IRS Negotiation Help Denver CO

How to Handle Tax Problems

Getting into Trouble with The IRS

It is estimated that there is a $350 billion dollar gap between what the IRS expects to collect and what it actually collects each year.

The problems can run from the mundane - small discreprencies between income reported on a 1099 form and what is listed on the tax return. This is usually handled by mail at little or no expense to the taxpayer.

From there, things can escalate quickly.

Common problems are under-reporting of income, overstating deductions, trying to hide money overseas and outright fraud.

The actor Wesley Snipes is a prime example of the latter. He was recently sentenced to three years in prision for failing to file income taxes since 1998. Although this case is under appeal, it illustrates a favored IRS method - vigorously and publicly prosecuting public figures with the objective of putting the fear of god - aka THE IRS - into all other taxpayers.

Remember that although the IRS is generally limited on how far back it can go to collect taxes, if fraud can be proved there is no statute of limitations.

Fraud cases are relatively rare, but the IRS has an 85% conviction rate.

In spite of this lots of people like to take the gamble and see if they can get away with some blatantly illegal schemes.

Since these are generally the better to do among us, the IRS is happy to catch them whenever it can.

Dealing with the IRS

The more trouble you're in, the bigger the gun you should hire to protect you.

Audits

The IRS audits less people than every before - something like 1%. It politically unpopular.

But the IRS has lots of tools at its disposal to detect possible errors in tax returns.

If you are audited, you can represent yourself. Try to collect or reconstruct all your records. Act in a professional and courteous manner with the auditor - these people have a lot of discretion and can choose to overlook minor problems if everything else looks good.

If you handle this correctly you should be able to reach a reasonable compromise and put the problem behind you. Do be careful about making any damaging admissions to the auditor - blame all your problems on neglect or ignorance.

If you are not happy with how you were treated, you can also ask for a review by a more senior agent. But don't try to push your luck. While these agents have the discretion to overlook problems or compromise you tax bill, they also have the discretion to ...