I work in the tax business. And it is critical to know IRS guidelines and regulations; this way I can accurately prepare returns and advocate for my client. But equally important is understanding how the IRS exceptions work.
Exceptions are imperative when I have a client who is struggling with the burden of high tax debt. For example, an Offer in Compromise (OIC) program allows me to settle someone’s tax debt for much less than they owe. The IRS is strict when it comes to evaluating these offers. But often times, IRS representatives do not understand or remember their own guidelines and regulations. Usually, when the IRS representative reviews the offer they will only allow the taxes actually being paid to the IRS. We know that the IRS manual does allow for all current taxes, even if they aren’t being paid!
This summer, Private Tax Solutions settled a $40,000 tax debt for $740. This client had chronically under withheld his federal and state income taxes. Prior to submitting his OIC, we had him increase his federal and state withholding. His OIC package included a deduction for taxes at the new withholding rate. When his OIC came up for review, the first and hardest argument the IRS representative made was about his taxes. She insisted that this was NOT allowed because he hadn’t actually paid that over the course of the prior year. After a manager conference and a few faxes quoting the IRS guidelines and regulation manual, our client was victorious!
In the end, this client was completely relieved of tax problems that had been haunting him for more than a decade. Now that’s a job well done.