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            For the past several months I have received calls from some of my clients with tax problems that they have received a phone call from the IRS threatening them with criminal prosecution if they did not immediately pay their taxes over the phone.  Knowing the IRS’ tactics, I reassure my clients that the call is a scam, but to allay their concerns, I take down the phone number provided and inquire.  Upon calling the number, I quickly learn it is a scam and report back to my client.

I used to think these scams were reserved for people with tax problems and have tax liens filed against them.  With the tax liens being public records, they are an easy target.  However, these scammers are also calling people with no problems whatsoever and are trying to intimidate and coerce payments.  I learned this from my wife when they called my house and left a message on our answering machine.

Upon receiving the message, I made the return phone call. The person that answered the phone sounded like they were in a large call center with a lot of background noise.  The person had a foreign accent.  I requested the purported IRS agent’s badge number and was answered with a barrage of threats including that they were going to send agents down to arrest me.  Not being concerned, I advised them I was about to leave for an appointment but would be back by 2:00pm if they wanted to come at that time.  Of course, nobody showed up.

The simple fact is that the IRS does not call people and demand credit card payments over the phone.  The IRS is required to send written notices to taxpayers that owe back taxes.  If the notices are ignored, the IRS typically will try and levy bank accounts and wages.  If the levies are not producing enough results, the IRS likes to show up at a taxpayer’s residence or place of work unannounced to make a field visit to attempt to get the taxpayer to pay their back taxes.  However, proper identification is provided on the field visits.

With the first deadlines past for the filing of tax returns, some taxpayers will find they owe taxes they cannot afford to pay.  Be careful of the numerous so called tax firms that advertise on television and radio promising to resolve your tax problems through the IRS’ recently announced Fresh Start Initiative.  The Fresh Start Initiative was rolled out back in February, 2011.  Tax problems can be resolved but a struggling taxpayer should rely on someone local they can meet with and trust to resolve their problems.  I frequently meet with people that have hired someone over the phone in another state to resolve but their problem has not been resolved and they can no longer get in contact with the person they hired.

To resolve IRS tax problems, you will essentially have one of four choices: pay in full; pay in installments; submit an offer in compromise; or file bankruptcy.

The easiest way to resolve the problem is to pay it in full if you have the ability.  There is no deal to be made if you have the funds to satisfy the liability.  Dragging the process out will only result in penalties and interest being added to the tax bill and you will be amazed how fast those penalties and interest accrue.

If you do not have the ability to pay the liability in full, there are various IRS installment agreement programs.  The installment agreement in some instances will require no financial documentation whatsoever, but in some instances, it will require detailed justification of the amount you propose to pay.

The offer in compromise program is another means to attempt to resolve a tax problem.  It will require detailed financial information and verification.  The process can be difficult and you will need someone that is knowledgeable in the program and the rules.  The IRS is not required to accept an offer in compromise and it is in their discretion.  Accordingly, proper advice is required before spending the time and money to pursue this option.

Lastly, a tax debt can be resolved through a bankruptcy.  However, different types of taxes have different rules and taxes that can be discharged have to have been assessed for at least three years on a filed return before they become eligible for discharge.  Proper planning and advice is necessary before attempting to discharge a tax debt through bankruptcy.  If it is done incorrectly, you are stuck because it could be a long time before you can file another bankruptcy.

There are a lot of scams out there.  Be careful in dealing with people on the phone and hiring people to assist you with your problems.  The best way to hire someone to assist you is obtaining a recommendation from someone you trust.  If you cannot obtain a recommendation, search for attorneys or accountants that are local to you and have experience in dealing with your type of problem.

– Jason W. Harrel is a Partner at Calone & Harrel Law Group, LLP who concentrates his practice in all manners of Taxation, Real Estate Transactions, Corporate, Partnership and Limited Liability Company law matters. He is a certified specialist in Taxation.  Mr. Harrel may be reached at 209-952-4545 or

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