Tax Problems All Have Solutions

What if I haven’t filed last year’s tax returns, or many years’ returns?

  • If you fail to file your tax returns on time, you could be charged with a crime.  However, this is unlikely. The Internal Revenue Service normally saves criminal prosecution for those who file false returns, hide income or assets, or refuse to file returns. Don’t freak out! The first obligation of the IRS is to collect taxes, not put people in jail where they can’t pay.  The states generally operate on the same principle.  In some municipalities in Ohio, however, the city has the authority and may turn non-filing or non-payment into a criminal matter.  Please don’t ignore notices from the taxing authorities!
  • If you are due a refund, there won’t be penalties for not filing, but they will not volunteer to send you the money. After three years, you lose it!
  • If you may owe taxes (for instance if you have 1099’s filed and no withholding), the most likely outcome is that the IRS will prepare a return for you. This is known as a “Substitute for Return” or an “SFR.” Normally, they will take a standard deduction and a filing status which may not be accurate or to your advantage.  I can complete and file an accurate return, which IRS will accept in lieu of the SFR, potentially reducing the tax due substantially.
  • I can access IRS records to obtain income information which they have on file; having lost your W-2’s is not an insurmountable obstacle.

Help! I just got a letter from IRS (or a state or city).  I’m being audited!  What do I do?

  • Most of the notifications you might receive from the IRS and other taxing authorities are not audit notices! Usually, they just need clarification of something. Occasionally, they will drop a form or some information in data entry or even in electronic transmission. The key is to respond quickly and thoroughly to their request, and to stay on them to make sure they process your response. The worst thing you can do is ignore their letters!
  • I can help you respond to IRS or state taxing authorities. Call or fax me a copy of the notice. Minor items I handle free of charge, anything substantial would get billed at a reasonable hourly rate. Phone consultations are normally free.  If you do receive an audit notice, call immediately, and be prepared to fax or mail me a copy of the notice.

But I really am being audited. What now?

  • Fax or mail me a copy of the notice. If I determine that I can handle it for you, I will do that. Otherwise I will refer you to another highly experienced and competent professional.

I’m getting collection notices. They want it all right now, and I can’t pay it. What do I do?

  • IRS Collections staff are not always as helpful and considerate as many of their customer service representatives. And the notices are downright scary. Remember, their primary goal is to collect taxes. You need to pay what you can, as soon as you can.
  • IRS likes Installment Payment Agreements. I can help you complete and file one, either in concert with tax preparation or a full financial check-up.
  • If you are disabled or otherwise can’t pay what you owe now – even over time – you may qualify for designation as temporarily uncollectible, and they’ll stop collection efforts.
  • If you really can’t ever pay the full amount you owe, the IRS and Ohio both allow an “Offer in Compromise,” in which they accept a percentage of the debt in full settlement. They are complex and difficult to qualify for, but if you appear to qualify, we can work on that.
  • Taxes *can* be discharged in bankruptcy, and it’s possible that may be your best option.  I can refer you to an attorney who can consult with you on that potential.

My wages (or bank account) are being garnished or my house has been liened.  I can’t pay my bills!  What can I do?

  • The IRS does have the authority to collect taxes due.  They can snatch your wages, or the balance in your bank account.  They can, and probably will, place liens on all your property.  The rules are very complex and you need to make sure they don’t do more than they can.  Your bank and employer may not understand them, and may turn over more than is legally required.  If you have a serious hardship, they may have to back off.  They cannot seize your house, although they will get the money when you sell.   Call me.  We can probably get you several weeks’ breathing room to find a strategy.

I made a mistake on my tax return, and now I’m being hit with penalties!  Do I have to pay them?

  • The IRS has many types of penalties: penalties for late payment, late filing, negligence, fraud, substantial overstatement, overvaluation, failure to file information, trust fund recovery, underestimation of tax, premature distribution, late distribution, excess distribution, preparer error, and many others. Many can be abated through showing “reasonable cause.”  Tell me the story, and let’s try to get them abated!

I just heard that you don’t really have to file tax returns because income taxes are unconstitutional.

  • Wrong. Don’t fall into this trap. This argument’s been tested in courts, up through the Supreme Court. People have gone to prison for holding this position. See the IRS summary: “The Truth about Frivolous Tax Arguments” at www.irs.gov.  If you don’t believe that source, Google “tax protest” or “income tax unconstitutional.”  Seriously consider the credibility of anyone who takes this position.  The only successful way to protest taxes is to not make much money, and some highly principled people do manage to do that.

I have a more complicated question!  Well, just call!  Phone consultations are free.

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