John Bullis: IRS can sometimes reduce taxes owed
October 16, 2012
If taxes (interest and penalties) are owed to Internal Revenue Services, in certain instances, the IRS will reduce the amount owed.
An IRS official recently said, IRS is accepting more “offers in compromise.”
An “offer in compromise” is a request to reduce the amount owed when “reasonable cause” is present and the required forms and information are sent to IRS.
You may have seen some TV advertisements that promise big reductions in almost every case. That’s not really happening that often.
Some situations, however, do allow IRS to agree to accept less than previous IRS Notices claimed.
In 2010, IRS accepted 27 percent of the requests of offers in compromise.
In 2011, IRS accepted about 34 percent of the requests.
In 2012, IRS reports an 80 percent increase in accepted offers-about 61 percent.
The IRS collection process is usually divided into three phases. First is the notice phase with between one to four notices sent to individuals and one or two notices sent to businesses.
The second phase is when the automated collection service sends notices of Intent to Levy and Intent to Lien on property of the taxpayer.
The third phase is when IRS revenue officers try to collect by issuing summons and/or seizing assets. The Reno IRS collection or revenue officers are not hard to deal with.
The best opportunity for taxpayers to minimize interest and penalties, and the time and trouble of dealing with the matter, is during the first phase.
All IRS Notices should be responded to in a quick and complete manner.
IRS is fairly easy to deal with on balances owed. An Installment Payment Agreement that provides for monthly payments can be established, many times just with a telephone call. IRS wants to know the monthly income and expenses so it can see if the proposed monthly payment is reasonable, but that’s not a big problem.
If you are confronted by an IRS notice, it is best to respond and work out a payment plan that you can afford. If something happens so you can’t make a particular monthly payment, you can call IRS and explain. IRS will frequently say “OK, skip this month.”
Did you hear? “You can never cross the ocean unless you have the courage to lose sight of the shore,” by Christopher Columbus.
• John Bullis is a certified public accountant, personal financial specialist and certified senior adviser serving Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs, LLC.