Tax Resolution: Informing the Masses

MKA Tax Resolution Specialists - Helping Taxpayers end their IRS problem

To provide the best possible representation and resolution services for troubled taxpayers in Ventura County and across the country,  MKA Tax Resolution Specialists takes the time to fastidiously research your tax situation and the specific circumstances of your life to negotiate the best possible resolution for your lingering tax problem!

Ventura Tax Representation Services by MKA Tax Resolution Specialists

• Financial Analysis and Investigation of Liability
• Thoroughly Researched Installment Agreements
• Currently Not Collectible status negotiation 
• Back Taxes and Non-Filer Issues
• Offer in Compromise Negotiation
• Lien Releases, Discharges, Subordinations, and Withdrawls
• Levy Prevention and Releases
• Employment Tax Issues and the Trust Fund Recovery Penalty
• Innocent Spouse Strategies 
• Penalty Abatements

Check out the information below to find out more specifics about the tax resolution process and the different ways to reduce your tax debt. 

The Resolution Process

Tax resolution typically has three phases: analysis, compliance and resolution. First, we have to understand your current tax situation as well as your financial circumstances to decipher what strategies to employ to bring an end to your tax issues. This involves pulling your transcripts from the IRS database and looking at your income, expenses, and equity in assets. The IRS isn’t going to cut any deals until you are current and compliant. This means we will go back and file all the needed tax returns for the last six years. Don’t start to worry though, our office has all the infrastructure in place to rebuild this information even if you think you don’t have records! Once you are compliant we can begin negotiating a settlement, abate unwarranted penalties and rid you of liens and levies. These sorts of cases can take anywhere from a few months to multiple years depending on the circumstances. However, don’t fret because you will never have to talk directly to an IRS agent and the only work you have to do is assist me in collecting information.

Financial Analysis

When a tax debt exists, the IRS wants to know where a taxpayer’s equity in assets are and they utilize many internal and external sources to discover them. If you owe the federal government money, they want to know any and all means a taxpayer can pay the debt. Honest disclosure of this financial information and ones income and expenses, when required, will prevent the likelihood of a criminal investigation. Luckily, there are many assets that qualify for exemption depending on a taxpayer’s unique situation. Furthermore, while there is a set of allowable expenses to reduce the amount of money the IRS can reasonably collect, the IRS manual allows for any expense when a skilled tax representative can show its necessity! In many situations, thorough financial analysis and planning can be the difference between a burdensome installment agreement and an offer in compromise.   

Tax Liens, Levies and Seizures

Tax liens and levies are easily confused, but very different things. A federal tax lien is when the federal government lays claim to all the assets of a taxpayer. Basically, the IRS is using the assets of a taxpayer as collateral for the debt they have, thus they can’t legally sell any of their assets without the consent of the government. Liens also can have significant effects on your credit score and your ability to get a loan. A levy is a liquid seizure of assets of a delinquent taxpayer. Most commonly, they come in the form of a bank levy, where the money comes out of the taxpayer’s bank account or a wage levy where it directly comes out of the taxpayers paycheck. Liens and levies are both much more common than an actual seizure, which is when the IRS takes a non-liquid asset like a car or house. All of these are categorized as enforced collection activity and can be particularly detrimental to a taxpayer. Knowledge or IRS laws and procedures can significantly reduce the likelihood of a lien filing or levy and get them released or even completely removed from a taxpayer’s record.

Offers in Compromise

Offers in compromise are contracts between the IRS and a taxpayer to settle their debt for less than the amount owed. They are most likely the best deal a taxpayer can get because they have the potential to rid a taxpayer of almost all their debt given the right situation. However, a taxpayer has to qualify for an offer, which is difficult in itself, and getting one accepted by the IRS is even trickier. The premise behind an offer is that given a taxpayer’s financial situation they can only pay a certain amount before the time runs out in which the IRS can collect the tax. Offers in Compromise require the most financial disclosure to the IRS because they want to guarantee you can only pay what you say and not any more. In addition, they usually need to be paid in either 5 months or 2 years and require the taxpayer to maintain compliance for the next 5 years. A comprehensive, detailed and appropriately annotated Offer in Compromise that considers all obstacles the IRS might contemplate could be a life changer.

