The IRS rules are complex and confusing. There is no real handbook that teaches the lay person or tax preparer exactly what to do. Do not try to solve tax problems on your own; you will need to work with someone who understands all the ins and outs and the fine print of exactly how the IRS works.

Each case is unique. John Spurgeon, CPA and tax attorney will get all the facts about your case directly from the IRS, evaluate them, speak directly with the taxing authority, develop a strategy, and walk you through everything, step by step. Our success rate for minimizing tax liabilities is outstanding.

He will also attend audits and deal directly with the IRS on your behalf.  You should stay away from the mass marketers who promise the moon and are staffed by “retired IRS agents.” IRS agents are trained to take your money, not lower your income tax.

Sometimes it is possible to avoid litigation through appeals: we can settle the matter without going to court.

However, your best chance at avoiding litigation is acting fast. Often you are only given a period of 90 days after receiving a notice about the tax controversy. If that period expires without the matter at least in the process of resolution, you may have to pay the outstanding amount the IRS says you owe and then try to get them to reimburse you later. Trying to get the money back can be expensive and time consuming.

If you have a tax controversy or need to solve tax problems, do not hesitate to contact us.

Free Initial Consultation with John Spurgeon

Taxpayers looking to solve tax problems would be wise to engage an experienced CPA and tax attorney.  John Spurgeon is both a CPA and tax attorney in Pasadena, California servicing clients in the San Gabriel Valley and the greater Los Angeles area. John Spurgeon & Associates have the proven knowledge and skill to effectively represent taxpayers when dealing with the IRS tax or the Franchise Tax Board. Please call John at 626-440-9518 for a complimentary initial consultation.

Correct Amount. The very first action to take is to determine if the taxes due are correct. As tax laws are unbelievably complex, it is best to use the services of a CPA or tax attorney. The IRS does make mistakes!

Payment Now. This is the easiest way to deal with the tax collector. Once you have determined that the tax liability is correct, paying them off is clean and simple. Of course if you don’t have the funds on hand this won’t work. However, if you can pay it off right now then you will be done with them.

Quarterly Installments. If you are self employed or otherwise required to make installment payments, be sure to make these in a timely manner. That way you won’t have a huge tax bill at the end of the year and you will avoid penalties and interest.

Installment Agreement. An installment agreement is a negotiated arrangement to pay the tax bill over a period of time. It is similar to paying off a car loan – monthly installments until it is fully paid. You will be charged interest and penalties until the balance is fully paid. For balances under $25,000, the time period for repayment can be up to five years. For balances over $25,000, much more financial disclosure is needed.

Tax Settlement Agreement. A tax settlement agreement, called an Offer-In-Compromise, can be obtain if certain very specific qualifications are made. With this option, the payment (one time or installments) is for less that the taxes owed. The taxpayer must document that the full tax liability is inequitable or a severe economic hardship.

Bankruptcy. A bankruptcy can eliminate an income tax liability but not necessarily employer payroll tax liabilities. This option should be carefully considered with the help of an attorney.

Time Limit. There is a statute of limitations of 10 years for the IRS to collect the taxes due. For unreported taxable income, the statute stays open forever.

Free Initial Consultation with John Spurgeon

Taxpayers looking to solve tax problems would be wise to engage an experienced tax attorney and/or CPA.  John Spurgeon is both a CPA and tax attorney in Pasadena, California servicing clients in the San Gabriel Valley and the greater Los Angeles area. John Spurgeon & Associates have the proven knowledge and skill to effectively represent taxpayers when dealing with the IRS tax or the Franchise Tax Board. Please call 626-440-9518 for a complimentary initial consultation.

1.    Huge agencies. The tax agencies are massive organizations with many highly trained professionals on their side.  Despite any hype to the contrary, they are there to collect taxes—not to provide independent counsel to taxpayers.

2.    Tax return filings. Taxpayers are required to prepare and file their own tax returns. Even if the taxpayer is well educated and informed, the tax codes are vast and complex. Even tax attorneys and CPAs struggle to keep up. Thus trying to prepare your own return is not a good idea unless it is very simple such as a wage earner with no special income or deductions. Even then it would be wise to utilize tax software.

3.    Tax avoidance. Taxpayers have a legal right to arrange their affairs in such a manner to minimize tax liabilities. This is called tax planning or tax avoidance and is highly advisable for taxpayers that are self employed, have a high net worth or otherwise complex tax situations. There are many legal ways to reduce taxes such as charitable donations, tuition fees, savings plans, estate planning, asset depreciation and so on.

4.    Tax evasion. Taxpayers are required by law to file tax returns, not cheat on the accounting and pay taxes due. Failure to do this could result in criminal proceedings for tax evasion.  It would be very wise to engage an experienced tax attorney if the IRS is contemplating this route. Dealing with the CID (criminal investigation division) is no small matter.

