Frequently Asked Questions

Why can't I just go for non-collectible status?

For some clients, non-collectible is the way to go. But when you talk to an IRS agent and try to make your own case for non-collectible status, consider this: the agent’s mission is to collect taxes. He or she will ask you a lot of questions to determine whether you qualify. If you don’t qualify, you’ve just given that agent all the information he or she needs to find your assets and issue levies and/or garnishments. Also, keep in mind that non-collectible status is only temporary. Interest will accrue, and any refunds will be intercepted. Within 1-2 years, you may not only get levied and garnished again, if you do, you’ll owe substantially more.

I read about some tips for success with offers in compromise. Can't I just do this myself?

You can, but keep in mind that 75% of offers in compromise fail. Some of our clients come to us after unsuccessfully trying to negotiate an offer in compromise, which makes this option harder for us to use. We’ll file the paperwork correctly and offer you your best chance for having your offer accepted by the IRS. If an offer in compromise is a good match for your circumstances, you’ll likely pay much less than the original amount owed.

Why is tax court so difficult?

Cases are often dismissed because someone missed a filing deadline. Our attorneys know the process very well and understand the filing procedures and deadlines.

The audit process sounds incredibly painful. Is it?

If you have inadequate representation, audits can be one of your worst experiences, and, from a financial perspective, very painful. But if you keep decent records and hire a good tax attorney to represent you in your audit, the audit procedure is often relatively quick and painless.

Can a levy actually result in a family of three living on $300 a week?

Yes. Levies are extremely painful. If you are ignoring a tax issue, keep in mind that a levy is one of the most common reasons clients come to us. It is much easier, and less expensive, if you contact us before you receive a levy.Don’t ignore this possibility. The IRS will levy as far back as ten years, and they have teams of specialists who focus on levying old cases.

Can I get rid of back taxes through bankruptcy?

Bankruptcy is a great way to get rid of back taxes. However, there are huge caveats. Only certain types of taxes can be discharged and there are specific filing requirements. Other tax companies won’t necessarily give you an honest answer about bankruptcy, because they aren’t attorneys and can’t help you with the bankruptcy process. Contact us if you think bankruptcy may be an option for you. We’ll let you know what all your choices are, and offer you our best advice.

Are offers in compromise routinely granted?

In a word, no. Offers in Compromise are stringently granted. The national average for acceptance is about 25%. Although our acceptance rate is much higher, 65%, we can’t guarantee that every offer we submit will be approved. The same exact Offers in Compromise can have different results. Well prepared offers are denied routinely, even after appeals. Our attorneys will look at all your options, and discuss your chances for an accepted offer.

If I already owe money to the IRS, do I make things worse by filing my taxes?

Tax protestors get the full brunt of the IRS. The federal courts do not rule in favor of tax protestors, in spite of any and every internet rumor. There are other more successful ways to protest the policies of the local, state, or federal governments. Whatever your personal beliefs about the tax code, it is the law.

I have a post office box. Does that protect me from getting federal tax lien notices or other paperwork the IRS is required to send me before they can attach my property?

No. The IRS is only required to send you a notice to the most recent address they have on file. A Federal tax lien puts the world on the notice that you owe the IRS money. It attaches to property owned, and will attach to any future property interest. Note: If you get married and you have tax problems, it can impact your new spouse’s property interests.

Can the IRS seize my car?

Vehicle seizures are rare. But they are more likely to happen if you have a second vehicle not tied to business use, or if you are using the car as a device to frustrate collection. Purchasing a very expensive car after you’ve received an assessment from the IRS doesn’t protect your assets.

Can the IRS levy social security?

Yes. The IRS can (and does) levy social security. We’ve worked with many clients who have faced these circumstances.

Are IRS agents aware of all current business endeavors?

It sometimes takes the IRS years to figure out that a taxpayer has not been in compliance. But this is not a good thing. Taxpayers take this as a sign that the IRS isn’t concerned with them, allowing the problem to get much much worse, because when the problem is discovered, the taxpayer is liable for the interest that’s accrued. If you have already been deemed to be a problem taxpayer, the IRS is watching you very closely. We can help you file back taxes, and get in front of any tax problems before the IRS catches up with you. In doing so, you have a better chance of a more favorable (and less expensive) outcome. Contact us and we’ll get started.

If I overpaid the IRS, can I get my money back any time?

Generally, you only have 3 years from the date the return was filed or 2 years from the date the tax was paid to seek a refund. So if you have refunds coming to you from unfiled taxes, you may lose them permanently if you don’t act quickly.

Can't I just claim ten exemptions so less is taken out of my paycheck?

Only if you actually have ten exemptions. Otherwise, it becomes a problem that gets compounded year after year, and results in a tax bill that is much more than if you had claimed the correct number of exemptions every year.

Am I financially better off paying down my credit cards, or paying down my IRS bill?

Calculating the Interest rate on a tax liability is difficult. If you ask the IRS how much interest you are paying, they can’t usually tell you right away; it often takes a few days for them to give you an answer. If you don’t file, interest is compounded daily on what you owe - the quarterly federal short-term rate, plus 3%. Non-filers also pay a .5% late payment penalty plus a 4.5% late filing penalty, for a combined penalty of 5% for the first month their return is late. For every month that you don’t file, the penalties double, capping at 47.5% (22.5% late filing penalty + 25% late payment penalty) after just five months. For example, if you owe $10,000 and you wait five months, you’ll end up owing $14,500. If you have the ability to pay the IRS in full, it is usually a good idea to do so.

I have more questions.

Please feel free to contact us. One of our representatives would be glad to discuss your particular concerns.

Copyright (c) 2009 Kruse & Crawford CPA's