Get Relief with the Help of a Texas Tax Debt Attorney
Lots of people struggle with tax debt—and they do so for a variety of different reasons. For some people, their tax debt is a result of not realizing how much of their income they have to save. For others, they unknowingly fall behind when their accountants or tax preparers make mistakes. Whatever your situation may be, you have options available, and you should discuss these options with an experienced Texas tax debt attorney.
The tax debt attorneys at Brown Tax, P.C. have decades of experience helping taxpayers secure relief from debts they cannot afford to pay. Depending on our clients’ circumstances, we have been able to help them secure relief ranging from deferring payment while avoiding tax liens and penalties to eliminating their tax debt entirely. When you contact us, we will arrange for you to speak with a Texas tax debt attorney at our firm one-on-one, and your attorney will help you choose the option that makes the most sense for your financial circumstances.
7 Ways to Reduce, Delay, or Eliminate Tax Debt
There are several potential ways to reduce tax debt owed to the Internal Revenue Service (IRS). In many cases taxpayers will also have options for delaying payment without incurring additional liability, and, in some cases, taxpayers will be able to eliminate their tax debt entirely. If you owe the IRS more than you can afford to pay, here are some of the ways our attorneys may be able to help:
Submitting an Amended Return
One of the first options to consider when you owe the IRS more than you can afford to pay is the option of submitting an amended return. If you have failed to claim credits, deductions or exemptions for which you are eligible, filing an amended return could significantly reduce (if not eliminate) the amount you owe. A Texas tax debt attorney at Brown Tax P.C. can review your tax returns and your personal or business financial records to determine whether you may currently be liable to pay more than you rightfully owe.
Submitting an Offer in Compromise (OIC)
The IRS’s offer in compromise (OIC) program allows U.S. taxpayers to settle their tax debt for less than the full amount they owe. To submit an offer in compromise, you must meet the IRS’s eligibility criteria, and you must be able to submit an initial tax payment with your offer. Factors that determine taxpayers’ eligibility to submit an OIC include their income, expenses, asset equity and overall ability to pay. Our tax debt attorneys can determine if you are eligible, and if you are, our attorneys can prepare your offer and deal with the IRS on your behalf.
Negotiating a Payment Plan or Installment Agreement
If you are not eligible to submit an offer in compromise, you may still be able to avoid tax liens and collection efforts by negotiating a payment plan or installment agreement. This option allows you to pay off your federal tax debt over time. Notably, however, with both short-term payment plans and long-term installment plans, penalties and interest may continue to accrue over the payoff period. As a result, deciding whether to pursue this option requires careful consideration, and if you decide that this is your best option, you will want to work with your attorney to negotiate an agreement you can keep while still limiting your tax-related liability to the greatest extent possible.
Seeking Currently Not Collectible Status
If you cannot afford to pay off your federal tax debt, another option may be to seek “currently not collectible” status. As the IRS’s Taxpayer Advocate Service explains, “If the IRS agrees you can’t both pay your taxes and your basic living expenses, it may place your account in Currently Not Collectible (CNC) status.” When your account is in CNC status, penalties and interest continue to accrue and the IRS may keep any refunds to which you would otherwise be entitled, but you generally do not have to worry about facing collection action. Seeking CNC status involves demonstrating your inability to pay what you owe to the IRS.
Filing an IRS Appeal
For individual and business taxpayers that dispute their tax debt, the best option may be to file an IRS appeal. In many cases, taxpayers will go through the review or audit process, and, despite their best efforts to accurately portray their tax liability, the IRS will still reach a different conclusion about how much they owe. If you find yourself in this situation, we strongly recommend that you speak with a Texas tax debt attorney at Brown Tax, P.C. about filing an appeal with the IRS Independent Office of Appeals. We have had significant success helping clients mitigate their tax liability through the appeals process.
Filing for Innocent Spouse Relief
If you are facing tax debt because your spouse underreported his or her tax liability, you may be eligible for innocent spouse relief from the IRS. Innocent spouse relief is an option for eligible taxpayers who live in a select number of “community property” states, which include Texas. To file for innocent spouse relief, you must owe the IRS as a result of your spouse underreporting income, incorrectly claiming deductions or credits, or incorrectly valuing certain assets. There are various other eligibility criteria as well. Forms of innocent spouse relief available from the IRS include elimination of tax liability, separation of tax liability (so you only owe any portion of your joint tax debt related to your personal income), and equitable relief.
