You’ve heard them. I’ve heard them. We’ve all heard them. Those exciting sounding ads that have someone shouting about how they can resolve your tax bill for “pennies on the dollar.” They make it sound like they have special expertise, a private hotline to the IRS, and magical powers that make them uniquely qualified and capable of handling IRS accounts that have gone into collections. It’s just not true. The process they are describing is called “Offer in Compromise” or OIC.
Offers in compromise are just one of the many different ways the #IRS has to collect on tax debts and they are one of the hardest to obtain. Once your account goes into collections the IRS may place liens on your assets (home, bank accounts, etc.) that can prevent you from selling those assets even to pay your bill. It can also issue a levy where it takes away your property and/or garnish your wages. But, like most things with the IRS, the collections process is formal and slow. You have many options and quite a bit of time from the time you receive your initial tax assessment until the time the IRS starts taking your property and you have options available that are not as complex, not as expensive, and are much more likely to be granted than requesting an OIC. Maybe you ignored the problem hoping it will go away—it won’t. Congress has recently allowed the IRS to once again use private debt collection agencies to attempt to collect back taxes from individuals in collections. So, while the IRS won’t call you about your overdue taxes you can be sure that if your case is sent to a private collections agency you will be getting called.
Rather than panicking and falling prey to scammers (not all collection calls are legitimate) or calling one of these expensive, predatory firms you’re hearing on TV or radio, call an #EnrolledAgent. This article from Forbes discusses how the predatory firms work (or don’t work), but it really doesn’t understand or explain what an Enrolled Agent can do. EAs can handle more that just “routine” matters before the IRS. No, they cannot litigate in U.S. District Court or Tax Court (neither can CPAs) but many of the EAs I know have been trained and continue to take CPE in how to represent taxpayers in IRS examinations, collections, and appeals. In many cases they can be more knowledgeable about IRS procedure than an attorney. Attorneys know the law. They are trained to litigate. Few are trained in IRS procedure the way that EAs who specialize in representation, not return preparation, are trained (some EAs are excellent at both “prep” and “rep”). The article also does not mention US Tax Court Practitioners. These are individuals who are not admitted to the bar but who have been specifically trained and passed a grueling exam so that they can represent taxpayers in Tax Court (not District Court). Always consider an EA who does representation as an excellent option to resolve your tax collection issues and a USTCP if you are headed to Tax Court.
Need help now? Find an EA here.