IRS Representation FAQs

Please be aware that the answers below are short overviews. There are many factors to consider when choosing the best option for settling your tax debt. Your unique situation requires a personalized approach. Please contact me for a confidential evaluation of your situation and to discuss your best options.

Understanding Your Tax Debt

Can I make my tax debt go away? Maybe, depending on your financial situation. All tax debt resolutions, including potential reductions, are based on your ability to pay. I’ll conduct a thorough review of your income and expenses, comparing them to IRS National and Local Standards, to determine your true ability to pay. There are several options to reduce or manage tax debt; please contact me for an evaluation to discuss which solution is best for you.

How long does it take for tax debt to expire? The IRS generally has ten years from the date the tax was assessed to collect it. If they can’t collect it within that time, they’re required to cease all collection activity permanently. However, certain actions can pause this ten-year timeframe, such as requests for Innocent Spouse Relief, an Offer in Compromise, and bankruptcy protection. While these requests are pending, the collection period is paused and will resume once the request is accepted or denied.

What if I can pay some of the debt, but not all of it? The IRS is usually willing to accept whatever you can afford to pay. Once your ability to pay is calculated, we can often find an equitable resolution to your tax debt. In some cases, we can consider a Partial Payment Plan, a Tiered Payment Plan, an Offer in Compromise, or a status of Currently Not Collectible (CNC). However, if the IRS determines you can pay in full, they will expect you to pay the full balance due.

Can I settle my tax debt for “pennies on the dollar?” Maybe. All options for settling your tax debt depend on your income, assets, and expenses. The only way to know for certain is to prepare a complete financial analysis and consider your options. Contact me, and we’ll review your situation and discuss the possibilities.

IRS Programs & Solutions

What is an Offer in Compromise (OIC)? An Offer in Compromise is a situation where you cannot fully pay your tax debt, and you’re willing to offer everything you have beyond your basic living expenses. This includes equity in your home, retirement accounts, and investments. If an OIC is accepted, you’re generally required to be compliant with your taxes for the next five years. This means you must pay your taxes as you earn the income and file your returns by the due date every year for those five years. If you don’t file and pay in a timely manner, the original tax debt with accumulated penalties and interest will return.

What is a Partial Payment Plan? If the IRS agrees you don’t have the ability to full pay, but you do have some ability to pay, they will likely agree to a payment plan based on your calculated ability to pay. Keep in mind, if your income changes significantly, the IRS may review your account and demand more later.

What is a Tiered Payment Plan? This is a full payment plan (also known as an Installment Agreement with escalating payments) that allows you to make smaller monthly payments in the beginning while you get your finances in order, and then gradually increase the payment amounts over time. You may typically increase the payment amount up to two times during the agreement.

What is Currently Not Collectible (CNC) status? If the IRS determines you have no ability to pay at the present time and your income is not likely to improve in the near future, they may agree to place your account in Currently Not Collectible due to hardship status (CNC). This means the IRS will not take any aggressive collection action against you. They will not levy bank accounts, paychecks, or other assets. You’ll receive one notice each year reminding you of the balance due. Once the debt expires, the IRS will cease all collection activity permanently. The IRS does reserve the right to remove you from this status if your income improves significantly.

What is the Fresh Start Program? The IRS Fresh Start Initiative (often referred to as the Fresh Start Program) refers to a collection of policy changes introduced by the IRS to make it easier for taxpayers to resolve their tax debts. It primarily relaxed the rules regarding which expenses can be considered when determining your ability to pay and allowed for longer payment plan terms (Installment Agreements) and expanded eligibility for Offers in Compromise. While it didn’t create entirely new options, it made existing relief options more accessible and flexible for many struggling taxpayers.

Navigating IRS Communication & Penalties

What is the first step if I receive a notice from the IRS? The first step is to not panic and not ignore the notice. Contact me immediately. Do not respond to the IRS without professional guidance. I can review your notice, explain what it means, and advise you on the best course of action. Often, quick and proper communication with the IRS can prevent further complications.

