New Year - Second Chance to Come Clean on Taxes I remember when he came into my office about this time last year.
Let’s call him Frank.
He’d run a successful business in the region for nearly a decade. But then suddenly, two things happened, tragically and simultaneously — his business hit hard times and his wife was suffering from medical problems that, while not life-threatening, were costly.
Nearly overnight, a successful businessman became a man who was worrying about how to pay the next month’s mortgage bill.
And then was more: Poor tax advice a few years back had finally caught up to Frank. The IRS had a large bill hanging over his head, and Frank knew he was in no position to pay it.
So you can imagine his state when he came to my office. A cold sweat, his hands a little clammy, Frank wondered if he’d ever get his financial life back together.
“What can I do?” he asked me. “There’s no way I can pay this tax bill.”
I looked at him across the table. He had the same look I’ve seen on dozens of other clients — scared, unsure, but a little bit hopeful. And I was about to bolster his hope.
“Don’t worry, Frank,” I told him. “You have options. We’ll take care of this.”
And that’s the message I want to send you, if you owe back taxes or otherwise need to come clean with the IRS.
Now that the New Year is here, there’s never been a better time to come forward and address your tax problems. The truth is — and this continues to amaze me — few people realize that they have many options available to them if they find themselves in tax trouble. All you need is some assistance from a qualified tax professional.
Let’s say, for example, you’re in Frank’s position — major life and business changes have drastically affected your financial profile and you now owe more to the IRS than you can pay. In this case, you may qualify for the Offer in Compromise.
Realizing that it can be more effective to be flexible rather than bare-knuckled in collecting taxes, the IRS makes available the Offer in Compromise for taxpayers who want to come clean, who want to pay their back taxes, but who are just financially unable to do so, even if given time. The Offer in Compromise can reduce tax debt by a significant amount!
Many taxpayers assume the stereotype of the IRS is true: If you owe back taxes, the taxman will hunt you to the grave until you pay every single penny owed.
Of course, that’s not true. A qualified tax professional can help guide you through the sometimes-complicated process of coming into compliance with the IRS. There’s no need to lose your home, or pull your children out of school.
As I told Frank, you have options. Speaking of whom, it’s been months since Frank settled his tax debt. He’s never been happier.
That could be you this year!
---David S. Nelson, CPA