Client owes A LOT of $$$ in back taxes

[Unregistered]

You have all seen these commercials for companies that negotiate with the IRS regarding back taxes. Has anyone used any of them? Would you recommend them? I have a client that has not filed tax returns in 6 years. He is going to owe a great deal of money and has no way to pay for it. I can prepare the returns for them, determine the liability but I would prefer to have someone else negotiate with the IRS. What should we do?

[Jiggers]

Representation

I would contact a local EA that specializes in OIC's and Representation. Check the NAEA website at www.naea.org.

[Unregistered]

I'm a CPA but in the 15 years I have been doing this have never had to negotiate with the IRS. I would prefer to have someone who specializes in this area help my client. It's kinda like doing a business valuation... YES I can do one but I think there are people out there that are better trained than I to perform such a service. What do you guys do? Do you refer the work out or do you just do it yourself?

[rosieea]

I would look for an EA who is a Fellow of the National Tax Practice Institute. I'm an EA, but I don't feel comfortable with rep work beyond the correspondence level.

[BOB W]

Sorry, but........

............. I don't feel bad for clients like this. I leave the "sorry for" for the IRS to process. That process is based on facts and circumstances within OIC.

I file the return, get paid and talk about options with the client. None of which they want to hear except the OIC.

I may do a review of those fact & circumstances, for a possible referral to someone that will process an OIC. In the past I have processed OICs but under the new laws I fear many turndowns.

So I would rather be the "good guy" for doing my best in getting all deductions and getting the lowest tax liability, then be the "bad guy" for failing to get them off the hook, or atleast for some of the tax liability.

[Black Bart]

Oic

I'm with the other people on this. If I didn't want to do it myself, then I'd recommend somebody in the tax prep or accounting business. Whatever you do, do not send them to J. K. Harris. I had a client who went to them and they collect a couple of thousand immediately, send in an OIC form, and after that, do absolutely nothing except to stay "out"-of-touch with the client.

I don't know about the lawyers advertising "settle for pennies on the dollar" on TV, but I wouldn't put too much stock in them. I've yet to meet the lawyer who knew much about taxes.

[Unregistered]

back tax help

https://www.grandcentraltax.com

[geekgirldany]

I recommend they go to someone else. I found a lady that is a former IRS agent. She specializes in OIC and representation. The client though needs to prepared to pay for the representation. Mine did not and still has this over his head.

[Ken]

bite the bullet

So are we suppose to feel sorry for a person who has willingly and knowingly put off filing for several years, and when he does finally file he owes money? If the IRS negotiates with people like that, maybe we should all just file every 5 or 6 years and then whine when its time to pay.
Sorry but I dont feel that badly for people like that.

[Bird Legs]

Representation-OIC

There is a local organization here that is made of tax practitioners, attorneys, and ex IRS
agents. When something like this comes up I will do the tax preparation then refer them
to someone in this organization, for the OIC.
Never have the client use one of the organizations that advertise nationwide on the TV.

[Black Bart]

Ken,

I'm kinda like Don Corleone on this one, i.e., "It's nothing personal. It's just business." I don't feel sorry for the person or sympathize with them for letting things go for years (although I do think IRS gouges outrageously on interest and penalties), but they're not asking for my sympathy--they're asking me to do a job for them for a price. And I would; if I didn't dislike it so much.

Although I've never filed a formal OIC, I got a taste of what it would be like by contacting an IRS rep (the Taxpayer Advocate, no less) on a client's request to reduce his monthly IRS iinstallment payment from $300 to $200 per month. IRS wanted disposable monthly income--sent us a form--he had no records--we estimated almost everything. I massaged it down to where it showed he had $200 per month to spare. Problem is, IRS has its own figures for average monthly expenses (groceries, utilities, etc.). They deleted our figures and used theirs--her calculations raised the payments from $300 to $3,000 per month. She kept telling me "I've allowed you everything you claimed," which was true except for substituting IRS "average expenses." All parties were thoroughly ticked off--I told her the results were crazy and to forget the whole thing--we'd stay with the $300. Since she was a TA (doesn't actually work for IRS), she did--don't know if a regular agent would have made us live with it or not.

Anyhow, I wouldn't go through it again because once you send your figures in you've sworn they're true and have to stick with them, but you don't know what they're going to change some of them to or for how much and there's no way to know what the net income will be. So, I decided not to do that anymore because it was a holy mess. Maybe there's a better way on an actual OIC form, but I got enough of it that I didn't want any more.

[DaveO]

I've gotten 2 OICs through in the last 12 months. They are a real pain but doable once you understand the formula the agents have to work with. Do the 433A and 433B. Get the standard deductions for meals and misc for your area. This will give you their monthly disposable income.

Then figure the quick sell value of everything they own. I do mean everything; home, life insurance, cars, household goods, etc. Add that amount to the monthly disposable income for 48 months and you have the amount the IRS will accept.

The "pennies on the dollar" folks are totally bogus in my opinion. They take an upfront fees of $3,000 and do nothing or tell the client their income is too high.

The main advantage of the OIC is that it stops the accumulation of penalty and interest while your client finds a source of money. If your client is totally upside down on their assets and has only a small amount of income over their basic expenses they may qualify for a substanial reduction. I settled $64,000 for $7,000 in that case. The other settled $72,000 for $64,000 with a 2 year payment plan with no interest.
Just a few more days!

[Chief]

Nina Olsen

What are these state offices that fall under the leadership of Nina Olsen.? What is their function and how do they operate? Do they help tax payers who owe the IRS bigtime?

[DaveO]

What are these state offices that fall under the leadership of Nina Olsen.? What is their function and how do they operate? Do they help tax payers who owe the IRS bigtime?

We use the Taxpayer Advocates Office on a regular basis. They are top shelf here in NE.

[jainen]

me instead of you

>>would prefer to have someone else negotiate with the IRS. What should we do?<<

Be sure you call me right away, BEFORE you do the returns. That way I can talk the client into letting ME do the returns, and he'll pay me instead of you.