealing a collection action. There are two main forms of appealing IRS collections. This first is a CDP appeal and the second is a CAP appeal. A CDP appeal must be filed within 30 days of a final notice of intent to levy. This allows a senior technical advisor within the IRS to review the case. This means it is being taken from the collection division of the IRS who are far more aggressive concerning these matters. In most instances, you will receive much better results filing a CDP appeal. If perhaps you have failed to file in a timely manner, you always have the right to file a CAP appeal which is very rarely used in the IRS. Most IRS agents do not know what a CAP appeal actually is. Our company applies this tactic to the IRS a great deal. If the IRS has not actually filed a wage garnishment or levy against the taxpayer, we immediately file a CAP appeal. This takes the case out of the hands of the collection division immediately and puts it into a technical advisor hands. This is very important because a technical advisor is somebody who has been with the IRS for multiple years and will approach things in a more professional manner and truly follow the guidelines required. A CAP appeal also puts the breaks on an agent filing wage garnishments and levies against an individuals social security income and payroll monies who are unable to provide for themselves. The crucial part of filing any of these appeals is that the taxpayer must be in full compliance with the IRS. Meaning that all tax returns are filed. Any tax returns that are not filed must be filed.

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JG TAX GROUP Staff Of:
Tax Attorneys,CPA's,Ex IRS Agents Our team of veteran ex-IRS tax professionals has over 120 years of combined inside-the-IRS experience.