The Complete Guide to IRS Collections

What is the strategy for dealing with IRS collection cases? Our firm’s strategy is to throw the IRS completely out the window and just start with the client. We take a client’s situation — and every situation is different — but we always focus on what the end goal is.

You may owe the IRS a sum of money and you may not be able to pay that sum of money but the really important thing is not that you pay the money, but that your life moves forward and that you are able to meet your personal, professional and financial goals.

We start with an understanding of what the goal is and then we work the solution into that.

That solution can look like a lot of things. It can look like a payment plan, it can look like a hardship, it can look like a tax settlement, but the long or the short of it is, let us work on hitting the goal based on what you want, not based on what the government wants.

The way that we approach IRS collection issues and the strategy behind that is to start by looking in a situation, figuring out where we want to be, figuring out the fastest way to get there and then navigating the government through that hurdle.

OPTIONS IF YOU CANNOT PAY THE IRS

Number one, the keyword is options. You have lots of options. The options that we recommend are ones that get you into compliance.

You can, number one, pay the liability in full. If you do not have enough money to pay the liability in full, you can ask them for an extension of say, four or five months before the IRS is going to request your payment in full.

If you still cannot pay the liability, then you should enter into a payment plan or propose a settlement. A payment plan is exactly what it sounds like, you make a series of payments to the IRS over time.

A settlement is what is more commonly known as an offer in compromise, where if you have a liability and you know that you will never ever be able to pay it, you could offer the IRS a reduced amount. In exchange for that amount, they will forgive your liability.

If, for whatever reason those do not work for you, you can enter into a hardship which is currently called non-collectible status.

You have to document evidence of your hardship and provide the IRS with financial information and then they will put a reprieve on you from collecting the liability either in the short-term or in the long-term.

Generally, non-collectable status can last anywhere from six months to about two years.

The last option that you have is bankruptcy, but bankruptcy is something that I consider generally to be a nuclear option because bankruptcy has a lot of impact on you outside of your tax situation.

If the only thing you owe is tax debt, or maybe some small consumer debts and credit cards, generally working through the administrative process is much more favorable to bankruptcy.

That is the lay of the land, you can pay it, you can request more time to pay it, you can put yourself on a payment plan, you can settle the liability, you can ask for a hardship, or you can go into bankruptcy. Those are your six options for dealing with liabilities that you cannot afford to pay.

That is why we created this free book, “The Tax Attorney’s Complete Guide to IRS Collections.” Our firm has represented many, many small business clients in IRS collections cases.

Although it is a daunting process, there is light at the end of the tunnel. Come in for a consultation and we will review your situation and together, we will figure out a strategy to pay off your debt to the IRS. We have an experienced team of attorneys with a solid record of satisfied clients, so you know you will be in good hands.