Steven Klitzner, the IRS Problem Resolution Attorney, joined Good Morning Keys on KeysTalk 96.9/102.5FM this morning to talk about tax time.
April 15 is the day and if you haven’t filed a tax return in years, you may want to call the tax problem solvers.
Klitzner said, “This is the time of year I get a lot of phone calls from people who have not filed returns in a year, five years, 10 years or even this century. These are very good, responsible, intelligent people who have this IRS mental block, where it’s just so overwhelming that every year goes by and it just snowballs into a horrible dilemma for them. This time of year, I get a lot of calls from people that say I’m going to do it. I’m going to put this behind me once and for all.”
There are more than 10 million people each year who fail to file their tax returns.
Klitzner said, “The penalties and interests build up tremendously. The criminal issue, that’s one of the biggest questions people ask me, am I going to jail? Generally the answer’s no. The IRS, the Justice Department, they don’t have the resources to go after everybody. So they’re looking for people that could really convict, high profile people, but that doesn’t mean they can’t make a lot of trouble for you. I ask people all the time, why now? You haven’t filed in years. Why are you coming forward now? The answers vary. Sometimes it’s because they’re young, and they have a life ahead of them and they don’t want to keep looking over their shoulders. Other times they’re older, and they’ve just had enough. They’re in their later years. They don’t need the aggravation of the IRS. My favorite is I’ll have a guy call and say I met a girl. She wants to get married and she won’t get married until I take care of my IRS problem. So my question is, well wait, do you want to get married? Because if you don’t, this is your opportunity to get out.”
The good news is the IRS only goes back six years.
Klitzner said, “For a lot of people that’s relieving because if you file a return that it’s 10 years old, that the IRS isn’t even looking for, with penalty and interest that will be more than double what you owe. So the plan is this. We look at the last six years, I get the transcripts from the IRS, I want to find out if the IRS filed for them because the IRS does not give you all of your deductions. I also find out all of their income information that’s been reported to the IRS. Then we start working on the last six years to get them compliant. Then we can work a deal. Sometimes they can’t pay and they can be not collectible or an offering compromise. Sometimes they can pay and they do. But the important thing and people always feel so much better once they get this done, because like anything else, it’s never as bad as you imagined it’s going to be.”
The IRS typically doesn’t go back more than six years.
Klitzner said, “Their policy is not to ask for returns that are more than six years old. So at the present time, we’re dealing with 2018 to the present. Now, if people do owe money, the statute of limitations is 10 years, 10 years, not from the year they owe, but 10 years from when they filed. There are certain things the taxpayer may have done in the last few years that would have extended that. That’s something I find out. It’s amazing how many people are so worried about an IRS issue and when I get the records from the IRS, it’s expired. It’s more than 10 years old, they no longer owe the money.”
The IRS is quite good at finding money that is owed to them.
Klitzner said, “They’re focusing on that now. They know there’s a problem with non filers. What they’ll do is they’ll send a letter to the last known address that they knew you lived at, your last return. If you don’t file the return, they’ll file it for you and the next thing you know, you owe the IRS money and they’re levying a bank account. So it’s important to get on top of this and get the transcripts and find out what’s going on. Then tackle it, put it together, get it behind you. You feel so much better because I’ll be able to ultimately make a deal that my client is going to be able to live with. They may not be happy with it. Now they’re paying taxes they haven’t been paying, but they’ll be able to live with it and they won’t be looking over their shoulder all the time.”
Penalties are very real and very serious.
Klitzner said, “That’s why you have to get ahead of it and you want to do it before the IRS wakes up on it and that way we can control this scenario. We can work on it without it having to be ‘we have to give them everything by tomorrow.’ We can we can plan ahead and that’s the important thing about it. One of the other big questions people ask me is, well, can they just waive the penalty and interest? Well, first of all, they never waive interest. As far as penalty goes, you have to have reasonable cause and if you haven’t filed in many years, it’s very hard to show reasonable cause why you weren’t able to file and pay over the years. Every so often someone will call me and say, well, I know a guy, I met a guy, and he made a call and they waived the penalty and interest, he just called them and they waived it, and they took 60 cents, 50 cents on the dollar. Well, I’m going to tell you this, maybe there is such a guy, I’ve never met him and he knows a lot of people because everyone has talked to this one guy. But it’s not a real thing. That one guy that you heard about, the guy at the party that told you that, I don’t know who he is, but he gets around the whole world.”
