We have a few key tips and ideas if you owe back taxes to the IRS and or the state. The COVID-19 pandemic has disrupted nearly everyone and everything around the world in 2020; the IRS and the GA Department of Revenue were not immune to the fallout. If you happened to mail a check to the IRS or the state to pay a tax debt early in the spring, you probably saw it leave your bank account sometime this past summer. The IRS has stated in a recent communication that it estimates it has nearly 2.5 million hard copy tax returns to process out of a stack of 5.3 million pieces of unopened mail due to the pandemic.

Judy Bernhard, CPA and Mason Hardin, EA here again from Killingsworth Spencer. If there ever were a time to make a deal with the IRS or the state to settle your tax debt, it is right now. Here are a few reasons why you are in a great position to cut a deal to settle your past tax debt:

  • The U.S. has seen a record number of small business closures and bankruptcy filings due to the pandemic. The IRS knows that 2021, 2022, and 2023 are going to be challenging years for tax collections
  • The IRS will experience a record number of payroll tax (941) delinquencies for 2020. This is the worst tax to owe because the IRS and the state consider this as your employee’s money that you withheld from their paychecks
  • You are also personally liable for employer match, and the penalties for Failure to File and interest for Failure to Pay can easily reach 100% – YIKES!
  • Many taxpayers who were on an installment payment agreement and have fallen behind, will need to renegotiate their agreements
  • If you have not filed taxes in a number of years, the IRS typically only goes back six calendar years to collect the taxes due. If you are relying on a tax refund to get you out of your tax debt, consider this. Tax refunds are good for only 3 years from the date the tax return should have been filed, including extensions. For example, if you were anticipating a $3,500 tax refund for calendar year 2016, the tax return should have been filed by April 15th, 2017 or October 15th with an extension. The refund was forfeited to the U.S. Treasury on either date as of 2020.
  • The IRS published a statement in late October noting the fact that there are nearly 900,000 U.S. taxpayers with annual earned income greater than $100,000 that have not filed taxes for years 2014 thru 2016. The IRS estimates that it is owed nearly $46 Billion from this group alone
  • The IRS has not been able to replace Revenue Officers as fast as those who are retiring. Therefore, the remaining RO’s are forced to do more with less manpower. They simply MUST move cases off their desks!

Killingsworth Spencer can help solve about 93% of the tax issues initiated by the IRS and your states’ Department of Revenue. The balance must be handled by an Attorney qualified to represent tax cases before the IRS, and we have several we can refer your case to if necessary. We can help clients in all 50 states. Mason and I will always treat our clients with the dignity and respect they deserve. We also are not going to promise anyone a “pennies on the dollar” settlement of their tax debt as that would be totally irresponsible. Each tax settlement case is different because humans are involved and no two are alike. Also, we do not ask for large cash retainers to take a tax resolution case.

For an honest assessment of your tax issue, give Killingsworth Spencer a call or send us an email to info@killingsworthspencerllc.com. Remember,  Fixed. No Tricks. TM