As the time arrives each year for completion of tax returns, more individuals learn of surprising amounts they owe to the government. Inevitable questions arise about the possibility of paying tax debt as installments. Delinquent tax only gets worse when ignored. Because installment agreements for payment of taxes are not automatic, taxpayers should consider obtaining help from a professional with Enrolled Agent training. An EA can usually obtain a better deal with the IRS than a taxpayer acting alone.
A valuable benefit from hiring Enrolled Agents is the level of tax training they possess. The completion of Enrolled Agent preparation renders expertise for capturing all entitled tax deductions and credits, which limit the calculated amounts owed to the IRS by taxpayers. This is particularly advantageous to an independent contractor with income reported on Form 1099. Because these individuals don’t incur tax withholding like regular employees, the sizes of their tax assessments are frequent shocks – especially for the newly self-employed. People with that type of income need all the tax deductions available to them.
Equally helpful to persons owing tax for a prior year is the ability of Enrolled Agents to negotiate payment terms with the IRS. This entails a resolution process. Sometimes, the financial circumstances of a taxpayer warrant IRS concessions. Examples include penalty abatements and partial pay installment agreements. Passing the Enrolled Agents exam is a pathway to aiding taxpayers with IRS representation in addition to tax return preparation.
When confronted with a new client needing tax resolution assistance, Enrolled Agents should explain the collaborative effort undertaken when approaching the IRS. The EA is only able to work effectively when the taxpayer provides important documents and information. An Enrolled Agent tax negotiation demands some initial evaluation of taxpayer financial condition. For example, an EA will analyze the taxpayer’s income and living expenses to arrive at the reasonable amount for an IRS payment plan. Although standard figures are used in determining allowable living expenses, some flexibility exists. The number of people in the household and other well-documented factors affects allowed living expenses.
IRS revenue officers are quite detail oriented, especially regarding taxpayer living expenses. Approval for abated penalties and partial tax repayment is often a lengthy process. Consequently, a professional representative meeting Enrolled Agent requirements begins each delinquent tax case by assuring accurately prepared tax returns and building a superior presentation of payment ability. This necessitates informing the taxpayer about the crucial step of getting organized. The EA should also establish deadlines for delivering requested details. IRS revenue officers will not hesitate to use their authority to levy bank accounts, garnish wages, place liens on property, and seize assets. Therefore, prompt submission of well prepared payment proposals is vital for anyone with an overwhelming tax burden.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.