3 Biggest Myths About Solving Your Back IRS Tax Problem
Myth #1 – You can settle your back taxes for less / pennies on the dollar / there’s new IRS programs you can qualify for / Fresh Start Initiative.
I see ads for tax relief companies all day long promoting some “easy button” solution to someone’s tax problem.
To solve this problem successfully, you have to be totally honest with yourself about your situation.
And the truth is that for business owners who are making money and running a going-concern operation, and who don’t have some long-term type of monetary or health hardship…the IRS isn’t gonna just wipe it all away.
The IRS isn’t like a credit card company trying to collect past-due credit card debt, where they’ll just cut deals to collect what they can and move on.
They have a duty to fairly and impartially enforce the tax law.
What kind of signal do you think it would send if people who did not follow the tax law were able to easily get reductions / “pennies on the dollar”…while everyone else had to pay in full and on time?
Looking for a shortcut is a surefire way to make no progress, and ultimately get in trouble deeper.
The truth is the IRS will work with you. They WANT to help you get back on track. BUT, getting back on track is more than them just writing off what you owe. It requires intense negotiation, and frankly a lot of internal self-reflection to figure out what you can do differently better meet your obligation from this point on.
Myth #2 – The IRS won’t work with me.
Existing on the opposite end of the spectrum from Myth #1, some people I talk to believe that they are beyond hope. They think their only option is to either live under a rock for the rest of their life, or to liquidate everything they own down to the shirt on their back.
Just the same way it’s not IRS policy to write off people’s tax debts…it’s not IRS policy to throw them out of house and home to collect past-due taxes.
I have personally helped clients that have owed well into 7-figures of back taxes. At no time in my career have I ever encountered any situation where the IRS flatly just said “sorry Charlie, we’re not gonna work with you. Prepare for the worst”.
They WILL work with you…BUT you have to know how to play the game, protect your rights, and negotiate with them to get a workable, quality outcome in your situation.
Myth #3 – I Haven’t Heard From The IRS For Years So I’m Not On Their Radar
2 responses to this.
First – in December 2023, the IRS released a pronouncement stating that in Q1 2024, they considered the “softening” of collections due to COVID to be officially over. So the relative silence you may have experienced for the last 2 – 3 years is quickly coming to a close.
But honestly, more importantly than this…there’s a bigger question you have to answer.
Is being on the run from the IRS, and blowing this off because they’re not coming after you “yet”…really a way you’re ok living your life?
Most business owners I talk to with back taxes who are ducking this problem pay for it in spades in their mental health, sense of security, and by foregoing opportunities to better themselves and advance their life.
On the IRS radar or not, them enforcing on you right now or not, the cost of doing nothing is exceedingly high. Especially if you aren’t hearing from the IRS, this makes it an even better time to get out in front of and tackle this issue for good.