Has The IRS Filed Your Tax Returns?

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We recently had a client who came to us with a tax liability totaling $115,000 between the IRS and the State of California for 2009 and 2010 (yes the State does this too!). He was concerned as to why he owed so much money and was very confused as to why the IRS and State would continue to harass him to collect the liability. He wasn’t sure if the figures were correct. Off we go. 

After contacting the IRS I found out the IRS and the State had filed his returns for him. The IRS and State do this for a few reasons:

– The taxpayer has reported income for each tax year

– The taxpayer failed to file his own return

– The IRS and the State assessed the tax liability at the highest rate

– The IRS and the State did not allow any deductions, credit’s, basis, or exemptions when calculating the balance due

– There aren’t any collection statutes in place because an original return was never filed

As you can see the odds are in favor of the taxing authorities. The first step was to inform the taxpayer of the balance dues and let him in on the tools we utilize to repair the problem and get him into a better situation. We took the following steps:

– Ordered all wage and income transcripts for 2009 and 2010

– Put him in touch with a trusted tax preparer (EA and/or CPA) to prepare his 2009 and 2010 returns for the IRS and the State

– Kept each taxing authority off his back while the returns were prepared and mailed in

– Challenge the IRS figures by filing the return with a specific office 

When it was all said and done our client owed the IRS $10,000 and the State $2,000. His tax savings was in excess of $113,000! It just goes to show getting his situation fixed helped drastically reduce his debt. 

If you know someone who is facing tax liability and has not filed, give us a call. We can be reached at 720-398-6088. We would be happy to assist not only with the short term problem, but also the overall issue of resolving their outstanding tax debt, for good!