From time to time, you might face tax problems. Whether it’s a tax debt you can’t afford to pay or an IRS audit that doesn’t go your way, tax resolution services can help you resolve your issues with the IRS and other tax authorities.

In this article, we’ll discuss what tax resolution services entail, when you might need them, and what to watch out for when working with tax resolution specialists.

What Is Tax Resolution?

Tax resolution is a service offered by a tax professional, such as a CPA, Enrolled Agent (EA), or tax attorney. Tax resolution specialists help you (or your business) work with the IRS or other authorities to resolve your tax situation. That might include responding to tax notices, negotiating with the IRs on your behalf, or applying for an installment agreement or offer in compromise.

Tax resolution services aren’t just for federal and state income taxes. A tax consultant can also help with state tax issues, payroll tax issues, sales and use tax, and excise taxes.

When Do You Need Tax Resolution?

You might need tax resolution services if you:

Owe Back Taxes

If you have unfiled returns or unpaid tax liabilities from previous years, tax resolution can help you apply for penalty abatement and manage and reduce your debt.

Received an IRS Notice

Ignoring IRS notices can lead to severe consequences, including tax liens and levies, wage garnishment, asset seizures, and losing your passport. Tax resolution can address these notices and prevent further action.

Are Facing an Audit

Being audited by the IRS can be stressful. A tax resolution expert can represent you, communicate with auditors, and ensure the audit process is handled correctly.

Can’t Afford to Pay Your Tax Debt

If you’re unable to pay your tax debt in full, tax resolution can help you:

• Negotiate a payment plan. IRS payment plans allow you to minimize penalties while you pay your tax debt over time in manageable monthly installments.
• Reduce your debt through an offer in compromise (OIC). For qualified individuals, an OIC allows you to settle your tax debt for less than the full amount owed. However, the offer in compromise program isn’t for everyone. To qualify, you must have filed all legally required tax returns and be current on mandatory estimated payments and tax deposits, including payroll tax withholdings. You must also submit a detailed application and documentation on your income and assets. The IRS will only approve an OIC if it determines you don’t have the current or future income or assets to pay your tax debt in full.
• Get your account placed in Currently Not Collectible (CNC) status. CNC status means the IRS deems you unable to pay your outstanding tax liabilities, as doing so would cause a severe economic disadvantage. This stops tax levies and other IRS collection enforcement until your financial situation improves.

Have a Tax Lien or Levy

If the IRS placed a lien on your property or a levy on your bank account or wages, tax professionals can help remove these restrictions.

How to Start the Tax Resolution Process

If you’re tired of ignoring your tax problem or dealing with the IRS alone, the first step is to contact an experienced and reputable tax professional for a free consultation. Every tax issue is unique, so they will ask questions about your situation to determine the best course of action.

Whatever you do, don’t ignore IRS notices or avoid filing returns because you can’t afford to pay the taxes you owe. This only compounds the problem, leading to severe consequences like:

• Increased penalties and interest. There is no statute of limitations on unfiled tax returns, and the IRS charges failure to file penalties, failure to pay penalties, and interest. The longer you delay addressing your tax debt, the more penalties and interest you will accrue.
• Wage garnishments, tax refund garnishments, and bank levies. The IRS can seize your paycheck, tax refunds, or bank accounts to satisfy your tax debt.
• Property liens. The IRS can place a lien on your home, business property, and other assets. This affects your ability to sell or refinance.

Beware of Tax Resolution Scams

Unfortunately, the tax resolution industry is fraught with scams. Some tax relief companies promise to settle your tax debts for “pennies on the dollar,” often charging exorbitant fees while failing to deliver on their promises.

These tax relief companies prey on taxpayers’ fears and financial difficulties, often leaving them in a worse situation. Here are some red flags to watch for:

• Guaranteed results. No reputable tax relief company can guarantee specific results—especially if they haven’t reviewed your tax records. The IRS has the final say on any resolution proposal and bases its tax relief options on strict criteria.
• High upfront fees. Be cautious of companies demanding large upfront payments. Legitimate firms usually offer transparent pricing and clear explanations of their rates.
• Aggressive marketing. Beware of aggressive sales tactics and high-pressure pitches. A trustworthy tax advisor will provide a realistic assessment of your situation without making outrageous claims.

Do You Need Tax Resolution Help?

Even if your tax situation seems impossible, you may have more options than you think.

The tax professionals at PaulHood can help you understand your options, respond to IRS notices, catch up on unfiled returns, negotiate with the IRS to manage and resolve your tax issues, and get you back in good standing.

Schedule a free consultation to find out how we can handle your IRS issues. Your financial peace of mind is just a consultation away!