Filing for Interest Abatement or Penalty Relief (or Both)
If your tax debt is being exacerbated by IRS interest and penalties, a Texas tax debt attorney may be able to help you reduce your debt to a manageable level by filing for interest abatement or penalty relief (or both). Interest abatement is available to taxpayers who have incurred liability through no fault of their own. The IRS has various penalty relief programs, and, in appropriate circumstances, taxpayers can seek relief from penalties the IRS has imposed for failure to file, failure to pay, and other issues.
Hire an Experienced Texas Civil Tax Attorney for Your State or Federal Tax Audit
Facing a civil tax audit is a serious matter. Not only can these audits lead to substantial liability for taxes, interest, and penalties, but, in some cases, they can also present risks for criminal charges. If state auditors or federal revenue agents find evidence of intentional tax evasion or tax fraud, they can—and will—refer the matter to the Attorney General’s Office or U.S. Department of Justice (DOJ) for prosecution. As a result, when facing an audit, it is important to have an experienced Texas civil tax attorney on your side.
Our attorneys represent individuals and businesses in civil tax audits conducted by the Texas Comptroller’s Office and the Internal Revenue Service (IRS). Both types of audits present similar risks, and, as a result, they both require a similarly strategic and comprehensive approach. Each Texas civil tax attorney at Brown Tax, P.C. has extensive experience handling audits at the state and federal levels, and our attorneys rely on this experience to efficiently pursue favorable resolutions for our clients.
Texas Comptroller’s Office Civil Tax Audits
The Texas Comptroller’s Office audits individual and business taxpayers suspected of underpaying their state tax liability. While Texas does not have a state income tax, individuals and businesses may still owe various other taxes under state law. The Comptroller’s Office enforces individuals’ and businesses’ tax liability, and one of its primary enforcement tools is the civil tax audit.
Most Texas civil tax audits examine four years’ worth of financial records and returns. But, as the Comptroller’s Office notes, audits may examine more than four years’ worth of records and returns “if a business was not permitted but should have been or if fraud has been detected.” In any case, dealing with a state civil tax audit in Texas can be a complicated and time-consuming process, and, to avoid unnecessary liability, targeted taxpayers must play an active role in the audit process.
The Comptroller’s Office selects taxpayers to audit in various ways. When facing a civil tax audit, understanding why you or your business has been selected is important for building an informed defense strategy. Some of the potential triggers for Texas civil tax audits include:
- Being designated as a “Priority One Account” as one of the state’s largest taxpayers
- Having undergone a previous audit that uncovered $25,000 or more in tax liability
- Referrals from other government agencies or from the public
- Analysis of taxpayers’ tax returns and payments
- Computer-based random selection
Regardless of why the Texas Comptroller’s Office initiates a civil tax audit, the audit will follow a nine-step process. For individuals and businesses that are facing scrutiny, engaging a Texas civil tax attorney as early in the process as possible can be critical for mitigating the risks involved. The nine steps in the Comptroller’s Office’s audit process are:
- Notice of the Audit
- Pre-Audit Research and Review
- Taxpayer Contact
- Entrance Conference with the Taxpayer
- Examination of the Taxpayer’s Records
- Exit Conference with the Taxpayer
- Reconciliation Conference with the Taxpayer (if the audit uncovers a disparity between the amount paid and the amount owed)
- Independent Audit Review (IAR) Conference
- Issuance of the Comptroller’s Office’s Written Findings
If a taxpayer disagrees with the Comptroller’s Office’s written findings, the taxpayer can engage counsel to request a review and redetermination. If this proves successful, the Comptroller’s Office will issue an amendment revising the taxpayer’s liability. Should the review and determination process prove unsuccessful, the taxpayer can continue to seek relief in the Texas courts.
IRS Civil Tax Audits
The IRS routinely conducts civil tax audits targeting both individual and business taxpayers. An IRS audit can examine all forms of tax liability, including liability for income taxes, employment taxes, and estate and gift taxes—among others. Most IRS audits examine three years’ worth of returns, though the agency can review six years’ worth of returns (or more) in some cases.
