How do I settle back tax debt that I owe?

There are many options available to settle back tax debt that you owe. We can contact the IRS, Rhode Island or Massachusetts tax collectors on your behalf and discuss the best resolution for you. Settlements can include negotiating short term extensions of time to pay, entering into Installment Agreements, Partial Payment Installment Agreements, and Offers in Compromise.


Other settlement options include Innocent Spouse relief, abatement of penalties and interest and even discharge of certain taxes in bankruptcy. Whatever your particular needs, we have the experience and expertise to tailor a plan designed to settle your back tax debt and protect you and your assets in the process.


Why do I have to sign a Power of Attorney form?

In order to protect your confidential tax information, the IRS and States require that you sign a Power of Attorney (POA) form authorizing our office to communicate directly with the taxing authorities on your behalf. Without a signed POA on file, the IRS and State tax collectors will not speak with us and we would not be able to effectively help you resolve your tax problems.


Can I get relief from interest and penalties?

Yes, in some cases. The IRS will, in the right circumstances, abate some or all of the penalties assessed against you. In order to seek relief from penalties, you will have to establish reasonable cause. In other words, you will need to explain to the IRS why you were not able to file tax returns, make federal tax deposits or pay your taxes on time. The IRS reasonable cause criteria clearly states that lack of sufficient funds to pay your taxes is generally NOT cause for penalty relief. The IRS will abate interest only in very specific and rare situations.


We have helped many of our clients to obtain relief from penalties and interest.


Can you stop IRS levy and asset seizures?

Yes. There are many different ways to stop IRS levy action and asset seizures. In most cases, the IRS takes enforced collection actions because the taxpayer has failed to respond to a notice or deadline, or if they have responded, the response was inadequate or incomplete. In other cases, the IRS sends out blanket levy notices to seize bank accounts or accounts receivable while trying to locate a taxpayer and send a message.


No matter the reason for the IRS levy or asset seizure action, we can use any number of proven techniques to stop or secure the release of a levy, and we can help prevent future enforcement actions against you and your assets.


Will the IRS or State release wage garnishments?

Yes they will. In our experience, most wage garnishments are issued by the IRS or State tax collectors to get your attention. Whether you missed a deadline or did not respond to a notice, the tax collectors usually need to talk to you or your representative. Even if you think that you don't owe the money, you cannot ignore tax collection notices or calls without fear of a wage garnishment. While communication with the IRS or State is important, you need the right representative who knows who to call and what to say in order to expedite the release of a wage garnishment and get your paycheck back for you.


How can I get the IRS or State to release tax liens?

An IRS or State tax lien notice is a collection tool used to attempt to secure repayment of past due taxes. Tax lien notices are recorded in the appropriate offices according to state law in order to attach the real estate and personal property of a delinquent taxpayer. Once that tax lien notice is filed, it may also appear on your credit report.


The easiest way to get the IRS or State to release a tax lien notice is to pay your balance due in full. When full payment is not an option, there are several other options to obtain relief from a tax lien. Those options include Certificates of Discharge or Subordination, Certificates of Non-Attachment, Bankruptcy and Offer in Compromise.


Do I qualify for an Offer in Compromise?

It depends. The IRS or state tax authorities' decision to accept an Offer in Compromise (OIC) is based on the facts and circumstances of each case. Generally, if you have little or no equity in assets and no ability to pay your taxes in full over time, you may be a candidate for an OIC. On the other hand, if you have the ability to pay, or your equity in assets is greater than the amount that you owe, you may not qualify for an OIC.


The decision whether or not to file an OIC is an important one and may not be right in every case. The filing of an OIC extends certain statutes of limitation and may make the ultimate resolution of your problem more difficult. We have years of experience on both sides in evaluating each taxpayer's situation and determining if an OIC is right for you.


What do I do if I have unfiled tax returns?

Many taxpayers have, for one reason or another, gotten behind with the filing of their tax returns. If you find yourself in this situation, you may need professional assistance in preparing your returns. The IRS and State taxing authorities have the ability to create and assess substitute or estimated tax returns, sometimes called "Substitute for Return" (SFR). Once the IRS or State prepares an SFR on your behalf, you will owe the balance due unless or until you file a corrected tax return.


We work with you, your CPA or tax preparer to effectively resolve your unfiled tax return situation by reviewing returns, correcting SFR assessments and resolving balances due.


What is Innocent Spouse Status and do I qualify?

Generally, if a husband and wife file a joint income tax return, each spouse is jointly and severally liable for the amount of tax due. Under current law, the innocent spouse provision now provides three ways for a spouse to be relieved from joint and several liability for a tax.  The first type of Innocent Spouse claim is IRC §6015(b), which permits innocent spouse relief if:


a joint return is filed;

an understatement of tax exists that is attributable to erroneous items of the "guilty" spouse;

the innocent spouse did not know and had no reason to know on signing the return of the understatement of tax;

taking into account all facts and circumstances, it is inequitable to hold the innocent spouse liable for the tax deficiency for the year attributable to such understatement;

and the innocent spouse elects to apply for relief no later than two years from the date of the IRS's first collection activity with respect to the innocent spouse.

If all five conditions are met, an individual may receive Innocent Spouse relief for the part of a deficiency not allocable to the requesting spouse. If all five conditions would be met except that the requesting spouse knew of a portion of the erroneous item, the individual can be granted to the extent that the liability is not attributable to such portion.