5.    Overdue taxes. The IRS (for federal taxes) and the Franchise Tax Board (for California taxes) are basically collection agencies. Once a tax return is filed with tax due, the tax agency collection procedures kick in to full gear. In a very short time, they will take very aggressive action to collect any taxes due including tax liens, bank account liens, asset seizure and wage garnishment. There are a number of remedies such as negotiating installment agreements and offer in compromise.

Free Initial Consultation With John Spurgeon

Taxpayers looking to solve tax problems would be wise to engage an experienced tax attorney and/or CPA.  John Spurgeon is both a CPA and tax attorney in Pasadena, California servicing clients in the San Gabriel Valley and the greater Los Angeles area. John Spurgeon & Associates have the proven knowledge and skill to effectively represent taxpayers when dealing with the IRS tax or the Franchise Tax Board. Please call 626-440-9518 for a complimentary initial consultation.

When A Lien Is Filed

A Notice of Federal Tax Lien is filed after:

• The amount of the tax liability is determined
• A Notice and Demand for Payment has been issued by the IRS
• Full payment is not made within 10 days

The lien is filed against the taxpayer’s assets so that the IRS ensures they get paid as a priority creditor in the event of bankruptcy or sale of assets such as your car or home. A tax lien will likely adversely affect a taxpayer’s credit rating as the lien is a public record.

Releasing A Lien

Once the taxes owing have been paid, the IRS has 30 days to release the tax lien. However, the IRS is a gigantic bureaucracy that does make mistakes—thus they may need to be nudged to get the lien released.

Credit Reporting Agencies

In an ideal world the credit reporting agencies would recognize that the lien had been satisfied and take it off a taxpayer’s credit report. As a practical matter it would be advisable to check your credit report and if needed send them a copy of the Certificate of Release.

Trouble Shooting

In you are in the process of getting a mortgage or otherwise need your credit report cleared up but the lien is overdue being released, then you could contact the Office of the Taxpayer Advocate. This office is a separate branch of the IRS and offers a free service to assist taxpayers in resolving matters with the IRS. Alternatively a tax attorney or CPA could be engaged to resolve the matter.

Free Initial Consultation with John Spurgeon

Taxpayers looking to solve tax problems would be wise to engage an experienced tax attorney and/or CPA. John Spurgeon is both a CPA and tax attorney in Pasadena, California servicing clients in the San Gabriel Valley and the greater Los Angeles area. John Spurgeon & Associates have the proven knowledge and skill to effectively represent taxpayers when dealing with the IRS tax or the Franchise Tax Board. Please call 626-440-9518 for a complimentary initial consultation.

Five Actions That Can Be Taken to Solve Tax Problems:

1. Representation and Negotiation

As a taxpayer you have rights—one of which is to representation by a tax professional such as an attorney specializing in tax matters or a CPA. If you wish, you don’t even have to talk to the IRS for federal income taxes or the Franchise Tax Board for California income taxes. Tax professionals look out for your interests not the tax collectors. Pick one that is an experienced negotiator as many tax matters can be resolved through negotiation rather than protracted litigation.

2. Tax Return Preparation

It is the taxpayer’s responsibility to prepare and file tax returns in a timely fashion. Tax laws are unbelievably complex and ever changing. Getting your tax returns prepared by a tax professional is a wise investment. There are penalties for late filing of tax returns and very severe penalties and even criminal prosecutions if you attempt to avoid paying taxes by not filing returns.

3. Installment Agreements

If there is tax owing when you tax returns are filed, the IRS expects to be paid right away. However, a payment plan can be negotiated so that the tax owing is paid in monthly installments over a period of time—even years depending on the balance owing. Interest and penalties will be added to your tax bill until it is fully paid. The IRS may also file a tax lien which may hurt your credit rating.

4. Offer In Compromise

An offer in compromise (OIC) is a settlement agreement with the IRS that resolves the tax liability for less than the full balance owed. This alternative is only available under certain circumstances and is not a quick solution to avoid paying taxes due. It is generally not an option if the IRS feels that the taxpayer has or could pay the full liability.

5. Tax Levies, Liens and Wage Garnishment

When the IRS feels that the taxpayer is not cooperating with them regarding the payment of past taxes due, they can take more severe collection action including placing liens on your assets such as your bank accounts, home, car or investments. They may also garnishee your wages or salary which will now involve your employer as they will be forced to deduct additional taxes from your pay check and remit it to the government.

Free Initial Consultation with John Spurgeon

Taxpayers looking to solve tax problems would be wise to engage an experienced tax attorney and/or CPA. John Spurgeon is both a CPA and tax attorney in Pasadena, California servicing clients in the San Gabriel Valley and the greater Los Angeles area. John Spurgeon & Associates have the proven knowledge and skill to effectively represent taxpayers when dealing with the IRS tax or the Franchise Tax Board. Please call 626-440-9518 for a complimentary initial consultation.

