Any tax issue can be overwhelming, challenging, and often difficult to understand. As opposed to confronting any tax-related issues on their own, business owners and individual taxpayers alike can benefit from utilizing an experienced tax attorney to resolve his or her case as advantageously as possible. Here are three of the most common situations in which a tax attorney can help provide IRS resolutions:
IRS Audit Strategy and Defense
As tax season approached in 2015, USA Today reported that the number of individuals audited in the previous year fell to 1.2 million, down more than 160,000 from 2013. It was the lowest number of individuals audited in more than a decade, according to the article. However, that still leaves more than 1 million taxpayers who are in need of audit strategy and defense.
While every IRS audit is unique, a reputable and experienced tax attorney has likely seen most scenarios unfold. They can be extremely useful when it comes to speaking directly to the IRS. For example, according to Certified Public Accountant Alan Olsen, the IRS will often hold statements made in casual conversation against an individual. Determining who is speaking on behalf of the individual being audited can greatly reduce the occurrence of a careless per-chance mistake during direct communication.
One way to reduce an overwhelming amount of debt is to file an offer in compromise (OIC) with the IRS. Essentially, a tax attorney files the OIC as an individualized program that allows for debt settlement, including penalties and accumulated interest, at a greatly reduced dollar amount. While it may be the most appealing option, gaining IRS approval can be a complicated process. Approximately 25 percent of the offers submitted annually are accepted by the IRS, according to NOLO.com, but it is still often worth submitting. The IRS has been known to accept less than five percent of the total amount owed without further penalty.
Less than a decade ago, the IRS estimated that more than eight million Americans owed more than $80 million in back taxes. It’s a reflection of one of the more complicated issues that arise and could require handling by a tax attorney. The legal adviser can find the least expensive way to pay back the money owed and assist in discovering why the amount was owed in order to prevent a recurrence. This can include developing a payment plan (as mentioned above with reference to audits), declaring the money owed as “not collectible,” or merely requesting an abatement on back tax penalties or liens.