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What Organization is Tougher Than The IRS?

by

Steven A. Leahy

What Organization is Tougher Than The IRS?

By Steven A Leahy

Remember, there are only 6 things you can do if you owe the IRS money. Before you hire someone to help you resolve your IRS problem, make sure they offer you every option possible. Many (most) tax resolution companies are not law firms – even if they have an attorney working for them. That means they can’t offer you all your options.

Let us review the six things you can do. First, you can pay the IRS everything you owe them. Second, you can set up an installment agreement with the IRS. Pay them over time. Third, you can submit an Offer-in-Compromise, to pay a lump sum to settle the debt. Fourth, you can be declared currently not collectible – prove to the IRS you don’t have any disposable income after you pay all your monthly bills. Fifth, you can file for protection under one of the Chapters of the Bankruptcy laws. And, finally, you can continue to do nothing and let the IRS have their way with you.

Sometimes, the very best option – clearly – is filing for protection under the bankruptcy code. Unless the tax resolution company you talk to is a law firm experienced in bankruptcy – and non-attorneys can never be qualified to offer you advice about bankruptcy – you may never even be exposed to that option.

Most of my clients owe the IRS a sizable amount of money – and many are what can be defined as “above-median debtors.” That means their monthly income exceeds the median (average) income for the household of the same size as the debtors’ in the same state of residence. For these taxpayers, working out a solution with the IRS can be very difficult because, often, the IRS will not allow all of their actual expenses when determining a remedy. If their mortgage is higher than the IRS allows, their payments or settlement with the IRS will be too high to allow both payments. This may force the taxpayer out of their home or cause a default with the IRS agreement.

The only organization stronger than the IRS is the Federal Court System. That is why bankruptcy is sometimes the best option. If the IRS is insisting that you give up your home, they won’t release a levy or they insist on an unreasonable monthly payment, bankruptcy may be the answer.

For example, I have an above-median couple who has a large IRS obligation, a very high mortgage payment and find themselves behind on their mortgage payments. The IRS insisted on full payment over a short period of time; a payment that would not allow them to keep their home.

Under Chapter 13, the federal bankruptcy law changes the focus of their repayment plan from repayment of the IRS debt, to keeping their home. Under their Chapter 13 plan, these taxpayers will pay their monthly mortgage, pay down the mortgage arrears and pay the IRS a small portion of the IRS claim.

I had another client who came to see me after the IRS levied his employer – leaving him with zero income. We negotiated with the IRS Revenue Officer for a time, put he would not relent and release the levy. My client was concerned that he would be evicted from his apartment if he missed his rent payment. The day he filed for protection under the bankruptcy code, the IRS was forced to release the levy, my client received his pay check, paid his rent and proposed a plan to pay his creditors over five years.

These remedies aren’t possible in many (most) tax resolution firms. Taxes under the bankruptcy laws can get very complicated. That is why it is vital that you seek help from someone who can offer all available remedies, including bankruptcy. So, if you find yourself with an IRS Problem, call Opem Tax Resolutions and The Law Office of Steven A. Leahy at 312-664-6649.

Solving Your IRS Problem – And Keeping it Solved!

by

Steven A. Leahy

Solving Your IRS Problem – And Keeping it Solved!

By Steven A Leahy

Listeners to the IRS Radio Hour – heard every Sunday afternoon at 5:00 on AM 560 The Answer – know I help people and businesses solve their IRS problems. What I have learned is – solving the IRS problem is only step one. The next step is keeping the problem solved.

When you reach an agreement with the IRS – whether the remedy is an offer-in-compromise, installment agreement or being declared currently not collectible – there are other conditions of the agreement, conditions often overlooked by taxpayers. For example, here are the conditions included in a recent installment agreement we worked out for a client with the IRS. The IRS wrote:

The other conditions of this agreement are:

– You file and pay on time all federal and state taxes due during the term of the agreement.

– We’ll apply all installment agreement payments to the oldest tax assessments first, then penalties, then interest on that assessment.

– You pay all installment agreement user fees.

– You provide a current financial statement when we request one. If you have a change in your ability to pay, we can revise or cancel your installment agreement.

In addition, the IRS will “apply any refunds you’re due to the amount you owe until you pay your balance in full. A refund payment isn’t a substitute for a monthly payment.”

The first condition is the most common stumbling block. Taxpayers often fail to file and pay all federal and state taxes on time. On time, to the IRS, means NO EXTENSIONS. If you fail to meet any of these conditions, the IRS will cancel the agreement and the taxpayer will find themselves right back where they started.

That’s why, once we solve a client’s IRS problem we offer to continue monitoring the case under our IRS Protection Plan. Under the IRS Protection Plan, we continue covering our client with our Power of Attorney, so we continue to receive all IRS notices. We offer on-going advice about tax issues and we complete their annual tax returns. Occasionally the IRS will erroneously cancel an agreement, or cancel an agreement but agree to re-instate the agreement after a request is submitted. Our IRS protection plan covers those items too. In addition, if you do default, we will offer a discounted rate to work with the IRS on a new agreement.

