7 Tips for Negotiating With The IRS

By Bonnie Lee
Published January 27, 201, FOXBusiness.com

From time to time every taxpayer will have to go head to toe with the IRS. Whether you are setting up an installment agreement, facing the auditor from hell, resolving a misunderstanding, or dealing with collectors on the phone or worse yet, on your doorstep, you would be well advised to heed the following suggestions.

1. You get more flies with honey. Dealing with bureaucracy can be very frustrating, but park your bad attitude and anger at the door. Take a deep breath, demonstrate a cooperative attitude, and proceed in an orderly fashion to resolving your issue. In my 28 years of dealing with the IRS, I have found that most IRS personnel are compassionate humans that bend over backward to find ways to resolve issues and help taxpayers. Of course you are going to run into that power-hungry, condescending, surly agent from time to time, but if you do, you can always trade up to a more understanding and respectful model by asking for the manager.

2.Use IRS lingo. When you use IRS lingo the agent you are speaking with will find you knowledgeable and may treat you with a little more respect. Here is some verbiage you may find useful:

Ask for penalties to be “abated” rather than removed. Tell them, if it’s the case, that your failure to (pay or file or comply with a document request) was due to “reasonable cause.” Use this term if you didn’t just flake and have a good reason, which could include such things as unemployment, losing your records, losing your home, health problems, etc.

If you can’t pay a tax bill because you are suffering financial reversals, you can ask to be deemed “currently not collectible.” If you are granted this status, they will leave you alone for an entire year while you get it together.

If you feel a spouse or former spouse should be responsible for a tax matter, ask to be treated as an “innocent spouse.” There are certain criteria to this status; do some research or discuss the issues with your tax pro.

If defending business deductions during an audit, the term “ordinary and necessary” business expense will help–but only if that’s really the case.

3. Don’t talk too much. IRS agents are trained to draw as much information from you as possible. Answer questions truthfully, but keep your answers short, succinct and to the point. There is no need to elaborate or discuss your personal life or disclose too much. This will only lead to misunderstandings and maybe even investigations.

4. Always tell the truth. Lies have a way of uncovering themselves. Once you are caught in a lie, you will always be suspect. And when you are suspect, you lose the cooperation you would normally receive. Don’t hide assets, don’t run for cover. There are many ways to resolve tax problems using a straightforward and honest approach. Lies may lead to jail time.

5. Only make promises you can keep. This is especially true when it comes to paying your liability. If an IRS agent asks you if you can pay $200 per month on a tax balance and you know you can only afford $100, tell him so. Indicate that you will try to pay extra when you can, but you are not going to set yourself up for failure by promising more than you are able. Throw that in with the fact, (if it’s the case), that you have always timely filed and paid liabilities in the past and now you need a break. Note that this will not work if their analysis of your financial situation indicates you can pay more.

6. Go to them before they come at you. If you are unable to keep a promise you make, tell the IRS immediately. The agency is usually so happy with the cooperation it will likely grant you the extensions you need. The collections department notes your file whenever you or your representative calls.

7. Stop the Interview. If at any time during an audit or a phone conversation you feel intimidated, disrespected, or out of your depth, simply say so and end the interview. Tell the IRS that you will be seeking representation and will get back with them soon. This will give you a chance to take a deep breath and discuss the matter with your tax pro. If you felt disrespected, you can always request a different auditor. Or if it was a matter of a surly customer service rep you were speaking with on the phone, you can hang up and call again in hopes of getting someone kinder or a little more understanding.

IRS Tax Levies: What You Need To Know

William Freudenthal owed the IRS some money. Quite a bit of money, actually – just over $16,000. And Freudenthal hadn’t been exactly timely about paying his tax obligation. He’d ignored notice after notice from the IRS. Finally, the IRS took action. They were going to seize some of Freudenthal’s assets – namely his classic 1965 Chevy Chevelle – to settle the debt.

This was not news that Freudenthal took well. His wife wasn’t exactly thrilled, either, and as you can imagine, the couple had an argument. Events escalated tragically, and Freudenthal struck his wife. The blow killed her.

Now, William Freudenthal is in prison. His wife is dead and his life is wrecked – and the real tragedy here is that the situation was completely avoidable. It didn’t have to end that way. Freudenthal, like every other American taxpayer, was entitled to the protections and procedures that are built into the tax code.

What is a Tax Levy?

A tax levy is the procedure the IRS uses to get money from taxpayers after they’ve exhausted every other avenue available to them. If you won’t voluntarily turn over the money to pay your tax obligation, the IRS will come and get it.

Let’s say you have some outstanding tax debt on the books – taxes that you were supposed to pay, but just didn’t, for whatever reason. The IRS will send you several notices, reminding you that you need to pay your taxes. If it remains unpaid, the IRS will eventually send you a Final Notice of Intent To Levy. This is your final warning to pay your taxes. If you don’t, the IRS is going to seize some of your assets to settle the debt.

