Avoid the five most common mistakes in dealing with the IRS.
Everyday I hear stories from people who have hesitated to call a tax attorney because they think it will cost too much. The reality is that not getting help with tax relief will likely cost you more. Unless your case is very complicated, a good tax attorney should be able to tell you that up front. Here are five reasons why do-it-yourselfers may want to think twice before going it alone with the IRS in an audit or when dealing with an IRS levy or lien.
1. Failing to take action now.
The biggest mistake in dealing with the IRS is to fail to act quickly. If you ignore the letters from the IRS, you may give up many of the rights you would have had to contest your taxes. You will be stuck with what the IRS has done. To make matters worse, the penalties and interest keep adding up while you do nothing. The best chance that you have for a good defense is to get help with your tax relief and respond to the IRS immediately. This gives your tax attorney the opportunity to work with the IRS in ways that aren’t available later. The attorney can also point out any errors that are in your favor. Many people don’t take action because they can’t pay the taxes owed. Getting help with tax relief can help you get on a payment plan or get an offer in compromise before things get any worse. The sooner you take action, the sooner you will have peace of mind.
2. Asking your CPA to handle the IRS.
When it comes to tax law, there are basically two types of law – the kind that creates a tax that you have to pay and the rules that control how the IRS must operate. CPAs are usually pretty good in knowing how much tax you have to pay. But only a someone that focuses on tax relief is an expert in both how much tax you are supposed to pay and the rules that control how the IRS must operate. To avoid this mistake in dealing with the IRS, the person you choose to help you fight the IRS must be very familiar with both areas of law.
3. Trying to negotiate with the IRS yourself.
You may be tempted to think that you can just deal with the IRS yourself. After all, the IRS agent seemed nice enough. If you go this route, you will probably end up paying more taxes than you owe. I have had IRS agents tell clients that they would just be wasting their money on a tax attorney. The truth is far different. The IRS will take advantage of your lack of knowledge. To effectively negotiate with the IRS, you have to be an expert in tax law. You have to know how to apply the law to the facts of a particular situation and make a persuasive argument according to the rules. Not knowing the rules of how the IRS operates trips up a lot of taxpayers. You have to be able to show the IRS agent where they are wrong. Dealing with the IRS is a lot like going to court – if you don’t know the rules you will lose. Only tax attorneys are trained for that kind of negotiation. Don’t let the IRS try to tell you anything different.
4. Believing that the IRS Agent will treat you with fairness.
Hi! I’m from the government and I’m here to help.
Right. IRS agents are trained to develop rapport with you. They sound nice and act like they are interested in your situation. They are trained to take this approach because they know they will get more information from you. You know the old saying, “You can catch more flies with honey than with vinegar.” But the truth is the IRS and the agent only have one goal in mind, to get money and close the case as soon as possible. Besides, they are the representative for the government – not you. If there is a questionable income or deduction, they will assume you were wrong. Case closed. They get an award from their boss for getting things done so quickly while you are left holding an inflated tax bill.
5. Thinking that the IRS Agent is an expert on tax law.
IRS agents have a limited educational requirements. All that is required to be an IRS agent is a bachelors degree with 30 hours of accounting. But the taxes you owe depend on the right application of the tax code is composed of four million words. IRS agents know how to add up numbers and follow the detailed instructions in the Internal Revenue Manual. They aren’t tax attorneys with a law degree, trained to interpret the tax code. When confronted with someone who is following their instruction manual, if you aren’t a tax attorney, how are you going to challenge them about what the tax law means and how it should be applied to your advantage.
Avoid these all-to-common pitfalls to get the best results when dealing with the IRS. You will usually fare better if you are represented by someone who has developed the knowledge and skill to represent taxpayers before the IRS.