I was audited by IRS and owe 10k after penalties/interest. Should I consult an outside firm to try to reduce?

Question

So I was audited and after the 'correct' tax took place, I'm in debt to the IRS for about 10k. Is it worth attempting to go with an outside firm that advertises lowering someones obligation or can I do this on my own or do I simply accept the penalties and move on?

The error was on my part so I understand and accept responsibility but wondering if it's worth it to go to an IRS atty or other business that offers to negotiate with the IRS?

Answer 1

Unless there is some extraordinary reason to think that the IRS will cooperate with the attorney, save your money and just pay the IRS. An attorney who does not advertise might be able to get the penalties lowered, but might charge more than the penalties. The attorneys who do advertise specialize in "offers in compromise", which are only accepted if either (a) there are unresolved legal issues on which you could take the IRS to court and might win, or (b) the debt is so much more than you could possibly ever pay that the IRS recognizes that it will not lose any money by lowering the amount it requests.

Answer 2

The tax resolution companies that advertise on TV have to pay a ton of money for advertising.They will charge you fees that will be a substantial percentage of what you owe and can not guarantee success. I provide the same kind of service to my clients for about a third what my as seen on TV counterparts charge and that still might not make sense in your case. You have to show that you are offering as much or more as IRS could expect to collect over the long haul. If you could pay $200 per month from current income, you are already out of the running.

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Answer 3

Probably not.



The firms that advertise heavily tend to be a ripoff.



Also, settling for a lower amount is based on ability to pay. If you could sell everything that you own and pay your debt, the IRS will not accept one cent less than what is legally owed.

Answer 4

outside firm? you might spend $6000 with the outside firm to get it reduced and there is no guarantee they can get it reduced

if you are reasonably young, have any kind of work at all, it is very unlikely IRS will reduce your debt, they are interested in getting all they can

you can submit your own Offer in Compromise yourself, for free but you really need to present as dim a picture of your circumstances to indicate the unlikelihood that collecting the money is real.

Answer 5

Being honest if your asking the question then you probably cannot do it on your own, I looked at it doing it myself when I was in a similar position ($17k owed). In the end I went with http://rfurl.net/irshelp who got it down to $11k, and only charged me $1k so I made a $5k saving.



The company I used offered a free consultation and advice, and told me there and then that it was worth pursuing. Visit the website and have a chat with them, you've got nothing to lose.

Answer 6

Talk to an enrolled agent, never one of those firms that advertise on TV etc. But if the calculations are correct, you will not get a reduction.