What Type of Assets Can The IRS Seize?

The IRS has been given a great deal of latitude in their mission to collect revenue for the government. They can seize many different types of assets, including money from your bank account, real estate, vehicles, or personal property. The IRS can also garnish your paycheck, taking their share of your earnings before you even see it! This is known as a wage levy.

What Should You Do If You Receive A Final Notice of Intent To Levy From The IRS?

If you have received a Final Notice of Intent to Levy from the IRS, you have 30 days to respond. During those thirty days, the best thing you can do is find an expert tax problem solver. You are entitled to file a Collection Due Process Appeal in response to the Final Notice of Intent to Levy. However, it must be filed within 30 days of the date of the Final Notice. This appeal stops the IRS collections process and sends your case to the IRS Appeals Office. At that point, your tax accountant will work with the IRS to find a reasonable solution to your tax problems.

What If More Than 30 Days Have Gone By?

If it’s been more than 30 days since you received the Final Notice of Intent to Levy from the IRS, don’t despair! You still have options. With the assistance of your tax accountant, you can still file a Collection Due Process Appeal. At this point, the IRS collection efforts don’t stop automatically. However, your tax accountant will be working with the IRS to prevent the seizure of your assets.

If a levy has already happened, you still have options. A Collection Appeal, also known as a CAP, can be filed. In order to release the levy, you will have to meet certain conditions. Your tax accountant will let you know what these are, but they generally include filing any outstanding or unfiled tax returns, and submitting a Collection Information Statement along with a proposal of how you plan to resolve your outstanding tax debts. This could include an Installment Agreement, being placed as Currently Uncollectable Status, settling through an Offer In Compromise, or additional time to raise the funds to full pay the outstanding tax liabilities.

What Type of Resolution Can There Be For My Tax Problems?

The IRS has a single goal. They are mandated to collect as much tax revenue as possible, and they are becoming more diligent about this mission with every passing day. However, an experienced tax professional can often work with the IRS to find a resolution you can live with – and that stops the IRS from seizing your bank accounts, property, or classic cars!
Installment Agreements are a common resolution, as are Offers In Compromise to settle the tax debt for a fraction of the original amount owed. If you have to full pay your outstanding tax liabilities, a great tax problem solver will work to see if there is reasonable cause to abate any interest and penalties, which can save you thousands of dollars.

Solving Your Tax Problems

William Freudenthal learned the hard way that the one thing you don’t want to do in this situation is ignore the IRS. The IRS moves slowly, but it doesn’t stop – once they have you in their sights, they’re going to pursue you until the tax debt is settled. Having an expert tax problem solver on your side can help you get the debt resolved and the threats of levies and seizures behind you. Don’t lose everything. Get help for your tax problems!

American Tax Relief Shut Down by Federal Trade Commision

American Tax Relief Shut Down by Federal Trade Commision

TAX MASTERS NO HELP FOR TAX PROBLEMS – ABC NEWS

ABC News expose on Tax Masters

Lots of Big Stars Are in Big Trouble With the Tax Man

By Lindsay Carlton
Published March 21, 2011|FoxNews.com

March 26, 2010: Al Pacino poses for a portrait in Beverly Hills, Calif.
Despite their high-priced tax attorneys and mega-millions, big stars can find themselves in big trouble come tax time.

Take Hollywood director Martin Scorsese. He was recently nailed with a $2.85 million bill for unpaid taxes. Scorsese was charged for past-due tax and related interest penalties. Although Scorsese’s spokeswoman Leslee Dart says the entire amount is now paid in full and that he has no current IRS debts, sources say the Oscar-winning director’s tax woes are due to his dealings with celebrity accountant Kenneth Starr. Starr was jailed for seven and a half years for a $33 million ponzi scheme, and has duped other superstars in his corrupt plots. He scammed Hollywood heavyweights such as Uma Thurman, Lauren Bacall and Al Pacino, to name a few.

Pacino allegedly failed to pay taxes for two years, a bill for $169,143 in 2008 and $19,140 in 2009, totaling $188,283. Anyone who would stiff this “Godfather” star out of $200,000 might be sleeping with the fishes too, but luckily for Al Pacino, the IRS doesn’t handle their business the same way the mob does. Pacino poured the blame on Starr, his business manager and close friend for years. The money hungry financier apparently used a lot of his fraudulent earnings to play sugar-daddy to his younger wife, ex-pole dancer Diane Passage, who enjoyed a lavish lifestyle. “Managers can be very helpful, but many are not skilled in the area of tax planning and some are outright greedy when given control of celebrities finance,” said Ray Lucia, a certified financial planner.