A second type of Innocent Spouse relief exists for individuals who have filed a joint return and are divorced, legally separated or not members of the same household during the 12-month period ending on the date of election of relief from joint and several liability. The third ground for relief is available which provides that if innocent spouse relief is not available under IRC §6015(b) and (c), the IRS can grant innocent spouse relief if under the facts and circumstances it would be inequitable to hold the individual liable for the unpaid tax shown on a return or for a deficiency. Such relief also may be granted where threshold eligibility conditions are met and it would be "inequitable" to hold an individual liable for a deficiency or unpaid liability.


An election to claim Innocent Spouse relief must be made on Form 8857 within two years after the date the IRS has begun collection. In addition to pursuing other remedies provided by law, an individual against whom a deficiency has been asserted can appeal the IRS's denial of, or refusal to consider, Innocent Spouse relief to the Tax Court.


How do I handle business and payroll tax payment problems?

Your business is important to you and when cash flow is tight many businesses struggle to pay their employment, withholding or sales tax obligations. A major key to successfully resolving past due payroll tax problems is to immediately begin making current tax deposits. The IRS and state tax collectors will not work with businesses that are delinquent unless current taxes are being paid. It is also important to note that principals and other responsible parties can be held personally liable for the non-payment of withholding taxes.


We have helped a wide variety of clients in virtually every trade, profession and industry to resolve business and payroll tax problems. We will develop a plan to preserve your business and to protect the owner's personal assets when the IRS or state tries to hold them personally liable for unpaid trust fund taxes.


What are my rights when my tax returns are selected for audit?

Tax audits or examinations take several different forms. An examination may be by correspondence from a Service Center, in person at the IRS office, or a field audit at your home or business. Each of these audit methods requires different levels of response. In many cases, your CPA or tax preparer is the right person to represent you because they are most familiar with how your return was prepared. In other cases, you should retain legal counsel when the issues being examined are more complex or involve interpreting the tax law. An attorney admitted to the United States Tax Court will always be required in cases where there is a disagreement with the auditor and a 90-day statutory notice of deficiency has been issued.


No matter what form your tax audit takes, you should always seek professional representation and not try to represent yourself.


Can I discharge back taxes in Bankruptcy?

Contrary to popular belief, there are certain taxes that can be discharged in Bankruptcy. For example, income taxes that are more than three years old from their last due date and for which returns have been on file for more than two years may be eligible for discharge. There are many exceptions to this general rule. Determining when taxes are eligible for discharge in bankruptcy is a complex area requiring specific legal expertise. Many experienced bankruptcy attorneys refer cases to McLaughlin & Quinn to review and provide a tax dischargeability determination.


Do you help resolve Rhode Island and Massachusetts State tax problems?

Yes we do. We have successfully represented numerous businesses and individuals to work out tax problems with the Rhode Island Division of Taxation and the Massachusetts Department of Revenue. Whether your issue involves income, sales, or withholding taxes we have years of experience working with the State tax authorities for our clients. If you need assistance with a Rhode Island license or registration suspension or a DOR balance due notice, we can help.


Why should I hire McLaughlin & Quinn, LLC for my tax resolution problems?

First, no matter how nice the IRS collection person sounded, you should not assume that you or your current accountant can represent you adequately. Tax resolution is a highly specialized area. Often, CPAs are excellent accountants, but when it comes to representing their clients before the Collection Division of the IRS, Rhode Island or Massachusetts, they do not have the experience needed. Apply the following checklist before choosing a tax professional, it will save you money:


  • 1. Beware of national Tax Resolution Firms promises.

    Great advertising does not ensure great results.  Many national tax resolution firms make promises of unbelievable tax savings without ever analyzing a client's financial situation. While it may be possible in many cases to settle with the IRS or State for less than you owe, you need an experienced tax professional to analyze your individual case before you pay for promises that may not come true. Finally, never let a sales consultant sign you up for services or provide you with a list of referrals at a cost to you. Tax problem resolution is professional and specialized legal representation. Don't fall for the hype of some mass marketing tax resolution firms.


  • 2. Credentials.

    Look at the tax professional's background.  Many tax attorneys have previous experience in other areas that can be very useful depending on your needs.  For example, tax attorneys and representatives who have previously worked for the IRS may have invaluable experience and local contacts to aid in dealing with the Federal and State taxing authorities.  Reputation is important.  Ask your CPA or tax advisor for a list of the best tax problem resolution specialists in your area.


  • 3. Watch out for common tricks.

    Promises of settlements for pennies on the dollar can be very misleading. Offers in Compromise (or Settlements) are based on a particular taxpayer's assets and ability to pay. Each and every tax case is different depending on your financial situation. We have seen cases where the IRS or State filed estimated tax returns for a non-filer client. Such cases can be resolved and may result in what appears to be significant tax savings, when in truth the taxpayer would not have owed anything in the first place had they filed their tax returns in a timely manner. Advertising that these cases are settled for less is misleading at best.


    By their nature, any accepted Offer in Compromise results in settlement for pennies on the dollar. In some cases, the settlement could be 80 or 90 percent, but still pennies on the dollar. In other cases, penalties may be waived resulting in payment of less that the total amount owed.  The common trick is to portray all of these resolutions of particular cases as settlements for only a very few pennies on the dollar.  In fact, since February 2004, the IRS has been warning consumers to beware of promoters' claims that tax debts can be settled for "pennies on the dollar" through the Offer in Compromise Program.


When you examine the reputations and expertise of the attorneys and staff at McLaughlin & Quinn, LLC you will learn that we can put over 90 years of combined experience in IRS collection and state tax problems resolution to work for you.