Once you owe the IRS or the State of Hawaii, they become very aggressive in their attempts to collect.
Some of the most common methods of collection include bank levies, garnishing wages, and even seizing your personal assets like homes and cars for sale at auctions.
The tax collectors do not care — they just want to get paid, and they don’t care who pays your taxes.
Although bankruptcy is oftentimes your most workable option to eliminate back tax problems, it is not always the best choice.
Therefore, our Honolulu tax attorneys offer other solutions to deal with the IRS and state that could help you avoid bankruptcy.
At Blake Goodman, PC, Attorney, we help clients get a fresh start.
Lead attorney Blake Goodman and his legal team provide a range of services that go beyond issues with the IRS.
We get you back on the path to financial independence by assisting with matters like rebuilding your credit score and strategizing about your debts.
With more than 8,000 satisfied clients and four convenient locations across Hawaii, see what we can do for you. Contact us today to get started!
What Is a Tax Resolution?
The IRS is responsible for collecting federal taxes, which includes processing tax returns, collecting tax payments, and distributing refunds.
If the IRS has reason to believe that a taxpayer is not abiding by the tax laws and either underpaying taxes or not reporting their income, it will step in and take action.
The IRS can audit you to take a closer look at your tax documents or history of tax returns. A tax resolution is the final solution that the IRS and taxpayer reach.
In most cases, it takes the help of a tax professional (e.g., tax attorney or accountant) to work with the IRS to reach a tax resolution.
Now keep in mind that if the IRS audits you, that does not automatically mean you’ve done something wrong.
However, this may be a time when you want to hire a Hawaii tax lawyer so that you can provide accurate information to the IRS and put your case to rest.
What Are Some Examples of Tax Resolutions?
As harsh and unforgiving as the IRS may seem, they are willing to work with you in most cases. Remember, they still just want to get paid, even if it takes a little longer. Let’s take a look at some tax resolutions.
Offer in Compromise (OIC)
The IRS allows you to negotiate with them to repay old tax debts. It is their way of cleaning up an existing mess and encouraging you to get back into the system.
The “offer in compromise” program is based on supplying the IRS or the state with financial information that will show them you’re entitled to a break on repayment of the whole liability.
This option is available upon showing that you’ve tried and exhausted all other resources available to you. Although the acceptance rate is low for an OIC, having an attorney to represent you can increase your chances of success.
We can work with you through this process to see what you qualify for based on a few factors that the IRS looks into.
Ability to Pay
The IRS will first look into seeing if you even have the ability to pay them back. Do you have a job? Are you unemployed, and if so, what are prospects for re-employment at the moment?
What is your income? The IRS will want to know how much money you are bringing into your home before they can come to a conclusion on what you’re eligible for. Your income and living situation could impact if you qualify for OIC.
Are you making minimum wage but have the expenses of someone on a $50,000 salary? The IRS will want to know this.
Asset Equity — What are Your Current Assets Worth?
We can help you decide if you qualify for this or if you have better options elsewhere. The IRS will generally approve OIC cases if there’s reason to believe that most of it can be paid off in a reasonable amount of time.
Depending on how bad your net worth and current income look, you could be entitled to a “pennies on the dollar” settlement.
Tax problems will continue to get worse and more expensive with new penalties and interest added each day.
You may qualify for penalty abatement, however, if you were attempting to follow the requirements of tax law and couldn’t meet them due to situations out of your control.
If your reason is justified for failing to file your return, pay your taxes on time, or forget to do any myriad of tax compliance steps, we may be able to negotiate an abatement of your tax penalties and the interest associated with them.
There are many grounds the IRS and the state typically consider “reasonable cause” for avoiding the assessment of a penalty.
Fill out our questionnaire and we can see if your case qualifies. If you do, then we may work with you to try and give you a smoother penalty abatement process.
Once we’ve worked through this, we can help you submit your case to the IRS with our tax resolution services. They will review the facts and effort you made as well as prior history in filing your taxes on time.
If your situation just falls outside the parameters of the offer in compromise or penalty abatement programs, then the IRS and the state may still accept repayment of your tax liabilities on an installment basis, if we can convince them that that’s the most effective and efficient way of collecting the tax.
Depending on your situation that may be what we seek out, but this is typically a case-by-case basis.
Higher tax liabilities can often require significant negotiating to prevent a levy or seizure from taking place — installment agreements relating to taxes under a certain dollar amount are usually easier.
If we are able to secure you a payment plan that the IRS agrees to then we can move into what kind of payment plan you are participating in.
Short Term Payment Plan
A short-term payment plan is an agreement with the IRS that you will be paying your taxes owed within a certain period of time. If the IRS agrees to this then you may not be liable for a user fee.
