#17 | Tax Debt Resolution Strategies Pt. 1

Practical Tax with Steve Moskowitz

Learn about options for dealing with tax debt and what happens when you can’t pay your taxes. This episode focuses on individuals with tax problems. This week Steve is joined by his long-time colleague Chris Housh. Chris chairs the firm’s tax resolution and business entity compliance practice groups and is the Vice President of the Golden Gate Society of Enrolled Agents. Listen to the full episode to learn more! Episode Transcript Intro: You're listening to the Practical Tax podcast with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz LLP, a tax law firm. Steve Moskowitz: Hello everyone. Thank you for tuning into our podcast. We're really excited to talk to you about this. This is an area that affects so many people and a lot of people get embarrassed about it, or they don't want to talk about it, but it's a common problem and there's so much help. This is what happens when you can't pay your taxes. And we're going to do this in two parts. Part one in part two part one is going to be individuals. That's where we're going to start. I'd like to introduce my friend and colleague Chris Howes. Chris is an attorney. He's also an EA and Chris and I have worked together at the firm for over 20 years. Chris heads the department doing these cases, and he's done thousands and thousands of tens of thousands of these over the past couple of decades. Chris, tell us what happens when you can't pay your taxes. What do you do? Chris Housh Well, there's a variety of things that we can do, and that's one of the things I love doing for our clients is finding what's the right thing for them. I don't treat it as a cookie cutter situation. There's the ability to go and try and work with the government. Find the ways to go and figure out what is manageable, reasonable for your budget, and also look at different ways to try and relieve and reduce some of that liability as well. Using elements of timing, elements of what is the important expenses for you and what does the government allow you to do? I play with all that, figure out what the best thing for someone and try and get the best result for someone in those situations. Steve Moskowitz: Chris, there was a word in there that I think everybody want to jump on reduced. Tell us about how do we reduce our taxes? Chris Housh Well, first of all, we look and see is it actually the right real liability? Is it that the IRS created a false number for you when they didn't get your return? If that's a situation we get the tax return correctly in there reduce the amount that you owe. The other part is we look at whether or not financially, you have the ability to do an offer and compromise. We look at that, is there that financially, you're never going to be able to pay it in the time that the government it wants so therefore they should accept the lesser amount. Sometimes though, that dollar amount that the government wants to not offer and compromise is too high, but I can use something called statute limitations, how long the government is illegal allowed to collect might make it where making monthly payments over the time they are allowed to collect might make it where you be paid even less than you would've done in the offer and compromise. Then also after you've either entered into the install pay agreement or have a base tax paid the original tax from return paid, we can also look at penalty abatement to go and say to the government, let's remove the penalties due to the events that were outside of your control in the year that the tax return was originally due. From that go and have them reduce out that penalty and also the interest related to penalty, but that part is if you have to go that route, that's the last piece in the puzzle because the government's not going to let me go and get rid of the penalty for not paying until you actually start paying. One of the things that a lot of the clients look at is going, oh,