Today on Tax Hacker Tuesday, Tim Berry and Bernie Garland talk solving tax problems and IRS collections. Learn what to do if the IRS takes your account, the 3-part problem solving process Tim and Bernie use for clients with tax problems, and the 3 options their clients have at the end of the appointment.
What You Will Learn About Solving Tax Problems and IRS Collections:
- What to do if the IRS takes your account
- The 3-part problem solving process for tax problems
- What to do if you haven’t filed taxes for 3-4 years
- Your 3 options once your tax returns are prepared
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Speaker 1: This is Theriault Media.
Did you know that up to 50% of your lifetime income will be wiped out by taxes? What if you could stop this madness? Isn’t it about time you play on a level playing field with the wealthiest 1%?
Now, you can. Tim Berry, attorney-at-law, shares here each and every week current tactics and strategies that anyone can implement to hack the tax code. Protect your assets and keep what’s rightfully yours. It’s time for Tax Hacker Tuesday.
Bernie Garland: And this is Timothy B. Berry.
Tim Berry: Hi everyone. Bernie, can I ask you a question?
Bernie: You can ask me any … Ask two or three, they’re free.
Tim: So, yesterday had somebody call up and they said, “Hey, IRS, FTB, whoever just levied my wages. They just took my account, they just had a tax problem.” You are the tax problem expert, what do you do?
Bernie: Well, first thing is we ask the client to come in and sit down, and say, “Okay, did you file your tax returns? Or did you not file a tax returns and the IRS, or Franchise Tax Board file what is called a Substitute Return.” We need to know those facts, and we need to know for what years that these taxes are owed for. That’s the first thing we need to do when we need to get the facts from the client.
Tim: Got it. And once you get those facts, what magic can you work?
Bernie: Well, normally … And I hate to say this, but normally if a person has a tax problem they probably haven’t filed the last three or four years. And we need to sit down and get them into compliance, that’s a big buzz word for the IRS. So, what we do is I sit down and we get the information from the client, and we sit there saying, “Okay, Mr. and Mrs. Client you are what we call a three part problem solving process so we can get this levy released.”
Now, the first part of the problem solving process is we send for under The Freedom of Information Act everything the IRS, and Franchise Tax Board knows about you so we can figure out timeline so we can now go to the next step. The next step is we gather information from The Freedom of Information Act, as well as, the client so that we can prepare the tax returns that haven’t been prepared. And if the IRS or Franchise Tax Board did a substitute return, we will do the tax returns based on the information that we got from the government and also the client.
Bernie: We prepare the tax returns, then we sit down with the client and say, “All right. Look at it, this is what we’ve come with, this is the amount of money you owe. Or by the way, the substitute for return they did for you that you owe a gazillion dollars where we say you only owe this amount of money.” So, we do certain remedies at that point in time.
Now, because [inaudible 00:02:41] constraints I can’t go into detailed explanation of what the person’s options are in detail. But, what I want to do is take time with you to let you know you do have options, and let’s go through the options and then if you want any additional information you can always contact us personally.
First option is, all right, now they owe this amount of money and we file the tax returns, and we may file the original tax return that the government did a substitute tax return on, we file it with what they call the Audit Reconsideration Department. Now, you owe this amount of money, here’s your first option; don’t do anything and then they’ll do it to you.
Number two, beg, borrow, steal, I don’t care where you get the money from pay the taxes. Number three, set up an installment agreement. Now, that’s easier said than done but it can be down, and by the way there’s a special installment agreement that if you owe under 10,000, if you owe under 25,000 you can dictate to the IRS what you want to pay.
The next option is, disappear for 10 years then you don’t owe it anymore to the IRS; 20 years for Franchise Tax Board. The next option is something called an Offer in Compromise, “Hey government, I owe you this amount of money how about taking this amount of money and let’s call it even.” The next option is a Bankruptcy, a tax bankruptcy. Yes, you can file bankruptcy on taxes.
The next option is a Chapter 13 Reorganization, that’s if you don’t qualify for the tax bankruptcy Chapter 7, you can set up a payment schedule with a bankruptcy court for five years. The next option is something called Currently Non-collectible, you know what currently non-collectible is, yes. It is a special code section that the IRS has that is a statue, it’s a law that if you take your gross income, minus your deductions, and you don’t have any money left over, the IRS has to put you into an uncollectible category and leave you alone until you start making some big money.
So, that’s the process when people have tax problems you come in, we send for information, we prepare the tax returns that are necessary, and then we go over in detail all these different options that you have.
Speaker 1: That’s it for today as we dream of a tax system that works just for you, but until then you have Tim Barry. See you next Tuesday for another episode of Tax Hacker Tuesday.