Payment Plans Costs and Fees
While we can try to avoid you paying payment plans costs and fees, there may be cases where the IRS will add a tax bill to your status despite our best abilities to avoid this situation.
We will work with you throughout this process with our tax resolution services.
Releasing Tax Liens and Levies
As a preliminary step in using an offer in compromise, installment agreement, or other programs, we often need to act quickly in order to delay, avoid, or release their powerful lien and levy capabilities.
This can often be accomplished if we can explain that our offer to them is the most effective and unobtrusive form of satisfying the tax liability.
After this, the IRS may choose one of the following options based on your situation.
Discharge of Property
A discharge will remove the lien from the property itself. If this option is available, we may try to pursue it.
The subordination option does not remove the lien from your case but will allow other creditors to move ahead of the IRS, and finding a loan or mortgage becomes a more realistic option.
When a withdrawal occurs, the IRS will not compete with other creditors for your property, but the amount due still must be paid in full.
No matter the options given to you, we can try to get you the best possible result. We will always work with you through this process.
Trust Fund Penalty Relief
Employers are required to withhold income tax, Medicare, and Social Security payments from their employees’ paychecks.
If you’re an employer and for some reason, you don’t send those withholdings to the IRS, they will impose the Trust Fund Recovery Penalty (TFRP).
If you have been assessed as “the responsible party” for failure to pay employment taxes and you’re questioning the accuracy of the IRS or state’s assessment, then let our law firm intercede on your behalf.
The TRFP is a way for the IRS to reach parties who are typically shielded from tax liability (e.g., officers and shareholders) and collect employment taxes from them.
On top of making tax payments, the IRS can impose the TFRP, which is one of largest penalties charged by the IRS.
If you have been given this heavy-handed tax and you fail to respond in time, then you will be saddled with the most onerous of all tax liabilities.
It can never be discharged in bankruptcy and is attended by significant interest and penalties. You must decide to end your tax problems with the IRS and State of Hawaii. No one else can decide for you.
Currently Not Collectible Status
If you’re in a situation where you know you owe the IRS but you can’t afford both the tax payment and your basic living needs, there may be an option for you. The IRS may place your account in “Currently Not Collectible” (CNC) status.
Of course, you need to qualify for this status and provide information about your income and expenses. During the time your account is in CNC status, the IRS will not try to collect the debt you owe.
However, they can still assess penalties and interest and may not release tax refunds to you. Instead, they’ll apply those refunds to your tax bill. If you’re able to make payments while on CNC status, you can do so to avoid interest and penalties.
Each year, the IRS will conduct an annual review of your income and expenses. If your financial situation has improved, the IRS may begin collecting the taxes you owe.
The IRS has a ten-year window from the date the taxes were assessed to collect them.
Do You Need a Tax Lawyer to Negotiate with the IRS?
There’s no requirement to hire a lawyer to represent you when dealing with the IRS. You are entitled to represent yourself. That being said, tax resolutions are complex.
They take a great deal of effort, time, and knowledge to navigate through and reach a favorable outcome. It’s incredibly advantageous to have a tax attorney in Honolulu guide you through the process rather than take it on yourself.
Here are some ways that a Hawaii tax attorney can help.
Enforce Your Rights
Taxpayers have certain rights. The IRS outlines them in the Taxpayer Bill of Rights, and they include the right to:
- Be informed,
- Receive quality service,
- Pay no more than the correct amount you owe,
- Challenge the IRS’s position and be heard,
- Confidentiality, and
- Retain representation.
You have the right to be subject to a fair and just tax system. An attorney will help you enforce your rights and ensure the IRS isn’t violating them.
Assess Your Situation
Before you communicate with the IRS, start by having a consultation with a tax attorney in Hawaii. We can evaluate your circumstances and provide realistic and probable tax resolutions.
Your attorney can also speak for you when communicating with the IRS so that you don’t put yourself in a disadvantageous position.
At Blake Goodman, PC, Attorney, our tax attorneys in Honolulu have over 30 years of experience helping clients manage their tax issues.
Create a Plan
The next step is to start putting together your defense to the IRS’s position. You want a well-prepared and thoughtful plan that the IRS will accept, and you need to be ready to negotiate.
Since tax attorneys know the tax laws and are skilled negotiators, they can get creative and craft a strong defense for you.
Ultimately, having an experienced tax attorney in Honolulu to represent you will give you peace of mind and likely lead to a better outcome.
Contact the Honolulu Tax Attorneys at Blake Goodman, PC, Attorney
At Blake Goodman, PC, Attorney, our goal is to get you on the path to financial freedom. Attorney Blake Goodman has helped thousands of clients regain control of their finances.
He puts his legal and accounting background to work for you and can evaluate your situation from different angles. This experience and knowledge helps him craft a unique solution that meets your goals.