These are some of the collection actions that the IRS will utilize:

•Telephone calls.They know a lot about you including your telephone number and they are very persistent. Their agents are training to gather information that will help them in their collection process. Do not volunteer information.

•They have sophisticated computer programs that churn out volumes of letters and demands. It is hard to ignore a registered letter.

•Filing a tax lien. If you have received notice that the IRS intents to lien your assets, you must respond in a timely manner.

•Sale of your assets. Once a lien has been obtained, the IRS has free rein to seize and sell your assets. They will firstly go after assets that are quick to convert into cash such as bank accounts, savings accounts, investments, pensions and so on. Then they will work on seizing other assets that can be sold at auction such as cars and real estate.

•The dreaded wage garnishment. The IRS will garnishee your wages which forces your employer into the collection process. While your employer can’t fire you for this, they might classify you as a “risky” employee whose personal finances are out of control.

•Reporting tax liens to credit reporting agencies which could damage your credit rating making it difficult to make a major purchase or get a credit card.

•Show up on your doorstep or at your place of business. This is a tactic that gets people’s attention.

•Installment plan. They will try to get you to pay by installments but keep in mind your payments will firstly go to penalties and interest.

Your Rights

As a taxpayer you have rights:

•The IRS must give you notice of the actions that they plan to take. Do not ignore these notices.

•The IRS may attempt to get you to sign a waiver. Don’t do it as it extends the collection period.

•You have the right to representation by a tax professional typically a tax attorney or CPA. The Taxpayer Bill of Rights and the Internal Revenue Manual mandate that IRS employees respect your right to obtain tax representation. Thus it is not advisable to discuss any tax matters with IRS agents.

Free Initial Consultation With John Spurgeon

Taxpayers looking to solve tax problems would be wise to engage an experienced tax attorney and/or CPA. John Spurgeon is both a CPA and tax attorney in Pasadena, California servicing clients in the San Gabriel Valley and the greater Los Angeles area. John Spurgeon & Associates have the proven knowledge and skill to effectively represent taxpayers when dealing with the IRS tax or the Franchise Tax Board. Please call 626-440-9518 for a complimentary initial consultation.

For each type of tax problem, there is a solution:

• Tax Liens. The IRS for federal taxes or the Franchise Tax Board for state taxes have the power to lien your assets to collect taxes owing. If a taxpayer owes back taxes, the government files a legal claim against the taxpayer’s assets. A tax lien may be placed for personal income taxes, payroll taxes not remitted or corporate income taxes. The lien stays in place until the tax liability is satisfied or the statute of limitations runs out.

• IRS Collection Action. Once the tax liability is in the IRS computer system, they will hound a taxpayer until the taxes, penalties and interest are either:
o Paid in full (government’s first choice)
o A correction reducing the tax liability is obtained. The IRS does make mistakes.
o An installment plan is negotiated
o A reduction in the taxes owing is negotiated

• Non Filers. A non filer is a person who has not filed tax returns when due. Without a resolution agreeable to the IRS, a non filer runs the risk of very serious consequences including criminal prosecution for tax evasion and even jail time. Solving this tax problem requires immediate and effective handling by a tax professional.

• Refund Disputes. The onus is on taxpayers to file their own tax returns and remit any balance owing. However, many taxpayers are eligible for a refund which may be disputed by the IRS. The IRS does respond fairly well when a tax attorney or CPA gets involved.

Taxpayers looking to solve tax problems would be wise to engage an experienced tax attorney and/or CPA. John Spurgeon is both a CPA and tax attorney in Pasadena, California servicing clients in the San Gabriel Valley and the greater Los Angeles area. John Spurgeon & Associates have the proven knowledge and skill to effectively represent taxpayers when dealing with the IRS tax or the Franchise Tax Board. Please call 626-440-9518 for a complimentary initial consultation.

• Penalties

The IRS issues volumes of penalties which get added to your tax bill. However, they end up cancelling a lot of them. A reversal of the penalty can be obtained by showing that the taxpayer acted in good faith.

• Interest

In addition to penalties, the IRS will assess interest on past due taxes. It is commonly thought that getting interest cancelled is near impossible. However there are circumstances where interest can be cancelled such as delays by the IRS itself.

• Tax liens

Tax liens are a collection action taken by the IRS to enforce payment of income taxes due. These should not be ignored as the IRS has wide powers to seize assets such as bank accounts, property and investments. The IRS can also garnishee your wages which will then involve your employers as they will have to deduct tax from your wages or salary then remit it to the IRS. While an employer can’t fire you for this, it will be an embarrassment. There is relief from tax liens.

