Tax lawyer shares 10 questions clients ask when dealing with IRS problems
BrandInsight Contributor
When dealing with the IRS, you need somebody by your side who not only knows the rules, but understands your situation.
For many years, Oklahoma City tax attorney Travis Watkins has done just that. He shared the most frequently asked questions clients ask when they want to hire a tax professional to solve an IRS problem.
1. Do I really need a tax lawyer?
“Yes. Dealing with the IRS can be complex, and most taxpayers are greatly outmatched when it comes to knowing IRS rules and procedure,” said Watkins, who has represented several thousands of clients over the years. “Our office also has CPA’s and Enrolled Agents who can assist as well. Tax relief is not something you should try to pursue on your own, as your financial and emotional future is at stake.”
Watkin’s clients sign an IRS Power of Attorney which allows the firm to take over communications with the IRS.
“An experienced tax lawyer can help you achieve your goals for yourself and your family,” he said.
2. How much can I save with the IRS’ Offer in Compromise program?
“It depends,” Watkins said. “The IRS’ settlement program or “Offer in Compromise” is determined by whether the IRS can collect the full amount of liability within its deadlines. As each taxpayer’s financial situation is different, each settlement is different. The IRS is the final decision maker of an individual’s eligibility for this program. The average accepted Offer in Compromise in our office is about 10-15 percent of what the taxpayer owed.”
3. When will my case be over?
“Compliance and payment are a lifetime commitment,” Watkins said. “That is why we help our clients from year to year with their taxes. Currently, the IRS is taking from six to nine months to process Offers in Compromise alone.”
Meanwhile, new collection attempts are stayed or stopped. Most cases are over in 12 to 18 months.
“You will need to stay in filing and paying compliance to make sure that all the relief you have accomplished stays in force.”
4. What about fees?
When it comes to fees, any tax professional should be transparent and up-front, Watkins said.
“Many factors are at issue in the fee, including our inability to accept other clients and other employment and in consideration of our power of attorney staying in full force and effect during representation. Most importantly, we will quote you a fixed rate, there are no ongoing monthly bills in most cases. A liability of $50,000 would be about $5,000 in fees,” he said.
5. Will I get thrown in jail for owing the IRS?
“The inability to pay your tax debt is not grounds for jail time,” Watkins said. “The IRS cannot collect income tax if you’re incarcerated so it is not in their best interest to pursue you in this manner. You can, however, go to jail for cheating on your taxes or fraud. Timely filing of your returns, even if there is a balance will prevent the hefty failure to file penalty.”
6. Do I owe taxes on gambling winnings?
“Yes. A casino may require your Social Security number so it can file an IRS Form W2-G to report your winnings,” Watkins said.
Table games are not required to report the winnings on the W2-G, but not exempt from paying taxes. Even if you do not win above the threshold to fill out the W2-G you are still legally obligated to report your monetary gain.
7. Will the government take my professional license?
Senate Bill 1040 requires state tax compliance before any professional can renew their license.
“That means medical doctors, physician assistants, chiropractors, commercial drivers, cosmetologists, dentists, funeral workers, engineers, insurance agents, optometrists, pharmacists, real estate agents, security brokers and agents, pathologists, veterinarians, buildings inspectors, electricians, plumbers and emergency medical technicians must be compliant with taxes to maintain their license,” Watkins said. “Licenses will not be renewed until compliance and a resolution is established.”
8. Can they take my home?
“The IRS is a powerful government agency that will utilize every tactic to collect the tax debt that is owed,” Watkins said.
If you owe the IRS taxes and are not compliant, the IRS will enforce collection in various forms: levies, seizures and public sale.
“There are little restrictions on the IRS’ ability to initiate seizure,” he added. “State homestead laws do not shelter your residence. Luckily, the seizure process is a last resort. Start working out a plan with the IRS now before the process proceeds further.”
9. The IRS issued a levy on my bank account, what do I do?
“If the IRS has issued a levy on your bank account, your funds will be frozen and you will not be able to withdraw,” Watkins said. “Your first step should be to contact an attorney. To get this released as soon as possible, you must present an acceptable alternative to the IRS within 20 days to negotiate the release.”
10. Why should I choose a local firm?
“The IRS works through its local field agents and officers. Your best representation will come from tax professionals that deal with these local IRS representatives every day,” Watkins said.
Most importantly, however, make sure that anybody you work with has the appropriate certifications, training or references.
Call 800-721-7054 for or visit TravisWatkins. com to download of the book, The Ultimate Survival Guide for IRS problems.
This article is sponsored by Travis A. Watkins Tax Resolution Firm.