Acorn Bookkeeping & Tax

In my Middleburg, FL practice I find that people are primarily interested in settling their tax debt for ‘pennies on the dollar’ with an offer-in-compromise like they see on those late night commercials. Sounds perfect right? You owe $200,000 and the IRS is going to agree to let you pay $2,000 to settle it completely because you paid those late-night guys $5,000 to file an offer-in-compromise for you. Wrong: It doesn’t work that way. There is a formula involved to see if you’re even eligible to file an offer-in-compromise. The bad part is the late-night guys are going to take your $5,000 and then do the math. If you don’t qualify they’re still going to submit the offer anyway and the IRS will reject it. They will have wasted your time, the IRS’ time, and led you to believe your problems will be solved. The only time that didn’t get wasted was theirs because they got paid. There are several things that will make you ineligible for an offer-in-compromise. 1.   ...

In my Middleburg, FL practice I find that people who owe the IRS have one big question: What happens if I can’t pay? Good news! You could be put into what is known as ‘uncollectible status’ or ‘CNC (Currently Not Collectible)’ and the IRS will stop collection enforcement action for now but will check in with you every year or so to see if you’re still uncollectible until the statute of limitations runs out on the tax debt. Sounds perfect, right? It can be but there are a lot of factors involved in determining if you qualify or if it is the best course of action for your situation. 1)       The IRS’ idea of whether you can afford to pay the debt and yours are probably very different. There is an analysis that you must go through showing your monthly income, monthly allowable expenses, and your equity in assets are not enough to pay the debt. The IRS has a list of various expenses and they’ve determined how much is an acceptable amount to spend on e...

In my Middleburg, FL office , I’ve had people ask the question “How long does the IRS have to collect the taxes I owe?” What they really want to know is are they going to be running from this forever? The answer is no: the IRS only has 10 years from the date tax is assessed to collect it. There are a few things you can do that would cause the IRS to be allowed to have more time to collect but, in general, after 10 years the tax is unenforceable. Why is this important to you? It is important to know what things you can do that will inadvertently cause the IRS to get more time. If you file an Offer-in-Compromise, a CDP (appeal) request, have a pending installment agreement, or file for bankruptcy, they will all freeze that 10 years and the clock stops, at least temporarily. The IRS is not allowed to try to collect money from you during these times, so it is only fair for that amount of time to get tacked on to the end of the 10 years. That little nugget of truth is why it is i...

At my Middleburg, FL office , I’ve learned that people who know they have tax problems and receive an IRS letter in the mail are often scared of opening it. They just don’t want to know. It seems easier to just shove the letter in a dark corner and hope that it never sees the light of day. Guess what? That just makes things worse. It means they are in the dark corner and don’t know what the IRS wants or what they plan to do to get it. Perhaps they know they owe money and do not have it to pay so why open the envelope? For starters, you need to open the envelope to see if the amount that the IRS says is owed is correct. If it isn’t, you’re going to need to gather proof and contact the IRS within the appropriate time frame indicated in the letter . If you ignore the letter the IRS will be allowed to assume it is correct. What if the amount is correct but you don’t have the money? There are still significant benefits to reading the letter and finding out the next steps. You c...