Even if you don’t default, some agreements, such as partial installment agreements or currently not collectible status may be reviewed after some time, typically every 2 years. And the IRS Protection Plan will provide a discounted rate for that service also.

So, even after you fix your IRS problem, you have to remain vigilant. That’s where Opem Tax Resolutions and The Law Office of Steven A. Leahy, PC comes in with the IRS Protection Plan. Give me a call at 312-664-6640 to fix your IRS problem and KEEP the problem fixed!

Surprise! Your Chances of Paying The IRS Less is Better Than Ever!

by

Steven A. Leahy

Surprise! Your Chances of Paying The IRS Less is Better Than Ever!

By Steven A Leahy

On the IRS Radio Hour (heard every Sunday evening at 5:00 on AM 560 The Answer) I often talk about the six things you can do if you owe the IRS. First, you can pay the IRS everything you owe them. Second, you can set up an installment agreement with the IRS. Pay them over time. Third, you can submit an Offer-in-Compromise, to pay a lump sum to settle the debt. Fourth, you can be declared currently not collectible – prove to the IRS you don’t have any disposable income after you pay all your monthly bills. Fifth, you can file for protection under one of the Chapters of the Bankruptcy laws. And, finally, you can continue to do nothing and let the IRS have their way with you.

The third option, and often the most attractive, is an Offer-in-Compromise (OIC). An OIC is an agreement with the IRS to pay a lump sum as a settlement for the entire IRS debt. Often on radio and television ads, this is the option they refer to when they promise you can pay the IRS “pennies on the dollar.” This promise led to the demise of many national tax resolution companies, because they would charge a client for an OIC, knowing the offer would be rejected. Then charge again for the real remedy.

Historically, the OIC was a bad option because only a small percentage of offers were accepted. For example in 2003 only 17% were approved. In 2014, nearly 40% were accepted! What happened? Why did the acceptance rate more than double in 11 years? What changed?

Well in 2011 the IRS put forth the “Fresh Start Initiative” which changed the OIC program. Before the Fresh Start Initiative the OIC program was limited to those few who had little to zero assets, and could prove they could never pay the IRS. The initiative gave the IRS more flexibility when calculating a taxpayer’s “reasonable collection potential.” The amount the IRS will accept for an Offer-in-Compromise depends on three major factors – the taxpayer’s monthly disposable income, the multiplier, and the taxpayer’s assets. The reasonable collection potential is calculated: (taxpayer’s monthly disposable income) x (the multiplier) + (value of assets).

Disposable income is the difference between a taxpayer’s income and their expenses. The IRS uses national standards when calculating expenses, not the taxpayer’s actual expenses. Historically, the IRS did not consider many of the taxpayer’s actual debts. Under the initiative, the IRS will now allow taxpayer’s to deduct student loan payments and monthly payments for state and local delinquent taxes. The national standards now also include a “miscellaneous” allowance. The miscellaneous allowance can be used for credit card payments and other debts that were previously not considered. The additional expenses will reduce the calculated monthly disposable income.

The biggest change concerns the multiplier used to calculate the amount the IRS will settle the debt. Once a taxpayer’s disposable income is calculated, the IRS uses the multiplier to calculate the cash component. If the taxpayer can pay the lump sum in five or fewer months, the IRS multiplier was 48 (4 years). Now, that multiplier is 12 (1 year). If the taxpayer can pay in 6 to 24 months, the multiplier was reduced to 24 (2years) from 60 (5 years). The decreased multipliers significantly reduce the reasonable collection potential calculated to settle an IRS obligation.

The asset calculation has also been reduced. The IRS will use 80% of the value of assets, overlook some dissipated assets and forego any equity in income producing assets in calculating the asset portion of the offer-in-compromise. All of these changes have the effect of lowering the calculated “reasonable collection potential.”

If you have an IRS problem and are looking to find a way out, maybe the Offer-in-Compromise will be your best option. Find out. Before you do anything, you should give me a call. We can discuss your all your options. Opem Tax Resolutions & The Law Office of Steven A. Leahy, PC (312) 664-6649. Call NOW to set up your FREE Consultation.

How to Stop IRS Collection Efforts – These Secrets may Shock you!

by

Steven A. Leahy

How to Stop IRS Collection Efforts

By Steven A Leahy

IRS Collections can be maddening! The IRS Collection Department can levy your bank accounts, garnish your wages, take your assets, visit your home or workplace in order to collect back taxes. Here is the key to Stopping the IRS Collection efforts – compliance. That means filing your tax returns and paying your taxes in the future on time. It also means setting up a remedy for your past due tax obligations.

There are only 6 things you can do if you owe the IRS money – I talk about these six things over and over again. First, you can pay the IRS everything you owe them. Second, you can set up an installment agreement with the IRS. Pay them over time. Third, you can submit an Offer-in-Compromise, to pay a lump sum to settle the debt. Fourth, you can be declared currently not collectible – prove to the IRS you don’t have any disposable income after you pay all your monthly bills. Fifth, you can file for protection under one of the Chapters of the Bankruptcy laws. And, finally, you can continue to do nothing and let the IRS have their way with you.

