You May Not Owe as Much as the IRS Says You Do
Contrary to claims made by unscrupulous marketing companies masquerading as legitimate tax resolution companies, the principle debt that you truly owe the IRS cannot be reduced.
Under certain circumstances the IRS may settle for less through an Offer in Compromise. However, if you have unfiled returns dating back two years or more, there is another way to possibly reduce the principle debt that the IRS claims that you owe.
You may not know that if you do not file a tax return for 2 years, the IRS will file a tax return for you!
This IRS created return is called a Substitute for Return. When the IRS files this type of tax return for you, they do not take into account any of your deductions, dependents, write-offs, or exemptions that you may be eligible to claim. In essence you are not getting a chance to defend yourself.
In almost all cases these Substitute Returns will grossly inflate you tax debt.
If you are a business owner or are self-employed, the IRS does not include any business related expenses that are tax deductible. If you paid mortgage interest you lose that deduction. If you had un-reimbursed employee expenses, a casualty loss, or high medical expenses you lose those also.
The IRS then takes the total gross income reported to them, applies one single exemption, and then uses that as your taxable income figure. As a result, the IRS will assign an inflated tax debt against your Social Security Number and quickly start the collections process. The IRS may also report this inflate Adjusted Gross Income to your State Tax Authority and they will also use these inflated numbers to prepare Substitute returns. In many instances, the inflated income figure places you into a higher tax bracket resulting in an even higher tax liability. The only way to reduce your tax debt is to file your true returns over the IRS Substitutes.
It is your right as a citizen to have AAA Tax & Accounting file a true tax return for you to replace the Substitute for Return that the IRS filed for you. Once the IRS receives and processes your new and true tax return they will void the one they created for you. By law the IRS must allow you to file over these Substitute Tax Returns. The IRS then zeroes out the debt and will calculate the tax, penalties, and interest based on your new and true return. In many cases the outcome is that there is little or no debt, and there may even be a refund coming to you! If the IRS owes you a refund, they will first place it against any outstanding debt and send you a refund for the rest.
AAA Tax & Accounting can prepare multiple years of tax returns in a matter of days. We can help you prepare proper returns and make sure you do not pay the IRS any more than the law allows.
IRS collections is under no obligation to inform you of your rights. Their primary goal is to collect the debt. Technically you can leave the IRS Substitute Return as is but in nearly every case, it is beneficial to file your own true tax return. Do not fall victim to IRS persuasion. Do yourself a favor and call AAA Tax & Accounting to determine the best way to handle your case.
Settle Your IRS Debts Legally and Ethically
“We will accept an Offer in Compromise when it is unlikely that we can collect the full amount owed and the amount you offer reasonably reflects the collection potential…” – Internal Revenue Code section 7122
Did you know the IRS has an Offer in Compromise prgram that can be utilized when liability has been incorrectly assessed or when total liability exceeds what you can afford to pay?
An Offer in Compromise, when present correctly to the IRS, could mean your tax debt will be eliminated or amount to 5-15% of the total owed.
AAA Tax & Accounting are tax specialists who can help you determine if you qualify for an Offer in Compromise or if another option would be a better route for you.
Fill out the form on the right for a Free Consultation and we’ll help you solve your tax debt.
We routinely assist our clients in tax debt issues. Call our office 720-392-0420 or fill out the form on the right and we will contact you within 24 hours.
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We offer all of the following services:
- Federal Tax Lien Release
- Wage & Bank Account Levy Release
- Personal (In-Business) Offer in Compromise
- Corporate Shutdown
- Tax Debt Financing Assistance
- Penalty Abatement (Forgiveness)
- State Tax Liability Assistance
- Currently Not-Collectible
- Innocent Spouse Relief
- Tax Return Preparation