Without the right tax advice, making your tax problem worse than it already is is quite easy to do. Here's a few common mistakes we see clients making before they come to WATAX:
1. Filing More than Six Years of Taxes - If you haven't filed taxes in 10 years or so, a common mistake is to file all 10 years! The IRS generally is looking for non-filers to file the last six years of tax returns. They usually won't be looking for returns past that. So in early 2024, you'll want to focus on 2018 to 2023 returns... There are exceptions to this six year rule, which we explain elsewhere in the blog.
2. Overpaying for a Tax Relief Company - Tax relief companies often will tease customer with a low research fee and then charge a high four or five figure fee $$$ to resolve your tax problem. Unless your tax problem case involves multiple tax filings, a complex tax audit or a really intense tax collection situation, you should really be able to resolve your tax problem for less than $4,000.00.
2. Filing a Bad Offer in Compromise - Filing an Offer in Compromise (OIC) to settle your tax debt is great when you "qualify." But if you don't qualify, don't do it! And don't let the Tax Relief company you hired do it either! Why? Filing an OIC freezes the statute clock on your taxes. And if you lose your OIC, which takes about 4 to 9 months to process, that's valuable time you lost on the statute clock! Other odd facts about OIC can be found in our blog.
4. Submitting Penalty Waiver Before Ready - Don't request a penalty waiver UNTIL you meet all of the criteria. The three most important criteria for penalty abatement are A. Be current on your most recent tax filing, filing and paying taxes due. B. Either have paid the taxes due or entered into an installment agreement. C. Have some explanation why you fell behind and indicate that you have "mended your ways." Sometimes your story (C) is the weakest criteria, but if both A and B are intact and C is weak, we say still try a penalty waiver.
5. First Time Penalty Abatement - If you have filed and paid your taxes and have a pretty good recent history with the IRS, all taxpayers qualify for a "first time penalty abatement" for one year. WATAX representatives are experts at getting this done for clients quickly so reach out to us to learn how we do it.