Will the IRS stop collection actions once you begin representing me? Once I am formally authorized to represent you (via Form 2848, Power of Attorney), the IRS is generally required to communicate directly with me, not you, regarding your tax matter. This often leads to a temporary pause in aggressive collection actions while we work towards a resolution. However, it’s important to understand this isn’t an automatic halt, and specific actions may still be taken if not properly addressed.

Why are the penalties and interest half of my tax debt? In the United States, the tax system is voluntary; however, there are stiff penalties for failure to comply with tax laws. The most common penalties include Failure to File on time, Failure to Pay on time, Significant Underreporting of income, and Civil Penalties for Failure to Pay Employment Taxes. Interest compounds daily and applies to both the tax debt and the penalties. If you have a specific question about a penalty, please call, and we can discuss your situation.

Can Federal Tax Penalties and Interest be written off? Interest can never be written off. If you amend the return and the taxes are reduced, the interest will be correspondingly reduced. Penalties can be abated if you can show the reason for the late pay or late filing was due to an extraordinary event beyond your control. Some examples include significant illness or death within your family, flood, fire, or natural disaster. If reliance upon written advice from the IRS caused some of the tax debt, this too may be a reason for abatement.

What does it mean to amend a tax return? If you find something in your tax return that is incorrect, you may make changes to the return and submit them with an explanation of how it affects the return you previously submitted to the IRS.

Specific Situations

What is Innocent Spouse Relief? If you filed a joint tax return and there are reasons you should not be held liable for tax debt due to false reporting of income or expenses by your spouse – for instance, if you had no knowledge of the error, or were in fear of abuse for refusing to sign the return – you may be eligible for Innocent Spouse Relief. This can result in the tax debt being separated so that only your spouse is liable. The rules are complex and require careful consideration; I strongly urge you to contact a qualified tax representative for assistance in submitting and supporting such a request.

What are the National and Local Standards and who sets them? The IRS uses Collection Financial Standards, which are derived from surveys by the Bureau of Labor Statistics, to help determine a taxpayer’s ability to pay. These standards include National Standards (for categories like food, clothing, and personal care) and Local Standards (for housing, utilities, and transportation, which vary by geographic area/county). The IRS uses these as a guide to assess the reasonableness of your claimed living expenses when evaluating your financial situation.

Are there exceptions to the Collection Financial Standards? Yes, if your expenses exceed the standards and you can prove your expenses are necessary for the health, welfare, or production of income to support your family, you may be eligible for higher expenses.

What is a frivolous tax return or frivolous tax argument? You have the right to pay the correct amount of tax and to appeal assessments through the IRS and Tax Court; however, you are obligated to follow the law. From an IRS standpoint, “frivolous” refers to unreasonable and outlandish claims made to avoid paying taxes. Arguments such as the government lacking the right to collect taxes, or refusing to pay due to religious beliefs, are commonly deemed frivolous and have been consistently rejected by courts. The submission of such a claim or argument can result in a civil penalty, often a $5,000 penalty per frivolous return or submission, and potentially even criminal charges if fraud is involved.

Working with Me

What is an Enrolled Agent (EA), and why should I choose one for IRS representation? An Enrolled Agent (EA) is a federally licensed tax practitioner who has unlimited practice rights before the IRS. This means I am authorized to represent taxpayers for any tax matter, including audits, collections, and appeals, anywhere in the United States. Unlike other tax professionals whose licenses may be state-specific, an EA’s federal license ensures consistent, high-level representation regardless of your location or the complexity of your issue.

How does working with you remotely work? I leverage secure, encrypted online portals for document exchange, virtual meetings (video or phone calls), and electronic signatures. This allows me to provide seamless, personalized service to clients nationwide, without the need for in-person visits.

How much do your IRS representation services cost? My fees for IRS representation services vary depending on the complexity of your case and the estimated time involved. I offer a transparent fee structure, and we will discuss all costs upfront during your initial consultation. My goal is to provide exceptional value and help you achieve the best possible outcome.

Final Disclaimer:

Please be aware that the answers above are short overviews, and there are many things to consider when choosing the best option for settling your tax debt. Your unique situation requires a personalized approach. Please contact me for a confidential evaluation of your situation and to discuss your best options.