Similar to audits conducted by the Texas Comptroller’s Office, IRS audits require a prompt and strategic response. When facing IRS audits, targeted taxpayers must work closely with their counsel to:
- Identify and collect all relevant financial records and tax filings
- Independently assess their tax liability
- Interface with the IRS throughout the audit process
- Affirmatively demonstrate compliance with the Internal Revenue Code (or present defenses to liability, if necessary)
- Work to favorably resolve the audit without undue liability for taxes, interest, and penalties
Similar to Texas civil tax audits, taxpayers who dispute the outcome of an IRS audit can—and should—challenge the IRS’ determination through the appeals process. This generally starts with going to the IRS Independent Office of Appeals, and individual and business taxpayers can seek relief in the federal courts if necessary.
Preventing a Civil Tax Audit from Becoming a Criminal Investigation
As noted above, one of the most significant risks involved in facing a civil tax audit is the risk of the inquiry becoming criminal in nature. When conducting civil tax audits, the Texas Comptroller’s Office and the IRS both look for various red flags for potential criminal activity. These include issues such as:
- Understating the taxpayer’s sales revenue or income
- Maintaining inadequate or inconsistent financial records
- Concealing sales revenue, income, or assets
- Filing false returns
- Refusing to cooperate during the audit process
Crucially, however, none of these issues are inherently indicative of criminal misconduct, and they can all have a variety of benign explanations. For example, while cooperating during an audit can be in taxpayers’ best interests in some cases, it can also be risky. When we represent clients during civil tax audits, we carefully assess all of the relevant facts and circumstances, and we formulate defense strategies focused on protecting our clients as fully and cost-effectively as possible.
FAQs: Tips From a Texas Tax Debt Attorney Reducing (or Eliminating) Your Tax Debt to the IRS
Is It Possible to Have an IRS Tax Lien or Tax Levy Withdrawn?
Yes, it is possible to have an IRS tax lien or tax levy withdrawn in some circumstances. Having a tax lien or levy on your property can have a variety of negative consequences, and, for many taxpayers, it can cause their financial circumstances to go from bad to worse. If you are dealing with an IRS tax lien or tax levy, we encourage you to speak with one of our attorneys about filing for withdrawal.
Can Tax Debt Be Discharged in Bankruptcy?
Certain types of tax debts can be discharged through bankruptcy filings under Chapters 7 and 13 of the U.S. Bankruptcy Code. Before considering bankruptcy, however, we strongly recommend that taxpayers consult with an attorney about filing for tax debt relief with the IRS. Not only is securing relief directly from the IRS both less costly and less time-consuming in most cases, but it also avoids the various negative consequences that come with filing for bankruptcy.
Why Should I Hire a Texas Tax Debt Attorney?
We see three main reasons for struggling taxpayers (both individuals and businesses) to consult with a Texas tax debt attorney. First, there are several options for seeking tax debt relief from the IRS, and you need to make sure you choose the best option for your (or your business’s) circumstances. Second, filing for tax debt relief with the IRS can be challenging. To demonstrate your eligibility, seek the appropriate relief and deal with the IRS effectively, you need an experienced attorney on your side. Third, working with an experienced attorney can be your most cost-effective option by far, as the amount of relief your attorney helps you secure will generally far exceed your legal fees.
When Should I Talk to a Texas Tax Debt Attorney?
If you have tax debt that you cannot afford to pay, it is strongly in your best interests to talk with an attorney sooner rather than later. Interest and penalties will continue to accrue, and unnecessary delays can make it more difficult to secure relief in some cases.
How Do I Choose My Best Option for Tax Debt Relief?
Choosing your (or your business’s) best option for tax debt relief requires a thorough assessment of all relevant facts and circumstances. Different relief programs have different eligibility criteria, so your first step will be to identify the specific options that you have available. An experienced Texas tax debt attorney can assist you with this process, and then your attorney can deal with the IRS on your (or your business’s) behalf.
Speak with a Texas Tax Debt Attorney in Confidence
If you need to find out what tax debt relief options you have available, we invite you to schedule an initial consultation at Brown Tax, P.C. To speak with an experienced Texas tax debt attorney in confidence, call 888-870-0025 or request an appointment online today.