Currrent and Compliant

It should make sense that the IRS wants you to file all your tax returns if they are going to negotiate a settlement. Almost every resolution pathway requires that a taxpayer have at minimum at least 6 years of tax returns filed to be considered. It might seem like a daunting and arduous process to go back in time and file old tax returns, especially when records are incomplete or nonexistent. Luckily, our talented and capable team of bookkeepers and tax professionals have years of experience rebuilding this information and getting taxpayers on track.

Installment Agreements

Most people end up in one form or another of an installment agreement. These are monthly payment plans set up to settle tax debt over time. The amount and type of debt a taxpayer has dictates what type of installment agreement they qualify for. Additionally, certain situations require no financial disclosure to the IRS while others require full disclosure. Occasionally, a taxpayer might qualify for a Partial Pay Installment Agreement, which, like an Offer in Compromise, settles your debt for less than you owe. But, unlike an Offer in Compromise, the debt is paid in monthly installments until the collection statute of limitations ends. Often with some careful financial planning and appropriate justification of necessary expenses, installment agreements can be quite harmless and lead to the release of liens and levies.    

Trust Fund Recovery Penalty

Trust funds taxes are the employee taxes withheld by an employer that they are required to pay to the government on behalf of the employee. When an employer fails to pay these monies to the IRS, it will trigger the assessment of the Trust Fund Recovery Penalty. The TFRP, for short, is money that isn’t actually the employers to keep, because it was never theirs in the first place. In these cases, the IRS will actually also assign that tax debt to one or more responsible parties and the employer that did not pay the trust funds in the first place. The IRS is particularly vigilant and aggressive when it comes to trust fund taxes and, in fact, they are not dischargeable in bankruptcy. Prior to assessing the tax to a culpable individual, there is a lengthy interview process to decipher who is actually to blame for not paying the trust fund taxes. If your business is behind on its federal tax deposits or the IRS has requested an interview to assess the TRFP, contact us immediately so we can build a strong case in your defense.

Penalty Abatement

The IRS understands, often begrudgingly, that circumstances come up in a taxpayer’s life that are out of their control and any penalty due to a tax delinquency as a result of these circumstances can be abated. These situations can include substance abuse, unforeseen health problems, economic hardship, natural disaster, or even IRS error. It is often the case that penalty accruals in themselves become a significant portion of the total tax debt and many taxpayers could actually pay their original debt if the penalties were abated. However, understanding how to justify penalty abatements and provide the necessary documentation of these events can be tricky. An able Enrolled Agent can even remove first time penalties in some situations and possibly negotiate penalty removal to promote payment during the resolution process, which can save a lot of valuable taxpayer money!

Currently Not Collectible

This designation is assigned to people the IRS cannot legally collect taxes from because of the financial nature of a taxpayer. When collecting the tax impedes the health and welfare of the family, the production of income, or would cause some other financial hardship the IRS will assign a taxpayer to currently not collectible status. At that point in time the IRS will not make any attempt to collect the past due taxes. Typically, every year or two the IRS will pick up the case again and assess if a taxpayer’s ability to pay has changed at which point they might remove them from non-collectible status and attempt to collect again. Besides not paying anything, the collection statute of limitations does not stop under this designation making the chances of tax collection becoming unenforceable that much greater. If a taxpayer’s financial circumstances aren’t likely to change anytime soon and they are barely meeting their living expenses, currently not collectible can be a savour.

Innocent Spouses

A situation where one spouse is relieved of paying all or part of the tax liability due to various circumstances. In some cases, such as when one spouse is self-employed, the other spouse has no knowledge or fault of an understatement of tax. There are a list of factors that the IRS uses to determine if someone qualifies for any one of the three Innocent Spouse designations. Court cases, IRS procedural guidelines and the Internal Revenue Code are all useful tools to classify someone as an innocent spouse. This can be a powerful strategy to employ during resolutions and can completely change how we go about ridding someone of their tax problem.