I’ve had many clients tell me that a large IRS feels so overwhelming that it freezes their ability to act. I get that and don’t judge.

The internet reminds the “frozen” all the normal stuff about waiting like:

  • You’ve got to get moving – interest and penalties are growing.
  • The IRS will eventually freeze your bank accounts and garnish your wages.
  • IRS Liens are going to be recorded and you won’t be able to sell your home or borrow against it.

All true…but I look at it differently and that’s because sometimes and strangely, waiting i.e. doing nothing, is the best move…

The problem the “frozen” have is they don’t know whether waiting or not makes sense because they don’t take the first step.…they don’t “analyze” their options with someone who understands these issues, the law , and who is willing to tell the the truth about options.

A few examples – how taking the “first step” can help.

Example 1

Emma had $50,000 in IRS debt from an underwithholding issue. The debt grew as penalties and interest were added. She set up a time based installment agreement with the IRS and struggled as she made a year’s worth of payments.

But, Emma also has credit card debt and a personal loan that she tried to pay and couldn’t…partly because the IRS installment agreement payments were eating up her income.

The IRS hadn’t issued a final notice of intent to levy with appeal rights and as a result, the IRS couldn’t yet issue levies.

Her IRS debt was 6 months away from reaching it’s “discharge” dates i.e. reaching an age where her obligation to pay could be discharged in bankruptcy.

She had few assets.

Her best option…hang on for six months, do nothing and…. if possible and file a chapter 7 bankruptcy at the right time. This would provide her with a true fresh start, elimination of her IRS debt and her consumer debt.

The problem is that Emma wasn’t aware that bankruptcy was an option. She thought that she was going to spend the next several years dealing with the IRS and other debt. Levies, lawsuits, and liens.

Example 2

Fred is retired. He’s been dealing with an IRS for several years. He tried an IRS offer in compromise early on and it failed. At one point he set up an installment agreement but the amount was difficult to pay each month and at some point during the Covid “shutdown” period at the IRS, he quit making the installment agreement payments. As he didn’t hear from the IRS for a long time, he thought he was out of the “woods”.

But…the IRS recently sent him a “final” levy notice and he called a tax resolution firm who charged him a large amount of money upfront to deal with it.

After paying the fee he felt sick and decided to find an attorney who could review his situation and explain all of his options before charging him a large fee.

He found one and learned that he only had 3 months before all of his IRS debt would reach it’s “collection statute expiration date” and be removed forever.

He was able to sit tight, do nothing, and let the clock run out. The debt was removed.

The tax resolution firm refunded some of his fee.

IRS DEBT GAME PLAN – FIRST STEP

If you have a serious IRS debt, take the first step and talk to someone who’ll review the facts and tell you the truth about your options.

You may not need to hire anyone… as the real solution may be relatively simple.

You may need to do some “planning” to get the best result.

If you simply arrange an installment agreement or file an offer in compromise without a deeper look by an experienced attorney, you may miss the real solution.