Are you experiencing IRS tax problems?
I’m Darrin T. Mish, and for 17 years I’ve been helping people to find solutions to their IRS tax problems. Today, I can look back on my own life and remember that it was my own tax problem at the time that led me down the path I travel today.
I’m proud to be a lawyer. There was a lot of hard work put in. However, I have to admit that I learned little about taxes and how to run a business while in law school. What I did learn was how to find the answers to problems.
This isn’t to take away from the education received in law school, but to draw attention to the fact knowledge was focused on a particular discipline. I remember that I ended up owing $20,000 in taxes, and it was embarrassing for me to say the least.
What I learned, for the most part, was on my own. So I understand the challenges that people face, mentally and emotionally, when dealing with IRS tax problems. However, regardless of any embarrassments, IRS tax problems won’t simply disappear into thin air. This is where I can offer the much-needed tax help that my clients need.
In this video, I explain what to do if you owe the IRS money.
Working Harder Is Not Always the Answer
Some clients think that solving IRS tax problems is a matter of using blunt force—working harder. That’s not always the case because making more money can bring about additional tax liabilities. It’s the equivalent of digging a hole deeper and quicker. If you have a business that’s doing well, money can come quickly.
Some Internet individuals and their businesses have tremendous growth in a short amount of time. Without sound advice, an individual can go through piles of money without giving it a second thought—until it becomes an IRS tax problem.
Many, who experience a measure of success, don’t start worrying about their taxes until late the next year, when their taxes are due. Then, the reality of what they haven’t paid in can hit them like a rock.
Here’s a video where I explain how I helped a truck driver and made him a very happy client.
There are always those clients who get the bill in the mail and tell me. “We don’t have the money to pay it. What do we do?” And if there are taxes owed from previous years, the situation can get worse.
In fact, the situation may be a train wreck. We file the client’s taxes and can look at filing an Offer in Compromise. This may allow the client to climb out of their hole and once again reach a status of success.
Hopefully, they will have learned a thing or two about managing their money differently.
Moving forward, a client can start to focus on building their business once again. A lot of good can happen when a person feels positive about their business dealings and how they’re handling things. However, it takes a professional, at this point, to correct the client’s direction.
It’s also important to note there are a lot of people who lose focus when the right account restraints aren’t in place. That’s when a business can go from success to failure overnight.
Consequences of Not Filing a Tax Return
Business owner or not, it’s important that you file your tax return. The reality is that it’s a crime not to file your return. There’s a six-year statute of limitations, so, you could be charged and end up going to a Federal prison.
It’s easy to get twisted up in filing returns. Some people fail to file simply because they’re stuck on perfection. When behind, I tell clients that sharpening their pencil can wait for another day. The key is to get the numbers close enough—and to file.
The reason that we want to file the client’s taxes is that if they owe $50,000, $100,000 or a half a million, the odds are they’re not going to clear the books by writing a check for their amount.
It’s also a never-ending surprise when clients don’t have the documentation they need when they come to me. We can sometimes get around this by getting a Power of Attorney for our clients. Discreetly and electronically, we get transcript information from the IRS, which can include W-2’s, 1099’s, 1098’s, and 5498’s.
Before We Can Start to Resolve IRS Tax Problems
All missing returns must go back at least six years and be filed to resolve a present problem. As a result, we’re very diligent about getting clients caught up. With regard to records that cannot be found, we tell our clients to offer conservative numbers so that we can get the process rolling.
Take a look at my tips in this next video on how to become a better problem solver.
Missing the Tax Extension Date
Every year, millions of people miss the extension date. These are returns that will be late and the penalty will be 5 percent of the tax amount owed for each successive month. The maximum penalty allowed is 25 percent. If you don’t file, it’s possible that the IRS will go ahead and prepare a return for you.
A sign that the IRS might file for you is when you start getting notices for a year that you haven’t filed for. When the IRS files for you, it is called a Substitute for Return (SFR). Excessive penalties may be applied.
But if you can file an original return after the substitute for return is filed, there’s a strong chance (99%) that the IRS will accept your return over the one they prepared. Your return has to be legitimate though, in which event they may abate excess tax interest and penalties. There is also that 1% chance they won’t accept your return, in which case you’ll end up paying the price for not having filed.
Not Having the Money to Pay Your Taxes
If you end up in a scenario where you don’t have the money to handle your tax liability, file your taxes regardless. Never just walk away and let your IRS tax problems accumulate.
File your taxes and work with a professional tax attorney that can help you get a handle on things. The reason being is that late penalties are racking up if you choose not to file.
Just keep in mind that the IRS can file a federal tax lien. Many people make the mistake that a lien can only attach to the property that they live at. The lien can attach to all of the taxpayer’s property—both real and personal.
A qualified tax attorney can be extremely helpful in explaining where a tax lien has to be filed where “good” title can be conveyed.
If you aren’t able to afford to pay your tax liability all at once, I give some options in this video.
Threshold for Filing a 1099
If you’re earning income as a contractor, $400 is the threshold for which you should file. Perhaps a conversation for a later date, but Congress passes statutes and allows the IRS to promulgate regulations. In essence, regulations are not laws, so there is a debate as to whether people have to follow those regulations.
Working for cash can get out of hand. I have a favorite story where a client came into my office, very nervous, and revealed that he hadn’t filed taxes since 1960. This individual didn’t receive a letter from the IRS because he was off their radar.
He had worked in a cash economy for decades. I look at this as a scenario where the individual’s conscience began to bother him so much that he had no other recourse but to look for help.
We filed his last six years of tax returns, the only years that were required, and he didn’t owe much because he didn’t earn much during that six-year period. He was upset with himself because it took him nearly half a century to resolve his tax issues. I look at this as a happy ending.
Filing While on Social Security
There are certain tax-filing regulations for a person on Social Security or disability insurance. If there is additional income, it can be taxed. If you’re living off retirement income, like interest and annuities, it could be taxable or non-taxable.
This is where we take a deep dive to find out greater detail. Again, it takes an expert in these matters to know what type of investment vehicle will, or won’t, be taxed. I’ve seen situations where people took large chunks of their retirement account and were taxed accordingly. They may have fared better by splitting up their withdrawals and, thus, paying less taxes.
I try to convey to people that there are a ton of rules to consider when dealing with the IRS. This is why it’s so important to work with a professional who understands both law and the tax codes.
If you’re wondering if it’s worth your time to seek out a professional, I can honestly say that you’ll benefit from not having to worry over complicated matters. If nothing more, you’ll sleep better at night, and that can make all the difference in the world.
For more information, you can listen to my podcast episode, “What are the Consequences of Having IRS Problems“.