Income tax resolution companies

[deadshank 24653]

Do any of you know of or had experience with the income tax resolution service companies?

I have a long-time employee of mine that has worked his way into quite a pickle, then froze up with fear and didn't file or pay his taxes for a 3 - 4 years (I know, bad move).   He is a fantastic employee, not well educated but fiercly loyal and very good at what he does.  I am compelled to help him get through this.

How do the income tax resolution services work?  Is it a scam?  Do they take a percentage of what they save you?  Do they play hardball with "what you now owe them".

 

[happyfunball 481]

21 minutes ago, deadshank said:

Do any of you know of or had experience with the income tax resolution service companies?

I have a long-time employee of mine that has worked his way into quite a pickle, then froze up with fear and didn't file or pay his taxes for a 3 - 4 years (I know, bad move).   He is a fantastic employee, not well educated but fiercly loyal and very good at what he does.  I am compelled to help him get through this.

How do the income tax resolution services work?  Is it a scam?  Do they take a percentage of what they save you?  Do they play hardball with "what you now owe them".

 

Usually a scam is my understanding but not necessarily all of them. I would hire a good accountant / lawyer and prepare his anus.

[deadshank 24653]

2 minutes ago, happyfunball said:

Usually a scam is my understanding but not necessarily all of them. I would hire a good accountant / lawyer and prepare his anus.

That is what I was thinking.  Poor bastard done goofed.

[TwiceHorn 31495]

I think the basic way those companies go about it is an "offer in compromise."  You can find the IRS docs yourself, but you file sworn financial statements showing that you have no assets (the problem is that what you do itemize is subject to seizure and there are few constraints on the IRS seizing property and bank accounts)  They will put you on a payment plan, possibly even reducing the total amount owed to something resembling your liquidation value.  Generally speaking, as long as you keep paying on that installment agreement, they stay off your ass.

https://www.irs.gov/payments/offer-in-compromise

An experienced pro, whether a lawyer or CPA/Enrolled Agent, is pretty important from what I understand to "talk to the right people" and "in the right way" to keep things on the rails.

Edited September 19, 2018 by TwiceHorn

[RollLeft 5045]

They have no more knowledge or ability to resolve things than most firms.  That said most firms don't want that client, didn't pay IRS probably can't pay us, hence Tax Resolution Firms.  Its merely a niche firm, many times shady with good marketing, looking for a desperate niche client.  Best thing to do is to find someone willing to take him on who will charge a fair price while setting proper expectations of outcome.  Also depending on how messy it is determines a tax attorney may be best.  

[TwiceHorn 31495]

3 minutes ago, RollLeft said:

They have no more knowledge or ability to resolve things than most firms.  That said most firms don't want that client, didn't pay IRS probably can't pay us, hence Tax Resolution Firms.  Its merely a niche firm, many times shady with good marketing, looking for a desperate niche client.  Best thing to do is to find someone willing to take him on who will charge a fair price while setting proper expectations of outcome.  Also depending on how messy it is determines a tax attorney may be best.  

Extremely valid point on the fees.  Like bankruptcy firms, but without the Chapter 13 payment plan.

[Bernard 879]

42 minutes ago, deadshank said:

I have a long-time employee of mine that has worked his way into quite a pickle, then froze up with fear and didn't file or pay his taxes for a 3 - 4 years (I know, bad move).

Aren't you, the employer supposed to be withholding his taxes? I understand not filing, but how does one not pay taxes unless self employed.

One more thing: fuck tax cheats. Pay what you owe.

Bernard

[RollLeft 5045]

Do you even construction industry bro;)?  

1099 sub i'm sure.

[deadshank 24653]

Just now, Bernard said:

Aren't you, the employer supposed to be withholding his taxes? I understand not filing, but how does one not pay taxes unless self employed.

One more thing: fuck tax cheats. Pay what you owe.

Bernard

Yes.  I have been withholding and paying his withholding to the Treasury; all according to Hoyle.  

He has not been filing or paying any additional taxes due.  

[deadshank 24653]

Just now, RollLeft said:

Do you even construction industry bro;)?  

1099 sub i'm sure.

He is a salaried employee, covered by WC, all on the books, nothing to hide.

[RollLeft 5045]

That should make it easier Shank.  

[Bernard 879]

20 minutes ago, deadshank said:

Yes.  I have been withholding and paying his withholding to the Treasury; all according to Hoyle.  

He has not been filing or paying any additional taxes due.  

First step is to sit down and fill out his missing tax returns. Find out how much he really owes. If you've been withholding the right amounts, how far off can they be? This is easy DIY. No need to call a pro yet.

Bernard

[woohorn 1131]

He is a salaried employee, covered by WC, all on the books, nothing to hide.

Dude probably due refunds if not for the failure to file penalties. Prolly not too bad off.

The advertised tax resolution cos are pretty shady. Google that taxmasters fraud in Houston for ex deets.

[NeverMarryAStripper 21907]

No real failure to file penalties if he doesn't owe since the penalty is calculated as a percentage of tax owed, except for some small minimum.  However, it used to be that you could lose credit for any withholding if you didn't file within a certain number of years to claim the withholding on a return on a return.  They might have changed this though.  He should at least go ahead and prepare all of his returns so he at least knows his situation.

Edited September 19, 2018 by NeverMarryAStripper

[deadshank 24653]

UPDATE:

I'm getting the rest of the story now. 

