I often hear clients say, “if you can just get me out of this mess with the IRS, I will never get back in trouble again.” The truth is that 100% of our clients will be given a settlement with the IRS that in most cases exceeds their expectations. Many say, “If I knew it was going to be that easy, I would have done this years ago.”
Getting the settlement is not the hard part. The hard part is breaking the habit that caused the problem in the first place. In most cases that requires adjusting one’s life style to adjust to a new expense in one’s life–income taxes–Federal, State and payroll. This amount varies, especially between individuals who are employees vs. self-employed. But let’s use a round number of 30%. If one is making $100,000, adding $30,000 in additional expenses means cutting out something else that they were used to spending money on.
The IRS estimates that about 80% of the individuals put on an installment arrangement default withinin one year. Experience has shown us that when clients see the reality of paying taxes, it is too easy not to pay in the “volutary” estimated taxes, or to adjust their withholdings when “emergencies” arise. Then when it comes time to file and full pay by April 15, to keep their settlement valid–they default when funds are not available to stay current on their tax liability.
Successful resolution with the IRS is not just getting the settlement; it means that one must break habits pertaining to spending, living within a budget and making the tax payments as important as other monthly expenses. One must avoid seeing the IRS as a credit card, in the sense that you pay other expenses by not paying the IRS. Unfortunately the easiest expense not to pay is the IRS. However, it is also the hardest one to catch on as well.
Scott Allen E.A.