by Don H. Campbell, J.D.
Notice of an audit or demand for payment from the Internal Revenue Service makes many people numb with fear. There are, however, options available with the help of an attorney for dealing with the IRS which may be well worth the effort and expense. The first option is filing bankruptcy. Upon filing, all collection efforts will stop by the IRS and any other creditors. In some instances, personal taxes can be discharged; but in the very least, you are given the time and opportunity to work out a practical payment plan with the IRS.
The second option involves making an "offer in compromise" of a specific amount less than that demanded by the IRS for payment. For the IRS to accept an offer in compromise, there must be (1) doubt as to whether the amount claimed by the IRS is 100% correct, (2) reasonable concern that there are sufficient financial resources available to pay the amount demanded by the IRS, or (3) a showing of extreme financial hardship resulting from illness or other personal circumstances. If you meet one or more of these requirements, a Form 656 must be submitted with various documents justifying why the IRS should accept less money. When successful, the reduction in the taxes, penalties and interest can be significant.
With a qualified professional to assist you, another option may be to file amended returns to correct previous errors and possibly wipe out interest or penalties claimed by the IRS. Even for those individuals who have failed to file tax returns, it is not too late to deal with the IRS in an effective manner, so long as you have competent representation.
Therefore, whatever your tax dilemma, help is available. For more information, you should visit an attorney experienced in working with the IRS. For a referral, contact your local lawyer, the State Bar of Texas or your CPA.
If you would like to speak to one of the attorneys at Mounger and Campbell, LLC about this or any other legal topic, you may ask us to contact you or call 512-847-1308.