Haven’t Filed Back Taxes? Think before you file…Joint!

Michelle Divan, EA
Michelle Divan, EA

Hi – Michelle Divan here.  I represent taxpayers in Denver, CO – and nationwide – who cannot pay their taxes or have back tax debt.  This month I am focusing my attention and education on people who have back taxes to file.  Last week we talked about how many years you need to file.  (See the blog post here.)  This week, let’s focus on the married couple who have not filed back taxes.

Normally, it is far more beneficial for married couples to prepare their taxes and file as married filing jointly (MFJ.)  When it comes to tax resolution, there may be some significant advantage to filing separately (MFS.)  How can this affect collections?  Once we know your tax debt to the IRS, we may be able to apportion the collections in a more beneficial manner for Installment Agreements, Offers-in-Compromise, or Uncollectible Status. 

The IRS has stopped many active collection activities due to COVID, but they are continuing to enforce tax compliance for non-filers and back taxes that need to be filed.  The IRS knows about close to 15 MILLION non-filers and are actively pursuing these tax payers.  Don’t forget about the back taxes for your state.  While we all start to focus on the IRS, the states are actively enforcing debt collection for back taxes and unpaid sales taxes. 

Wondering what is right for you?  If you or someone you know is in this predicament, let’s get it taken care of!  You can reach me at 303-250-0122 or via email at [email protected]

Haven’t Filed Tax Returns? How Many Years Do You Need to File?

Michelle Divan, EA
Michelle Divan, EA

Hi – Michelle Divan here.  I represent taxpayers in Denver, CO – and nationwide – who cannot pay their taxes or have back tax debt.  This month I am focusing my attention and education on people who have back taxes to file.  I am sure that is an overwhelming feeling – especially when you have several years you need to file.

So, how many years of non-filed taxes do you need to file?  The IRS has a Policy Statement 5-133 that states that delinquent filers have to file 6 years back to be in good standing with the IRS.  If you exploring this blog today, that means you need to file all the way back to 2015.  If you actually did not owe the IRS, you may even get refunds (back to 2018 – sorry, IRS will only refund back 3 years!)

Now you know how far back you have to file, but what first?  Always get into tax compliance first!  That means get the most current year prepared first and pay any taxes due on that.  The IRS will not negotiate a resolution until you are in tax compliance.

Let’s now talk about the resolution for your back taxes.  There are several options for you once you have know your back taxes and what you owe the IRS.   There are options such as Installment Agreements, Offers-in-Compromise, Uncollectible Status.  Each of these options has rules and requirements around them and I can navigate the rules and requirements.

Your State taxes can be yet another issue.  The IRS has a policy of 6 years to be in compliance.  The states vary by each state, and there may be strategic advantage to the order in which you file your federal and state taxes.

Wondering what is right for you?  If you or someone you know is in this predicament, let’s get it taken care of!  You can reach me at 303-250-0122 or via email at [email protected]

Resolving the Back Tax Debt: Choosing your Collection Alternative

Michelle Divan, EA
Michelle Divan, EA

Hi – Michelle Divan here.  I represent taxpayers in Denver, CO – and nationwide – who cannot pay their taxes or have back tax debt.  So…you’re ready to address your back tax debt?  Maybe you are able to pay it off in full – great!  Many times, the balance due has become so high with interest and penalties, that payment in full won’t happen in one payment.  There are collections alternatives: Installment Agreements, Offers-in-Compromise (OIC), or uncollectible status.  What is right for you?

Installment Agreements: An “installment agreement” is an agreement between the IRS and a taxpayer to allow the taxpayer to pay their back-tax debt in monthly payments. There are various forms of installment agreement, each of which has special rules.

Offers-in-Compromise: An “offer-in-compromise” is where the IRS accepts less than the total owed by a taxpayer to settle the outstanding tax debt.  While this sounds like the best option, there are several requirements a taxpayer must meet to be eligible for this alternative.

Uncollectible Status: If a taxpayer has no available equity in assets and his or her income is not sufficient to cover their IRS allowable expenses, the taxpayer would be deemed “uncollectible”, or “CNC” in tax-speak.  While this does not actually resolve the tax debt, it does keep the IRS from filing any tax liens or tax levy’s

Wondering what is right for you?  If you or someone you know is in this predicament, let’s get it taken care of!  You can reach me at 303-250-0122 or via email at [email protected].

Back Tax Debt? Here’s how to spend your money!

Michelle Divan, EA
Michelle Divan, EA

Hi – Michelle Divan here.  I represent taxpayers in Denver, CO – and nationwide – who cannot pay their taxes or have back tax debt.  So…you have back tax debt that hasn’t been paid.  You are ready to deal with that now.  Where do you start?

Your first inclination might be to get that old debt paid off first. WRONG!  Your best bet is start with the most current tax debt.  This will get you into a status called “Tax Compliant.”  Why is this important?  Well, if you cannot pay all of the tax debt in full, there are collections alternatives.  However, you must be in current compliance to be eligible for any of these options.

