People in search of an Ann Arbor tax attorney often need help negotiating with the Internal Revenue Service. Many taxpayers can pay less taxes than they owe when the work with tax resolution services in Ann Arbor, MI.
What Do Tax Resolution Experts Do?
The primary job of these experts in dealing with government collection agents is to settle a client’s tax debt for less than the total amount due. If that is not an option, the professional attempts to get the IRS to agree to a reasonable payment plan for the person who owes.
An experienced Ann Arbor tax attorney will usually assess a client’s situation before recommending an approach for negotiation. Tax resolution services in Ann Arbor, MI, include law firms, CPA firms, and Enrolled Agents.
Who Will the IRS Deal With?
The IRS has a strict rule when it comes to tax resolution services. The IRS only negotiates tax bills with three types of professionals: licensed attorneys, certified public accountants, or enrolled agents. That’s why an Ann Arbor tax attorney can settle amounts owed to the IRS for less than the full amount, can request to have entire bills forgiven, or ask the IRS to accept a sensible payment plan.
What Is the Best Choice?
Typically, a licensed tax attorney has the most experience with IRS negotiations. CPAs and Enrolled Agents often focus on standard tax filings and tax consultations rather than tax resolution. Ann Arbor, MI, offers taxpayers a wide array of choices when it comes to choosing a professional for dealing with the IRS.
Types of Tax Resolution Approaches
The IRS generally settles tax cases when they are unable to immediately obtain the full amount owed. While there are more options than the main three, the following encompass about ninety percent of all tax resolution cases that the IRS settles.
Offer in Compromise
An offer in compromise, or OIC, means the IRS will accept less than the full amount owed by the taxpayer. Any one of three separate conditions can lead to a successful OIC: there is a chance the debt is not actually owed, the debt probably cannot ever be collected, or collecting the debt would cause an undue hardship on the taxpayer (or might be unfair and inequitable for the taxpayer based on particular circumstances).
Partial Payment Installment Agreement
The PPIA is used as a settlement method when the debt runs into the statute of limitations and the IRS believes that the taxpayer might not be able to pay the entire tax bill. The agreement is negotiated by an attorney, CPA or EA. After that, the taxpayer must remit the agreed-upon amount each payment period, which is typically every month until the end of the agreement.
This is the most common kind of tax resolution agreement. Many millions of U.S. taxpayers are familiar with it because it’s easy to request via IRS form 9465. Such agreements don’t really lessen the total amount owed, but simply allow the taxpayers to spread the payments out over a period of up to six years.
The IRS views the standard installment agreement as a good way to collect taxes from people who are unable to remit the full amount when it’s due. It’s important to keep in mind that penalties and interest do accrue during the payment period, which means the total amount paid can end up being considerably greater than the original amount owed.
In addition to the main types of tax resolution agreements, a professional tax attorney, CPA, or EA can get the IRS to agree to penalty abatement, which is a forgiveness of penalties only, not the original debt.