Q & A and Tips on Accounting, Taxes and Personal Finance.

IRS Notices – Do’s and Don’ts

February 9, 2016 | By More

Receiving a letter from the IRS can make your blood run cold. A smart response strategy can lessen the stress, but where to begin? David Leichter CPA of Pikesville Maryland discusses his experience with delinquent taxpayers, and offers some “do’s” and “don’ts” for dealing with the IRS.

IRS-auditDavid: I’ve been working as an accountant for nearly 10 years now. I’ve had exposure to many different types of clients across an array of many different industries. I have the unique advantage of seeing things from both perspectives – yours and the IRS’.

Nothing surprises me anymore, so I completely understand when taxpayers sheepishly enter my office with their heads bowed to their knees, admitting they haven’t filed taxes in a number of years (with excuses ranging from the ordinary, “once the kids came and we had to put mom and dad in a nursing home, we lost track of time” to the utterly absurd, “I didn’t think someone in my industry was obligated to file taxes!”) and now Uncle Sam is banging on their doors. Sometimes, though, it isn’t quite as drastic as that.

More often than not, there are very straightforward methods to deal with these situations. Below is a short “To Do” and “Not To Do” tutorial. There’s obviously more to it than this, but this will help get your started and hopefully settle your nerves.

TO DO: ACT!

Often people’s initial reaction is to ignore the notice and (usually) throw it away. The problem with this approach is that even though you’ve ignored the problem, the IRS has not. Once you are in their system, you’ll never get out of it. But because the IRS doesn’t always do a great job following up, you’re often led to believe that the problem has been resolved, or the threat was empty and whatever they were going to do has been reversed or has expired. Not the case. Very often, the IRS has already begun the process of levying your accounts, garnishing wages and placing liens on your property. It’s VERY important to address IRS notices head on and not to let them sit. But who do you call and what am I going to have to pay for this?

Be SURE you are speaking with a true professional. You should be absolutely certain that the person you are seeking for help has either an EA (Enrolled Agent), CPA (Certified Public Accountant), or Esq. after their name.

And ALWAYS be sure that you are comfortable with the person servicing you with this problem. If you have even a hint of suspicion or anxiety about him or her, go elsewhere! There are many people who can help. Interview as many as you need.

NOT TO DO:

Never call the phone numbers you hear on radio commercials. Most often, those companies are either scams or rip offs. They will promise you the moon and rarely deliver on their promise. They will ask for a large initial deposit, and they will never stop there. Before you know it, you’re in the thousands on this issue, which may or may not even require such extensive support.

A very important addendum to this is that many of these companies will advertise that they do their work through a number of attorneys on their staff. This is also a lie, and you should never rely on that. And never trust the guys who tell you, “we guarantee to settle your account for pennies on the dollar!” No legitimate professional can guarantee that. Especially if they don’t even yet know what your issue is. While it’s true that many cases can be settled for less than the stated debt amount, very often your case is multi-layered and requires an approach that is different than simply compromising (known as the Offer in Compromise).

I think the most important thing to do, though, is to not panic. In many situations, the notice is not as bad as it seems, and with a simple phone call to the agency, the matter can be resolved and abated.

Always address the problem proactively, and always seek the services of a professional. For more information about IRS and State Tax Debt, visit our informational website at www.taxrelief-md.com. Feel free to schedule a no-hassle consultation, either by phone or in person. We’re always available to talk!

Contributed by David Leichter – CPA
Leichter Accounting Services, LLC is located in Pikesville, Maryland. For more information or to contact David Leichter, visit http://www.leichtercpa.com

Article information should not be used exclusively to make legal, financial or tax decisions. Because laws and rules can change frequently, topics may not always be updated to reflect these changes or may not apply to your unique situation. It’s prudent to seek out the advice of a professional for your specific needs.

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Category: IRS Problems

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