19 May I owe $50K in tax debt. How can I make it right?

Q. I have three or four years of unfiled taxes and more than $50,000 of tax debt. How much money would it cost to resolve these issues? I’ve been wrestling with this because I think the cost will be out of this world.
— Worried

A. There is a way out of your dilemma.

You should first get a free consultation from a tax resolution specialist.

You want a certified public accountant (CPA), enrolled agent (EA) or an attorney who specializes in resolving back tax issues and has experience dealing with the local IRS offices, said Johnathan Donenfeld, a certified public accountant with JLD Tax & Accounting in Jersey City.

He said CPAs and EAs are usually cheaper options that tax attorneys.

“Ask for examples of similar cases that they have dealt with,” he said. “The fees will vary depending on the complexity of your situation.”

For example, is there an IRS revenue officer involved? Are your wages being garnished yet? How close is the IRS to doing a bank levy? What assets need to be protected? What settlement offers do you qualify for? Do you have a state tax issue as well?

Donenfeld said depending on your situation, you may be able to settle the debt for less than the full amount owed through an Offer In Compromise or Partial Pay

Installment Agreement, and these settlements can take a lot more time and be more complex.

“All of these things need to be considered when evaluating back tax issues, and if someone gives you a price before getting this information, they are either inexperienced or will be adding additional fees as they go,” he said.

Lastly, he said, be very wary of the national firms advertising on television that promise to settle your tax debt for nothing.

“When you speak with them for your `consultation,’ you are speaking with a salesperson, not an actual CPA that can give you a real plan to resolve your situation,” he said. “Every few weeks we get a new client that paid a lot of money to a national firm that didn’t do what they promised, and now has to engage our firm to fix things.”

Donenfeld said for his clients, after an initial free consultation, “if we think we are a good fit, we give a flat fee and offer flexible payment plan options to the client.”

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This story was originally published on May 19, 2020.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.