A spokesperson for Pacino said the “Scarface” actor is working to resolve the situation as soon as possible with a new financial manager.

Another Hollywood cash cow who skipped his IRS bill is Jennifer Lopez’s husband, Marc Anthony. The Latin crooner owes $3.4 million for unpaid taxes on his Long Island mansion. Anthony has a history of running from the tax man. In 2007 he failed to pay taxes on his $15 million income over a five-year-period and ended up paying $2.5 million in back taxes. One might assume that such a power couple would have a better handle on their finances, but some tax attorneys aren’t surprised. “They live in a world where everyone gives them more and more leeway and slack — and they slowly develop an attitude of being above it all,” said Doug Burns, a federal prosecutor who has prosecuted dozens of tax fraud cases.

One pop star even sang a song about paying bills, the aptly titled “Bills Bills Bills,” but then forgot to fork up the cash herself. Former Destiny’s Child singer Kelly Rowland owes $98,634 in back taxes. The government filed a lien against her on Nov. 8, according to the Detroit News. The songstress hasn’t had much success since splitting from the Beyonce Knowles-led girl group. She also recently parted ways with her long-time manager and Beyonce’s father, Matthew Knowles. “Celebs who are attending to other details in their lives may brush taxes aside for later, but by then it’s too late,” said CelebTV.com host Kelli Zink.

“Survivor” winner Richard Hatch has had his fair share of tax trouble. The reality star spent three years in jail for failing to pay taxes on the $1 million prize money he won on the hit show. Hatch is heading back to the slammer for not settling a tax bill that is now reportedly up to $2 million. Hatch is currently starring in Donald Trump’s “Celebrity Apprentice” show. Although the episodes of the series have already been filmed, he will miss the live finale in May while he finishes his sentence behind bars. Along with his prison term, Hatch will remain under supervision for 26 months, and 25 percent of his wages will be garnished to pay back the IRS.

Joe Francis, founder of “Girls Gone Wild,” also spent some time behind bars for his tax tribulations and says the IRS targets celebrities every year around tax day. To avoid glitches in your taxes, Francis recommends Hollywood newcomers hire reputable business managers and get references from their other clients. “Good financial managers are helpful, ones like Bernie Madoff are awful. I was young, I was making a lot of money,” Francis said. “You trust people like lawyers and accountants. I didn’t even sign my own tax return. I didn’t even question it.”

Is An IRS Audit The Last Word? Not Necessarily!

Audit Appeals

Once you receive the results of an IRS audit – which generally includes a large bill that you have to pay – you have three options.  You can pay the bill, request an informal review with the auditor’s group manager, or file a formal request for appeal.

If you went through the initial audit without help or representation, NOW is the time to get professional help. Have a licensed tax professional review your situation.  There are many factors that go into deciding whether or not an audit stands or is overturned upon appeal.

Bear in mind that IRS auditors are trained to get information out of the taxpayer. The tactics they use are often frightening, especially to the taxpayer who doesn’t know what rights and protections they have.  An IRS auditor is not going to volunteer the information that their decisions can be questioned – or even overturned!

Appealing An IRS Audit Successfully

Appealing an IRS audit is difficult, but it is not impossible.  Prepare yourself for success by having competent, professional tax assistance from an audit accountant, licensed tax professional, or other expert. The vast majority of audits that are overturned or altered significantly upon appeal have a tax professional involved.  An individual taxpayer, particularly one with no tax experience, is at a significant disadvantage when they try to appeal on their own.

The primary advantages of having a tax professional represent you in appealing an IRS audit is that it introduces a significant degree of separation between you and the IRS as well as having someone with years of experience in dealing with the IRS on your side.  The IRS will be talking to your tax accountant, not you.  The phone calls will go to the tax professional’s office – not your home!  This eliminates stress and gives you the peace of mind that the problem is being handled. Your tax professional’s experience will also get you a better result than you could have gotten on your own since he knows how the IRS operates, what your rights are, and how to maneuver through the IRS maze.

Bankrupt Woman Saves Over $37,000 In IRS Audit

Lisa had suffered greatly as a result of personal problems, including both a divorce and a personal bankruptcy. She lost everything she owned – including her home. Fortunately, bankruptcy gave her a fresh start and a new lease on life . . . or so she thought! Just when she thought her troubles were over, the IRS came into her life, claiming she owed over $38,000 due to unreported income. As a result of her previous tax preparer’s mistakes in preparing her return, the IRS was demanding over $38,000 that she did not have and was threatening to levy her bank accounts and wages. She was terrified of what would happen. Our firm negotiated a reduction of over $37,000 in her tax bill by invoking a little known tax law relating to taxpayers discharged in bankruptcy. As a result, Lisa paid only $800 in tax. She was relieved beyond words.