Help Back Taxes

December 15, 2013 | Late Filed Returns

Help Back Taxes

Help back Taxes That is a common call for help that we hear as New York Tax Attorneys & CPA’s. In most cases the problem is compounded with a threat of an income tax levy by the IRS, or an income execution by New York State. In some cases once the tax returns are prepared no taxes are owed, but in most cases taxes are owed a either a tax payment plan has to be established, or an offer in compromise needs to be submitted.

Elsewhere on this website, we discuss in length payment plans and IRS offers in compromise. Here, I would like to give you two real life stories to show how the rules work and their benefits in real life situations.

1) Help back taxes example #1. In my first example of client called and said she owned her own business and was arrested for not filing her New York State tax returns for 2000 to 2007. The income tax liability under the tax laws was very substantial both for the IRS federal taxes ($1.2 million) and New York State taxes ($75,000). Her current income is about $110,000 a year, and she lives in the New York City area and can afford to pay $1000 a month toward the tax debt. Based upon these facts, a payment plan would not be an ideal solution since my client would be paying off the tax liability over a 10 year time period (or more), since that is the IRS collection period under the statute of limitation rules. The IRS may even refuse the $1000 a month request, and demand more. Assuming the IRS agrees to $1000 a month, every few years under a payment plan where the full debt can not be paid off in 10 years, the IRS will ask for updated financial information and try to get more per month. Not ideal, but at least the monthly payment is affordable. They IRS calls this a part pay installment agreement. However, not an ideal situation for either the taxpayer of the IRS. In this type of case an IRS offer in compromise would be the best way to settle this type of tax problem. Since the State of New York filed criminal charges, a payment plan with them would be the best situation to resolve the criminal issue and use the $1000 a month toward that debt.

2) Help back taxes example #2. In my second example of client was an employee but claimed very high withholding tax deductions so little state or federal taxes were taken from her paycheck. She made about $60,000 a year and owed about the same. She was very ill, and her income was uncertain. In this case we convinced the IRS that this taxpayer was not collectible, and the debt should not be in active collections. This allowed my client to pay nothing toward the tax debt and use all of her money to live on. Once her illness was resolved, she felt more comfortable at that time to start making monthly tax payments and then submit an offer in compromise to resolve the tax debt.

When a client calls and requests help with their back taxes, a request for help back taxes can lead to solution to their tax issues that will make a substantial difference in their lives. As a NY tax attorney we are here to help you with your tax problem.

By: Timothy S. Hart

Attorney Timothy Hart

Timothy S Hart, the founding partner of the tax law firm of Timothy S. Hart Law Group, P.C. is both a New York Tax Lawyer & Certified Public Accountant. His area of expertise includes innovative solutions to solve your Internal Revenue Service and New York State tax problems, including tax settlements through the Federal and New York State offer in compromise programs, filing unfiled tax returns, voluntary disclosures, tax audits, and criminal investigations. [ Attorney Bio ]