Do You Need Professional Help?
These days there is a lot of information available on the internet.
As with any endeavor, there are nuances, traps, and tricks to be
aware of. Do you have the time and ability to review
everything? It can be mind-numbing trying to read
through all the extraneous information to find what
is important.
Many people are paralyzed by fear of the unknown.
The Internal Revenue Service has done a great publicity job by
jailing big offenders such as Al Capone, Leona Helmsley, and Wesley
Snipes. But, the Internal Revenue Service really doesn't want
to put you away, house you, feed you, and give you medical care.
They'd rather have you being a contributing taxpayer, not a burden
to government. So, don't let fear immobilize you.
The agent's job is to collect the taxes you owe in the quickest
manner possible. With
the exception of any streamline procedures (your tax debt has to be
less than $50,000 to qualify for streamline procedures) they will
request complete financial information disclosure from you before
they will consider any negotiations. They will expect you to
pay the tax immediately with any cash and liquid accounts you have
(including IRA's and other retirements accounts, with some
exceptions and other options). If that's not enough to pay the
tax bill, next they will look at any assets/property you own that
can reasonably be sold to generate cash to pay your taxes.
If your liquid accounts and assets don't generate enough to pay the
taxes, then they will look at your ability to make monthly
payments.
However, there
are options.
Rather than cashing out your liquid accounts or selling off assets
you have accumulated over your life, you can request a Streamlined
Installment Agreement if you owe less than $50,000 and you can
propose to make monthly payments that will pay the tax bill within 6
yrs (72 months). E.g. if you owed $25,000 you would have to pay at
least $348 per month.
If you can't make payments under the automatic installment agreement
conditions, you
can negotiate other payment terms. For that the Internal
Revenue Service will require that you make a full financial
disclosure and they will closely scrutinize your financial profile.
They will take into account all your sources of income (including
sources not typically subject to income taxes or otherwise exempt),
then dictate what expenses are allowable for you based on their
Bureau of Labor Statistics Living Standards. (These Standards
are used in Bankruptcy also.) Whatever is left over is what
they expect you to pay, nothing less. Some people feel that
the Standards are generous, others feel it's stingy. That depends on
your life style. This may be an area where you want to seek
professional help. There are many traps to avoid, and options you
can use that you may not be aware of.
If your tax debt is large and you are in poor financial
condition, you may consider an 'Offer in
Compromise.' (OIC) In
an Offer in Compromise you can settle tax debt for less than you
owe. Pennies on the dollar. It has no relevance to how
much you owe. It is based only on how much you can reasonably
pay. You'll want professional help on that.
If you had extenuating circumstances, you
may qualify for an abatement to
reduce penalties and interest.
Think you may need help? Contact
us for a free analysis.
Professional Fees
Apart from our on-line and direct professional help, you can find a
range from $25 to $500 per hour. Obviously the lowest rate is not
the best, nor is the highest. Sometimes the old adage 'you get
what you pay for' applies. You need to hire a tax professional
who can get the job done for you. You want someone with
experience. You wouldn't ask your podiatrist to perform your
heart surgery.
Sample Professional Fees for Representation:
-
$200 to $500+ per hour. These
fees may vary depending on the nature of the services being
performed.
-
$100+ per hour for para-professional time (usually half the
professional's rate).
Depending on who you hire, these fees may run higher.
It's unpleasant to quote hourly fees because people
just see the clock ticking every time work is done.
You have to look at the value you get in the end and the peace of
mind. Here are some typical total costs for projects.
These are based on normal circumstances. Simple cases may run
less than these below. These are typical fees in this
industry. Any complexities or issues may add to
the costs:
-
Individual Streamlined Installment Agreement $750
-
Individual Standard Installment Agreement $1,500
-
Business Installment Agreement $2,500
-
Individual Offer in Compromise $3,000
-
Business Offer in Compromise $5,000
Some processes are often pursued in conjunction with another. Professionals
seek to provide the best solution the taxpayer qualifies for.