By Howard Abrams
PBS Tax & Bookkeeping
Q: I owe $15,000 to the IRS for unpaid income taxes. I heard on the radio that this could get settled for 5 or 10 cents on the dollar. Is that true?
A: Yes. It has happened. However, you basically need to be unemployed and have nothing of value; in that case, the IRS has no hope of ever recovering what you owe them.
Q: I do have a job and some value in my truck, so will the IRS settle?
A: That all depends on your monthly income compared to your monthly expenses. You will have to submit financial information via Forms 433A, B or F. The IRS will determine the collectibility of your balance due.
It also is dependent on how much you already owe the IRS. You stated you owe them $15,000, but if you owed $30,000 to $50,000 or more, the final determination might be different.
Q: I would need to hire someone to represent me with the IRS, but the companies that advertise on the radio want $4,000 to $5,000 up front. I don’t have that kind of money. What can I do?
A: Those companies do demand large up-front fees. However, if you listen to their ads they say they have a 70 to 90 percent success rate of offers submitted to the IRS. What percentage of their cases actually get submitted? There are companies and tax preparers out there whose initial and overall fees are a lot less.
Q: So, what should I do?
A: Find a company or tax preparer that will bill you in stages. The “offer in compromise” process is long and tedious and can take up to 18 months. In most cases, a collection program will have to be in place before the offer is submitted.
And be wary of unscrupulous individuals making outrageous claims. Many truckers call us complaining they paid $3,000, $4,000, up to $6,000 up front for the offer in compromise process only to find it failed.
The offer in compromise program does occasionally work. Before you spend thousands only to be disappointed, find a professional who will evaluate and follow the step-by-step process and who will request deposits in stages. You can also do it yourself with the help of the IRS. LL
Everyone’s financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult with your own tax professional.
This article is written by PBS Tax & Bookkeeping Service, a company that has been providing income tax and bookkeeping services to the trucking industry for more than a quarter-century. If you would like further information, please contact PBS at 800-697-5153 or visit their Web site at www.pbstax.com.