Klitzner has a lot of experience with the IRS.
He said, “It’s very strange how the policy from the higher ups, sometimes it’s different than the policy of the local people and that’s what we have to do. We have to enforce the real policy.”
Has the IRS hired those 87,000 agents the news talked about?
Klitzner said, “They’re working on it. I just saw a statistic that they haven’t put as much money into collection, as they have. They’re only at the tip of the iceberg there. They have had a lot of new hires. There have been people of course that retire. But we see a lot of new revenue officers on the collection side. I had a Revenue Officer call me the other day and I knew she was new because I didn’t know her before. After about halfway through I said are you new? And she said, I’m not going to tell you that. I said, well, why not? She said because then you’ll take advantage of me. I said no I won’t.”
If you get a letter from the IRS, you really should open it.
Klitzner said, “There is a new round of letters going out. It started in December to people who the IRS hasn’t really touched in a couple of years because of COVID. Now they’re sending these letters, they’re sending two types of letters. One is a certified gunning, Intent to Levy letter and the other is a new letter they just developed which is a kinder, friendlier letter, which doesn’t really threaten as much as it says, look, we want to work this out and they have some QR codes, and they want to work it out. But the problem is, they don’t tell you all your rights. They don’t tell you everything you can do. They don’t tell you about first time penalty abatements or lien withdrawals. They’re only interested in getting the money. That’s why it’s important that we get involved, exercise all of our rights and make the best possible deal for our clients.”
Are there incentives for IRS agents to get as much money as possible?
Klitzner said, “Fortunately, they don’t get a percentage of what they collect. Otherwise, it’d be like the old west. They get reviewed all the time, and they need to close their cases. But, look, the bottom line is, they don’t want to set you up for failure. They may want you to pay $2,000 a month for an old debt, but if you can only pay $500 a month, that’s the deal, whether they like it or not, that’s the deal they’re going to make, and they’re going to close the file and go to work on the next one. When you owe them money, they want as much as they can get from you on a monthly basis. Sometimes that’s very little. Sometimes it’s a lot. I’ll have two people owe $100,000. One is paying $2,000 a month, the others paying $100 a month, because that’s all they can afford. So everything is done on a case by case basis.”
Does the IRS look more favorably upon those who voluntarily come forward?
Klitzner said, “To some extent they do, especially the ones who come forward and start to file and pay going forward. Because when you haven’t filed and paid for many years, you may be a great person, but in the IRS’s mind, you’re bad person, you’re not doing what you need to do. But when you start to file and pay going forward, then they look back and then they understand something happened, hard times came along, something happened in their lives, and they just fell behind. Then they work with you on the past stuff. So the biggest most important thing is doing everything right on time going forward. The first thing you’ve got to do this time of year, if you can’t get the return filed, is go on the IRS website, get the form and file for an extension. You have until October to file. There’s no extension to pay only to file, but you’ll save, if you wait five months, you’ve got a 25% penalty for failing to file so get the extension at the least. And then get on it right away. Don’t wait till October.”
The consultation with Klitnzer is free.
He said, “I like talking to people, at the very least it gives me an idea and I get the pulse of the community, a pulse of what the IRS is doing right now. But I always give people free consultation. If I can help them, I tell them, I can help them. I tell them, here’s the fee. It’s a flat fee and covers everything until the end of the case. Sometimes though, we have to do a little investigation. So instead of a fee for everything, there’s an initial flat fee, so that we can get our ducks in a row. Then I give them credit for that when I say alright, here’s the fee, it covers everything to the end. If we do this and it doesn’t work, we’ll appeal and if that doesn’t work, we’ll do this. If a couple of years go by and your situation changes, we’ll do this because it really flows in that way. So the ultimately my fee covers everything to the end. But I’ve got to be able to give value to people. People call me all the time. There’s a $5,000 problem/ It makes no sense for them to call me. They might as well just give that money or my fee to the IRS and start paying down what they owe. But when you owe a significant amount that you can’t pay, I can give value to my clients. Nothing makes me happier than someone that really starts to take care of the problem, to be accountable for it. You created it, maybe someone else did, it doesn’t matter. Just take the bull by the horns, and you feel a whole lot better knowing that all of a sudden, there’s not going to be the doorbell may ring or you’re going to get a letter or your bank account’s cleared out. It gives a lot of peace of mind whether you’re young or old.”
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