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 filing status strategy for married couples. (See the blog post here.) This week, let’s focus on the why we might want to file state taxes before the IRS.
As you begin to get your documents together and have your taxes prepared, it becomes time to look at the bigger picture. Look at your grand total of what you owe to the IRS and what you owe to the state. When I am negotiating the collections with the IRS there is a formula that is used to calculate your collection potential. The IRS has a clear policy on what debt can be included in your collection potential, and what cannot be included. If you owe a significant amount to the state, it may benefit your negotiations with the IRS of we have already dealt with the state.
Once we know this, then I can strategically file your tax returns in a way that will be the most beneficial for you! Then I can start negotiating the best option for you whether is an Installment Agreement, an Offer-in-Compromise, or Uncollectible status.