Few pieces of mail elicit as much dread as a letter from the Internal Revenue Service. Many people are justifiably afraid of having to defend themselves against such a powerful organization, but the truth is, you’re not powerless against the IRS. The key to resolving a tax controversy is working with a certified public accountant who has specific expertise in tax code and who can make the argument that your actions were justified under United States law.
Ignoring the problem will only make it worse and will close off options that are available to you if you make a good faith effort to resolve your tax controversy. Read below to learn more about 4 examples of tax controversies you can settle with the IRS.
If you’d like to speak with a Charles Krengel, P.A. representative today, call us at (800) 892-9631 or click here to contact us online!
1. Disputes over Audit Results
You do not have to agree with the IRS about audit results. IRS examiners usually want to close cases as quickly as possible and may encourage you to sign an audit report when the audit is concluded. You do not have to sign this, and you don’t have to state whether you agree or disagree with the audit result. You have the right to an administrative appeal, during which you may be encouraged to sign a “partial agreement” about findings which you don’t dispute. However, if you sign a partial agreement, you could give up leverage you need for other findings. Appeals may take 18 months or more to resolve, and interest will accrue during that time on whatever tax liability is finally determined.
2. Installment Payment Disputes
Initiating an installment agreement after a tax controversy with the IRS usually starts with filing IRS form 9465. However, people who are in bankruptcy and want to make a counter-offer should not use form 9465. Installment plans have the obvious benefit of giving you time to pay your federal taxes, and if you honor the agreement, collection efforts by the IRS will cease. However, installment plans are not ideal. They’re not free, for one thing. You’ll pay a setup fee, and interest and penalties are applied until the balance is paid off. While you may think that agreeing to an installment plan is your best choice, you should speak with a qualified and experienced CPA before filing a 9465 or agreeing to any installment plan. You could be eligible for lower setup fees or other discounts based on your financial situation.
3. Disputes over Penalties
Many people disagree with penalty amounts assessed by the IRS, and if this is you, and if you have a history of complying with tax requirements, you may be eligible for a one-time penalty amnesty. There are many categories of penalty relief, including the following:
• Reasonable cause to believe the taxpayer made a good faith effort to comply with tax laws and that failure to comply wasn’t due to willful neglect.
• People who owe less than $1,000 when no tax liability exists in the preceding year, or when the taxpayer is newly disabled or retired may be eligible for a statutory exemption from penalties.
• When the IRS itself makes an error, it should waive penalties.
• If an IRS penalty is determined to be unlikely to hold up under litigation, they may waive penalties.
• Administrative waivers may be assessed based on changes to IRS policy, or they may be waived for first time penalties against people with a good compliance history.
4. Innocent Spouse Situations
In order to be eligible for innocent spouse relief, several conditions must be met:
• The purported innocent spouse must have filed a joint return in the tax year for which he or she wants relief.
• The claim must be filed in a timely manner.
• The spouses must not have transferred assets to each other as part of a fraudulent agreement between them.
• The spouse not requesting innocent spouse status must not have transferred disqualified assets to the requesting spouse.
• The requesting spouse must not knowingly have participated in filing a fraudulent joint tax return.
If you are involved in a tax controversy with the IRS, trying to take care of the matter on your own will almost always cost you more money. When you enlist the services of an experienced CPA who has dealt with the IRS, like the professionals from the firm of Charles Krengel, PA, your dispute will almost always be resolved more quickly, and will almost always result in a significantly lower tax bill.
If you’d like to speak with a Charles Krengel, P.A. representative today, call us at (800) 892-9631 or click here to contact us online!
Contact Charles Krengel, P.A. Today!
Just as you wouldn’t represent yourself in a high-stakes court case without a qualified, experienced lawyer, you should not go up against the IRS in a tax controversy without counsel from a CPA who knows the tax code and how to help you get the most favorable outcome.