• Correction Notices

Believe it or not, the IRS makes a lot of mistakes. So if you got a correction notice and you don’t agree with it, it is likely that it was issued in error. Taxpayers must respond within the time limits to avoid even more difficulties. A tax bill whether it is correct or not remains in the IRS system until it is resolved. Doing nothing is not going to resolve it. The IRS will enforce collection in an ever more forceful manner.

• Statute of Limitations

The IRS has ten years after a tax assessment is issued to collect the tax. It is not uncommon for the IRS to attempt collection after that period. The IRS, in most circumstances, has three years to audit your tax return once filed. However, if there is a 25% error in the income reported, this period is extended to six years. Thus it is prudent to retain all accounting records for a minimum of six years.

Taxpayers looking to solve tax problems would be wise to retain an experienced tax debt attorney and/or CPA. John Spurgeon is both a CPA and tax attorney in Pasadena, California servicing clients in the San Gabriel Valley and the greater Los Angeles area. John Spurgeon & Associates have the proven knowledge and skill to effectively represent taxpayers when dealing with the IRS tax or the Franchise Tax Board. Please call 626-440-9518 for a complimentary initial consultation.

If there are any late payments the IRS adds penalties and interest until the tax debt is fully paid. Taxpayers or their legal representative must move quickly to avoid harsh collection actions. The longer the matter is dragged out the more aggressive the IRS collections actions will be. The IRS has a great deal of power given to get the taxes owed collected.

The IRS will firstly go for assets that can be easily grabbed and converted into cash. This includes:

• Bank account levies – one notice is served to the bank, the funds are taken out without further notice or your permission and paid to the IRS.
• Wage garnishment – the IRS sends notices to the taxpayer’s employer who is then obligated to deduct tax from the pay check and remit it to the government. While an employee can’ be fired for this, it is certainly an embarrassment to the taxpayer.
• Asset seizure and sale at auction – this could include automobiles and other assets
• Attack a taxpayers retirement funds, social security or pension

There are a number of solutions available to taxpayers to get the IRS off their back. First and foremost is to determine if the tax liability is correct. If not, this would be addressed resulting in an agreed tax liability. Once the tax debt is agreed with the IRS, a number of different payment options are available.

Don’t sit and wait for your IRS problems to go away—they won’t.

Taxpayers looking to solve their tax problems should consider engaging an experienced tax debt attorney and/or CPA. John Spurgeon is both a CPA and tax attorney in Pasadena, California servicing clients in the San Gabriel Valley and the greater Los Angeles area. John Spurgeon & Associates have the proven knowledge and skill to effectively represent taxpayers when dealing with the IRS tax or the Franchise Tax Board. Please call 626-440-9518 for a complimentary initial consultation.

1. Communication. The taxpayer or a tax professional representing the taxpayer must be in good communication with IRS otherwise collection actions just get more aggressive including asset seizure, bank account liens and wage garnishments.

2. Amount Due. First and foremost the amount of the tax liability needs to be determined and agreed with the IRS and/or the Franchise Tax Board for California taxes. The IRS depends on the taxpayer for filing tax returns and paying the tax due. As a tax attorney and CPA I can tell you that the IRS does make mistakes so the tax bills you are getting are not necessarily correct. Also the original tax return could be incorrect.

3. Installment Agreement. This is a negotiated payment plan based on the amount of tax owing. Essentially a good faith payment plan over time will generally be accepted. If the tax debt to the IRS is greater than $25,000, then additional documentation will need to be provided to the IRS before they will agree to a payment plan. Once the plan is agreed to, the taxpayer will be required to keep all current tax return filings and payments up-to-date.

4. Offer In Compromise. (OIC) This a negotiated settlement whereby the tax debts are settled for less than the taxpayer owes. Normally this requires extenuating circumstances such a job loss, divorce or death of a family member. Once the settlement is agreed to with the IRS, the tax debt is paid off in a lump sum or short term payment program.

5. Bankruptcy Filing. Your tax debts can be discharged under a bankruptcy petition to the court. This option should be carefully considered as it has severe implications including ruining your credit rating.

6. Not Currently Collectible. This is a program whereby the IRS agrees to suspend collections at this time as the taxpayer is unable to pay even an installment plan. However, if the financial circumstances of the taxpayer change, the IRS can resume normal collection action.

7. Statute Of Limitations. Generally the IRS has 10 years to collect from the date of assessment. If collection is not made in that time, the tax debt could vanish.

Taxpayers looking for effective tax debts solutions should consider engaging an experienced tax debt attorney and/or CPA to solve the tax problem. John Spurgeon is both a CPA and tax attorney in Pasadena, California servicing clients in the San Gabriel Valley and the greater Los Angeles area. John Spurgeon & Associates have the proven knowledge and skill to effectively represent taxpayers when dealing with the IRS tax or the Franchise Tax Board. Please call 626-440-9518 for a complimentary initial consultation.