Thursday, May 19, 2011


If the victims of the many “pennies on the dollar” tax debt resolution scams, who apparently have paid millions to firms that make promises they cannot keep - firms who seem to have in many cases just took the money and ran - had instead given the money to the Internal Revenue Service as partial payment of the outstanding debt, both the taxpayers and the Internal Revenue Service (and therefore the government) would have both been better off.

And what if the payments had been made as part of an installment agreement offered under a federal tax amnesty program, which would totally eliminate accrued penalties and substantially reduce accrued interest? In many cases what makes tax debt unmanageable is the excessive accumulation of penalties and interest, which can end up being more than the actual outstanding tax liability. Under such a program actual tax debt would not be eliminated, and the government would collect that to which it is entitled at a minimal expense.

For those who are faced with tax debt, and tempted to throw their money at these scam artists, what the ads refer to is the IRS Offer In Compromise program. Ask your tax preparer about this program. He/she will be able to either help you submit an offer or refer you to a legitimate and responsible tax professional who can – for a substantially lower fee then what you would pay to the scam firms promising, but ultimately unable to deliver, “pennies on the dollar” settlements.



Peter Reilly said...

It is amazing what a field collection representation is and what can be accomplished. I somethimes think the payment of tax really is optional for people who choose to live beyond their means and not accumulate anything. Every once in a while they end up visiting a federal facility but as I read the cases I can't always tell what makes IRS think you are a criminal rather than a deadbeat

Anthony said...

One problem is that most of the people faced with these debts either don't have a tax preparer, or have a tax preparer they should stay far, far, away from.

Anyway, if you owe more than $25,000 and can't pay it immediately, or if you can't reasonably pay your IRS debt off, with interest and penalties, within 5 years, then I'd strongly recommend dealing someone enrolled to practice before the IRS. That means an Enrolled Agent, CPA, or lawyer. Offers in compromise and nonstandard installment agreements invariably involve back and forth negotiations where the lack of a power of attorney is a severe detriment.