Most people who come to see me are just plain scared of the IRS, and believe there isn’t a remedy that will work for them. So, they choose number six – they do nothing. It may take some time for the IRS to focus on your tax problem, but they will get around to it. Do not interpret the delay as proof the IRS has forgotten about you and you are “under the radar.”

One of the most common remedies for IRS problems is the second option, installment agreements. Now, there are different kinds of installment agreements. Most of my clients that enter into an installment agreement with the IRS enter in to a partial installment agreement. That means, the installment agreement will not pay the IRS obligation in full. This is the part most don’t understand. Even if I owe the IRS way more than I could ever repay, I can set up a partial installment agreement and pay the IRS what I can, even if the amount I can pay is $100.00 and I owe $200,000.00.

Now, most taxpayers think, “that means I will be paying the IRS forever.” But, here is a secret about IRS problems: The IRS has a set amount of time to collect an IRS debt. This date is referred to as the Collection Statute Expiration Date (CSED). Once that date is reached, the IRS must end all collection efforts, including releasing any liens that had been filed.

The best partial installment agreements leave you room to pay all your monthly obligations. We do this by collecting your financial information on an IRS Form 433. On this form, you list all your assets, your liabilities, your income and your expenses. Calculating your disposable income is a simple equation – all of your income, from whatever source, less your “allowed” expenses. The IRS scrutinizes the taxpayers expenses and disallows many of them. By disallowing reasonable expenses, the IRS is inflating your disposable income.

The real negotiations revolve around what expenses are allowed before your disposable income is calculated. That’s why taxpayers need help. The IRS will calculate a disposable income that will not allow you to pay all your other obligations. That guarantees the taxpayer will default some time in the future.

If you owe the IRS, a partial installment agreement may be your best remedy. Let’s find out. If you contact my office and mention this article, we will complete an IRS Analysis Report, that will tell you exactly where you stand with the IRS, for FREE. Call me, attorney Steven A. Leahy at 312-664-6649. Tell Bonnie, my scheduler, you want a FREE report.

Mark Glennon of wirepoints.com

by

Steven A. Leahy

Mark Glennon of wirepoints.com

By Steven A Leahy

This week on the IRS Radio Hour, we are pleased to welcome Mark Glennon of wirepoints.com. Mr. Glennon is an attorney, an entrepreneur, venture capitalist and consultant. He is Managing Director at Ninth Street Advisors, providing consulting services to high growth technology companies and their investors. He specialties include business development, operations and management, equity and debt transactions, e-commerce, B2C, mobile applications, entrepreneurial ventures, reorganizations and workouts. Before moving on to his current passions, Mark practiced law with expertise in debt transactions, turnarounds, bankruptcy and venture capital.

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Recently, Illinois Governor Bruce Rauner appointed Mr. Glennon Co-Chair of Innovate Illinois Advisory Council. The council works closely with the Illinois Department of Commerce and Economic Opportunity and has a core mission of bringing new opportunities to the forefront on behalf of the community. Innovate Illinois Advisory Council is “all about bringing together leaders from different backgrounds who can bring different perspectives — venture capital, business, research, universities, education, community leaders, corporate executives — everybody we can who has a stake in the success of the technology sector,” Rauner said. “We want to get their ideas, we want to get input, we want to get their collaboration.” Mr. Glennon is the perfect choice for that task.

Mr. Glennon writes extensively for wirepoints.com about Illinois Government, pensions, financial matters, technology, and capital formation. He has served on the Board of directorship for Tech companies such as GrubHub, Shoutlet and FunMobility. But, in addition to writing about these important issues, Mr. Glennon is also the founder of Wirepoints.com. Wirepoints.com is a news site that bills itself as a “One stop for all economic and governmental news of macro importance to Illinois and Chicago.”

“WirePoints delivers both original stories and hand selected articles from other sources about Illinois’ economy and government. We want to be a one-stop source for all news of major importance to Illinois’ economy. We have a particular focus on the state and local fiscal crises. Our frustration with poor coverage of those crises by the regular press was the primary reason for starting this site, and that frustration continues. We try to stick to policy, facts and numbers, not politics.”

Not only am I on board with the right of center viewpoints. Listeners may remember that I have a great interest in technology – I have a LL.M. in Information Technology and worked with computers and coding from the birth of personal computers, and BEFORE! Finance is also one of my interests, having earned a Bachelor of Arts Degree in Business Administration, concentration in Finance from Loyola University of Chicago. So, Mr. Glennon is a welcome guest!

We, at the IRS Radio Hour, are anxious to discuss Illinois’ complex and dangerous pension obligations, public school financing, tax policies, budget woes and political corruption. We will also discuss the work of the Innovate Illinois Advisory Board and their efforts to to grow the state’s innovation economy, including developing high-growth industry clusters, attracting resources, developing and retaining top talent, and fostering collaboration among all the parties in the state’s technology and innovation community. These are important issues to all of us at the show, and all of our listeners.

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