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.