These collections alternatives are options such as Installment Agreements, Offers-in-Compromise (OIC), or uncollectible status.  And once you are in tax compliance, you can start exploring to see which of these options are best for you.  If you or someone you know is in this predicament, let’s get it taken care of!  You can reach me at 303-250-0122 or via email at [email protected]

What if you can’t pay your taxes? Do you file or not file?

Michelle Divan, EA
Michelle Divan, EA

Hi – Michelle Divan here.  I represent taxpayers in Denver, CO – and nationwide – who cannot pay their taxes or have back tax debt.  Many times the first reaction to not being able to pay your taxes is to not file.  Now that is probably the biggest mistake you can make.  Why?  Failing to file will get you up to a 25% penalty on the taxes due…that’s right, 5% a month for 5 months.  Yikes!

The first step is simple: deal with the issue!  It’s not going to go away, so let’s not let it get worse.  If you cannot pay your taxes due, there are options such as Installment Agreements, Offers-in-Compromise (OIC), or uncollectible status.  Not filing your taxes exacerbates the issue and shows bad faith – not what you need when we are trying to negotiate your tax debt.  Further the Internal Revenue Code (IRC) section 7203 is in fact a criminal statute for failure to file a return.

Quickly, you can see how failure to file your taxes can spiral out of control.  Don’t let that happen to you, especially not when you have options.  If you or someone you know is in this predicament, let’s get it taken care of!  You can reach me at 303-250-0122 or via email at [email protected]

Do you have back taxes to file?

Michelle Divan, EA
Michelle Divan, EA

Hi – It’s Michelle Divan! I represent taxpayers in Denver, CO  – and Nationwide – who have civil tax matters.  I have recently seen and uptick in clients coming to me who have not filed tax returns, some for may years.  In fact, the non-filer issue is a major priority for the IRS.  The IRS has stated publicly that they have identified more than 7 Million taxpayers who have failed to file returns, and the IRS plans to roll out an initiative to target those tax scofflaws.

In addition, it is worth noting that the willful failure to file a tax return is a federal tax crime under the Internal Revenue Code’s Section 7203.

So what can non-filers do, and how can I help them get their tax return issue resolved with the IRS?  It depends on why they failed to file in the first place.

If the failure to file the tax return was a lack of money (i.e., they realized they would be unable to pay the tax liability and chose not to file) then I can get those returns filed and begin working on a tax resolution for them to resolve the back tax balance, this might include Installment Agreements, Offer-in-Compromise (OIC,) or have the account placed in uncollectable status.

If the taxpayer’s failure to file was intentional or for other reason, such as cash payments to undocumented workers, the way to resolve the issue and avoid a criminal tax referral is by utilizing the IRS’ Voluntary Disclosure program.  By doing a voluntary disclosure the taxpayer can come in and disclose the issue without fear of a criminal tax referral.

If you or someone you know has unfiled tax returns or some other federal tax issue, please feel free to contact me at either (720) 900-1822 or by email at [email protected].

Not Pay SE tax?? What you need to know!

Hi – It’s Michelle! Sorry to hook you in with that title…you really DO have to pay your Self Employment tax for 2020…but you can delay paying some of it!  You know you try to be disciplined, but sometimes you hold back on making your estimated quarterly payments.  This year, in particular, it may have been more difficult to set money aside for those taxes.  BUT, the CARES Act passed early in 2020 aimed to alleviate some of the difficulties faced by the self-employed sector and there certainly were some substantial benefits.  For tax year 2020, the IRS is allowing self employed individuals to defer paying up to 50% of the SE tax that is owed.

What does that mean in plain English? Let’s look at an example.

  • Let’s say that you calculated what you owe in Social Security tax, and it came out to $1,000.
  • That simply means that you’d need to pay a minimum of $500 by December 31, 2021.
  • The remaining amount would be due December 31, 2022.

While this sounds fantastic – I mean, who doesn’t want to put off paying taxes – there are some very important rules and dates that surround this tax deferral.  During a time when changes seem to crop up with each new week, you may want to consider continuing to set that money aside — and potentially paying it as usual — while you still have it. That could help you to avoid a larger tax bill further down the line.

I am always available to answer questions – schedule a free consultation! My office is open and accepting new clients.

Denver, CO: What to do if you can’t pay your taxes!

Hi – It’s Michelle. I am a tax resolution expert based in Denver, CO and I help taxpayers nationwide. I know the story: things are tight financially, so you either (1) do not file the tax return, or (2) file the return but don’t pay the balance due.  But do not worry, you tell yourself, next year will be better.  Now it is 2-3 years later and a letter arrives from the IRS, and the threats start, and maybe it has even gotten to the point of actual levy and seizure activity.  Now the IRS is wreaking havoc on your financial life and you simply do not know what to do!

As it turns out the IRS is usually only too happy to work with taxpayers, but there are some ground rules you need to be aware of and a roadmap to follow. I can help you navigate through Tax Compliance, Installment Agreements, and Offers-in-Compromise.