Seeking IRS Tax Relief: Why Does It Take So Long?

Posted 8/25/2008 11:27:14 AM

When you have a back tax liability with the Internal Revenue Service (IRS), getting relief is an urgent matter. You will want to establish a resolution with the IRS as quickly as possible in order to avoid enforced collections or to stop the enforced collections already in place. Alternatively, if the IRS is already engaging in enforced collections, you will understandably want to do whatever it takes to stop the collection.

However, it is important to note that the IRS is not on the same timeframe as you when it comes to resolving tax debt or releasing a taxpayer from IRS collections.

Hiring Representation

At first glance, hiring representation may seem like it will only delay tax relief. It is just another layer between you and your goal – either tax debt resolution or IRS collection relief. In reality, having a knowledgeable attorney serve on your side may make the end result better for you. In case you did not know, the IRS has very specific rules and regulations that they must abide by when resolving back taxes or releasing levies, liens, and garnishments of taxpayers. A competent attorney will know these IRS guidelines, and the best way to try to get you the tax relief you are seeking.

An attorney will know what information is going to be needed early on in the process to prove your case. For example, did you know that releasing an IRS wage garnishment will require proving income and necessary living expenses? Did you know that getting an Offer in Compromise accepted will require all missing tax returns to be filed? An attorney knows these requirements and understands the nuance of the negotiations that work hand-in-hand with the evidence. Lastly, having an attorney will allow you to focus on other aspects of your life while they are trying to get you the tax relief that you need.

Power of Attorney

If you decide to hire an attorney to help resolve your IRS tax problem, the first thing you will need to do is authorize the attorney to discuss your personal tax matter with the IRS. This can be accomplished by completing IRS Form 2848 and filing it with the IRS. Without an active Power of Attorney on file with the IRS, the IRS will refuse to discuss your case with anyone, but you. The power of attorney requirement is a safeguard for you, because it prevents unauthorized individuals from discussing your personal tax matters with the IRS. Completing and filing the IRS form is easy. However, sometimes there is difficulty in the IRS processing the form. Sometimes, it can take weeks for the IRS to process. However, this delay can oftentimes be overcome by having your attorney file the Power of Attorney at the same time that he or she enters into negotiations with the IRS.

Now that there is an active Power of Attorney on file with the IRS, the case is ready to be solved right? No! A common misconception is that the attorney simply has to call the IRS and the case will be solved. Getting tax relief is not that simple. Instead, like any dispute, your attorney has to prove your case with the use of evidence.

Evidence & Documentation

Before requesting tax relief from the IRS, you and your attorney will need to collect and review your current financial information. You will also need to provide your attorney with documentation that substantiates the financial information you communicated to him/her. The documentation may include paycheck stubs, current bank statements, and proof of payment for your mandatory expenses. After you send these documents to your attorney, they will be reviewed and analyzed before contact is made with the IRS. Once necessary income and expense information is supplied to your attorney, he or she will then present it to the IRS in the light most favorable to your case. This is the same process that is used for all forms of IRS tax debt resolution – such as Offer in Compromise, Installment Agreement, and Currently Not Collectible status – and is also used to end IRS collections.

Keep in mind that changes to your financial situation will inevitably change your case. An increase in income or a decrease in expenses can result in changing the type of resolution that the IRS will accept. Because changes to your financial situation can significantly effect your resolution, it is important that you always keep your representative informed of any changes that occur. You will also need to provide your representative with updated paycheck stubs, bank statements and other financial documents since the IRS will generally not accept any documents that are more than 90 days old. The IRS can and likely will request copies of your documents. Once all of the necessary evidence has been collected and your representative has prepared a strong case, then IRS negotiations can begin.

Negotiation with the IRS

You and your attorney quickly gathered your financial information and have submitted it to the IRS. You are now hoping for a quick response from the IRS to resolve your tax debt problem. Unfortunately, a common misconception is that once your attorney contacts the IRS and submits your financial information that IRS collections will immediately end and/or your back tax issue will be immediately resolved. In fact, that rarely occurs – the IRS does not make decisions that quickly. Regardless of the type of resolution you are seeking, the IRS takes time to review your case and the evidence presented. The main goal of the IRS is to collect the debt owed and, consequently, it can take time for them to determine whether they can collect the debt owed more profitably via another method – i.e. continued collections. It can take the IRS anywhere from 2-6 weeks to respond for an Installment Agreement or Currently Not Collectible Status and up to 3 months for an Offer in Compromise. Oftentimes, the IRS will request updated financial information and documentation to verify that income has stayed the same. If the IRS believes that it they can collect more from a taxpayer than what was submitted, the IRS may delay the case and seek additional information or reject it.

Two of the most important things to remember when seeking IRS tax relief is that you must remain patient and must play by the IRS’s rules. Because the IRS provides options that are beneficial to the taxpayer, they have established a very strict set of standards and regulations that dictate the available forms of tax relief for a taxpayer. The IRS has established these regulations in order to ensure that these benefits are not abused.

The length of time it can take to get IRS tax relief can vary greatly from case to case. However, please keep in mind that a competent attorney will do everything in his or her power to get your case resolved as quickly as possible.