He and his wife have filed separately over the years.  Her filings have been meriting a refund.  His papework generates him owing to the IRS.  So, in his bad logic, he decided not to file and get as much money back as possible.  WTH?  Now the Man has come calling and has him over a barrell.  Looks like he owes a smooth $13K.

He is working on the offer in compromise angle and should have some work today or tomorrow. 

Will keep y'all posted.  Hoping for the best.

[Bernard 879]

$13k is nothing, especially with two incomes.  He just needs to file his overdue returns, ask for a payment plan, and start making payments. As long as he's making his monthly payment, IRS will back off on collection efforts. If he continues to ignore the IRS, they are going to freeze his (and/or his wife's) bank accounts. I've seen it happen to people. It's not pretty, although I don't pity tax cheats. 

Bernard

Edited September 19, 2018 by Bernard
Typo

[woohorn 1131]

MFS has the highest rates, so he'll want to end up amending her returns and filing jointly if he wants to save money.

Must be some background why they filed separately though.

[TwiceHorn 31495]

1 hour ago, Bernard said:

$13k is nothing, especially with two incomes.  He just needs to file his overdue returns, ask for a payment plan, and start making payments. As long as he's making his monthly payment, IRS will back off on collection efforts. If he continues to ignore the IRS, they are going to freeze his (and/or his wife's) bank accounts. I've seen it happen to people. It's not pretty, although I don't pity tax cheats. 

Bernard

This is consistent with what I know.  I am not a tax practitioner in any shape or form, but in the course of representing businesses and "businessmen," have been in proximity to all manner of bad financial decisions and their solutions.

[Brew 3049]

As Bernard has said, file the returns, work out a payment plan, and have him pay the tax. IRS will finance it for a number of years. Don’t pay one of the bullshit tax resolution companies. They ask for a big up front payment and any legitimate accountant would do the work for a fraction of what they charge.

if there was no reason to file MFS, they can amend the last 3-4 years and fix those which may make a sizeable difference.

[Reagan1k 3024]

On 9/19/2018 at 3:15 PM, Bernard said:

$13k is nothing, especially with two incomes.  He just needs to file his overdue returns, ask for a payment plan, and start making payments. As long as he's making his monthly payment, IRS will back off on collection efforts. If he continues to ignore the IRS, they are going to freeze his (and/or his wife's) bank accounts. I've seen it happen to people. It's not pretty, although I don't pity tax cheats. 

Bernard

Agreed - He's likely not going to get an offer in compromise over $13k with dual income and no extenuating circumstances.  That's not what the OIC is designed to do......$130k might be a different story.  He needs to get filed, get on a plan, and start delivering pizza or driving for Uber and get the IRS out of his life ASAP.

[deadshank 24653]

Update:

He did get an OIC to the tune of $1300.00.   I wrote him a check and he paid them.  All good. 

[TwiceHorn 31495]

4 minutes ago, deadshank said:

Update:

He did get an OIC to the tune of $1300.00.   I wrote him a check and he paid them.  All good. 

Fascinating.  Was that due to his net worth?  My understanding is that if it's a case of basic dumbassery, and not some intentional scheme to avoid taxes, and you have a small net worth, but including home equity and things otherwise exempt (there are no exemptions against the IRS), that they would strip down the amount owed to net worth.

[deadshank 24653]

22 minutes ago, TwiceHorn said:

Fascinating.  Was that due to his net worth?  My understanding is that if it's a case of basic dumbassery, and not some intentional scheme to avoid taxes, and you have a small net worth, but including home equity and things otherwise exempt (there are no exemptions against the IRS), that they would strip down the amount owed to net worth.

He probably has a negative net worth.  Remember, this is guy is a ham and egg, work-a-day schmo with an 8th grade education from the Northside hood of Houston.  He’s good as gold but does not make sound financial decisions and doesn’t not have the money to back up his poor decisions.

The IRS took what they could get and, unknown to them, I provided that money. 

Edited September 25, 2018 by deadshank

[luke duke 6413]

And now you own him. Do you prefer syrup or jelly?

[deadshank 24653]

He’s worth it.  

[Clintonaldo 2574]

5 hours ago, deadshank said:

He’s worth it.  

I’m ready to stop working and am willing to be your slave. 

[deadshank 24653]

Just now, Clintonaldo said:

I’m ready to stop working and am willing to be your slave. 

Go on

[Quagmire 2147]

Can you pay my taxes too? I’m cool as shit

[Reagan1k 3024]

11 hours ago, deadshank said:

Update:

He did get an OIC to the tune of $1300.00.   I wrote him a check and he paid them.  All good. 

Interesting and educational......  I'd assumed the dual incomes and relatively low balance due would have kicked him into "the pay-up sucka" line.

I guess they are looking at the complete financial picture / time & trouble to collect and not just gross income.

[Bernard 879]

Something tells me he didn’t really owe them $13,000 after all. Did he ever fill out and file his old tax returns? Was the $13,000 debt confirmed via completing the returns, or was the $13,000 some random ass guesstimate IRS threw at him since he never filed his returns?

Bernard

[deadshank 24653]

5 hours ago, Bernard said:

Something tells me he didn’t really owe them $13,000 after all. Did he ever fill out and file his old tax returns? Was the $13,000 debt confirmed via completing the returns, or was the $13,000 some random ass guesstimate IRS threw at him since he never filed his returns?

Bernard

He filed them all

[Nolacycling 893]

Once he fills out his returns and is on their books they'll put him on a payment plan and keep his refund every year until he's green. 13k is very doable. Don't lend him any money.