Today TaxMama hears from Judy in the TaxQuips Forum who needs help. “I am struggling to maintain my household, have four years of back taxes to file and settle and my home was just foreclosed on. I was contacted by someone claiming that they can help negotiate a reduction in tax liability and stop any further collection by the IRS. They wanted $3,500 for this service. I went on the Internet and found other so-called businesses advertising the same service. Can anyone help with these negotiations with the IRS and how can I know whom to trust?”
You’ve been through hell. But you have good instincts.
Avoid all those predators who buy the IRS lien lists and contact you. True, some of them might actually take care of you. However, many of them will just take your money and make it worse.
You have some options.
1) Try to do it yourself.
A. You can prepare your own prior year tax returns:
a) The forms for all years are available at the IRS website. Your state may have a similar page.
b) You can find prior year software online relatively cheaply – see the links in this TaxQuips.
c) You will file on paper. You cannot file prior year returns electronically.
B. You can handle your own negotiations, if you only knew how, couldn’t you?
a) I’ve taught some courses to help tax professionals learn how to deal with IRS balances due. For about the price of one hour’s consultation with a tax debt firm, you can download several of the self-study or resource courses and walk through the steps to do this for yourself. Or just pick the one relevant course for under $50.
b) Even when you hire a tax professional, you still need to prepare most of the paperwork used in the process. It doesn’t hurt to learn what to do. It could save you hours of fees if you do it right in the first place.
c) Believe me on this, though it’s hard to believe. If you learn to do this yourself, you will be stronger and better able to deal with the other creditors and crises facing you right now. In fact, this may open up a whole new lucrative career option for you.
3) Find a reputable tax professional
a) You can find enrolled agents at the National Association of Enrolled Agents (NAEA) website. Search for ‘representation’ experience or for an NTPI Fellow. The National Tax Practice Institute specializes in training tax professionals in IRS tax representation skills.
b) You can find CPAs at the AICPA website. Unfortunately, the AICPA does not list a specialization in taxation or tax representation, so finding the right CPA won’t be all that easy.
c) Ask people you know if they used someone they trust. You’d be surprised at how many people you know will admit to having gotten into tax trouble at least once in their lives.
Incidentally, if you’re still IN your home, stay there. Filing bankruptcy may help you stay in your home for another several months – or even a year, if you have a smart attorney. It won’t take care of the tax problem at all – but it may give you some breathing space – and may even help you keep your home.
Just know one thing. As bad as everything is right now, you WILL get through this. Your children need you to be strong and clear-headed. You can collapse after the crisis is over – which may mean putting off that nervous breakdown for a couple of years. OK?
And remember, you can find answers to all kinds of questions about tax disasters, and other tax issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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