issue regarding past year taxes

[taxdude71]

Client has tax due for 2007 and 2008 tax years. They entered into an installment agreement and made the first few payments, then stopped. Wanted me to find out what the IRS changed on their returns that they now owe. After some digging, found that in those years they had a business and EIC. IRS changed returns due to the fact that the taxpayers never responded to any letters the IRS sent.
The question I have is there anything the taxpayers can due about the taxes? I'm inclined to believe that once the entered into the installment agreement that they pretty much screwed themselves.

[DaveinTexas]

3 Possible Options

Client has tax due for 2007 and 2008 tax years. They entered into an installment agreement and made the first few payments, then stopped. Wanted me to find out what the IRS changed on their returns that they now owe. After some digging, found that in those years they had a business and EIC. IRS changed returns due to the fact that the taxpayers never responded to any letters the IRS sent.
The question I have is there anything the taxpayers can due about the taxes? I'm inclined to believe that once the entered into the installment agreement that they pretty much screwed themselves.

You should secure a Power of Attorney to begin your research. This will allow you to contact PPS (IRS Practitioner Priority Services). I would ask the agent who answers if it is too late to respond to the IRS notices (probably a CP2000). Sometimes these cases hang around AUR for a while and it may not be too late to respond to the notices.

If the notices are long gone and the case is closed, so to speak, then the agent will probably tell you your only option is to respond with an Audit Reconsideration request. These requests, the last time I checked, were taking up to a year to process. This means your clients would have to make the IA payments, to avoid levy action, the entire time the request is being considered, probably only to find out the IRS requests more information, further delaying your case.

Last option to consider it to file an OIC, Doubt as to Liability. This is a viable option because it will stop any levy action while the case is under consideration but also it will give your clients an opportunity to respond with supporting documents as to why the IRS assessed balances are incorrect (expenses to offset business income). The OIC process is also a slow one, but hopefully not longer than the Audit Recon route and the taxpayers should consider making payments during the consideration process.

All 3 options require a bit of experience with IRS problem resolution, if you are not comfortable with handling this case, find a colleague that can help.

[taxea]

If you are not knowledgeable of compliance and collections you should refer them to someone who has this expertise.