Eliminating Back Taxes


What's Hot


2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

Q: My husband and I owe in excess of 31,000.00 in back taxes. We have learned all too well that our ignorance of tax witholding laws is no excuse to the IRS. I would like to know how to choose … Continued

Q: My husband and I owe in excess of 31,000.00 in back taxes. We have learned all too well that our ignorance of tax witholding laws is no excuse to the IRS. I would like to know how to choose an agency that can help us to eliminate or reduce our tax debt to a level that we can pay. We are so afraid of the multitudes of options from companies claiming to be able to help us and want to choose a reputable company. What advise can you give?

A: Back taxes are like any other debt, with one big difference: the IRS has a lot more power to hurt you than any other creditor. For example, they can attach your bank accounts and simply take your money without jumping through nearly as many legal hoops as a private creditor. In addition, many IRS debts can’t even be eliminated by declaring bankruptcy. So if you’re going to owe money you may have trouble repaying, the government is probably the last entity you should owe it to.

That being said, this debt can be approached much like any other… you can attempt to negotiate it yourself, or you can hire someone to do it for you. Since this amount is so large, I think you’re right to try to find help. Here’s what I’d do: rather than respond to some ad on TV or radio, I’d attempt to find a good local tax attorney or CPA to represent me. My accountant, for example, is a former IRS employee who knows many of the local IRS folks personally. He also has about 30 years experience in dealing with the IRS. So these are two obvious things to look for: connections and experience. If you don’t know any tax professionals yourself, you’ve got two choices: ask friends for referrals (in general, the more well-heeled the friend, the better) or simply call your state society of CPAs and ask for a list. Interview a few, then pick one. Ask them exactly how they would handle your situation, how much experience they have with similar ones, and how much they’d charge. (And that fee, by the way, should be hourly, not a percentage of what they save you.)

When it come to any actual negotiation, this is an opportunity to learn how to get what you want in virtually any negotiation. And that is by having a specific request, backing it up with as much factual information as possible, and being prepared to respond to counteroffers. In the case of your debt, you should request a specific reduction, then provide evidence of why that reduction is all you should…or can…pay. So forget excuses about why you’re in this position: focus on precisely explaining what you can afford to pay and when. So you’re going to do is to you show up with a specific plan: you’ll have a budget showing your exact income, your exact expenses, your exact savings balances, if any, and exactly what you feel you can afford monthly. In other words, rather than essentially saying “Geez, IRS guy, we didn’t know what we were doing…give us a break, wouldja?” you’re going to do something much more professional and businesslike. You’re going to be showing up saying something more like this: “We screwed up, but let’s focus on the future, not the past. We owe $31,000. We can afford to pay $1,000 today, then another $15,000 by making monthly payments of $200 for the next 75 months.” Then you pull out supporting documents and show the IRS exactly why that’s fair and what you can afford. Then you wait for a counter-offer from the IRS.

That was an example, of course: in real life, you may not say anything at all to the IRS…your professional will most likely do the talking for you. But you might find that professional more easily…and get charged less for their services…if you start preparing that information now and presenting it to the professionals during the interview process. The more organized you are, and the less emotional you are…the faster and better your outcome will probably be.

Hope that helps…and good luck!

Regards,
Stacy

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: What You Should Do — and Not Do — When Meeting a New Dog

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 2,038 more deals!