09 Jul I owe the IRS money. Should I hire a pro to help me?
Q. I owe the IRS a lot of money and I’m thinking of hiring someone to help negotiate the balance down and I do not know where to begin. I’ve been warned to steer clear of companies advertising this service. What should I do?
— Help me
A. We’re glad you’re trying to catch up on your debt.
You have to have the correct mindset as you approach this challenge.
“When you call the IRS, you have to remember they are not your friend,” said Jonathan Donenfeld, a certified public accountant with JLD Tax & Accounting in Jersey City. “They are a creditor and are trained to get you to pay as much as possible, not the other way around.”
Donenfeld said if you’re not experienced in dealing with the agency, you may end up helping them get more money from you and inadvertently start the process for them to issue a bank levy, he said.
To qualify for an Offer In Compromise, you need to be able to prove that you meet the qualifications.
“You need to be in compliance, provide a 433a or 433b — sometimes both — financial statement, a filled-out form 656, bank and account statements and potentially receipts for your various expenses and meet the IRS financial standards,” he said.
It can then take 6 to 8 months for the IRS to respond and if it is not done correctly, it will be rejected immediately, he said.
“What’s worse is now the IRS has all of your financial info, which they can use to levy your bank or put liens on your accounts or property,” he said.
He recommends you find a local certified public accountant that specializes in back tax issues.
And a word of caution.
“If someone says they can settle your tax debt with doing a financial analysis, you should run,” he said.
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This story was originally published on July 9, 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.