by Jay Freeborne , Enrolled Agent
January 6, 2010

I have been thinking about the interview I just had with a taxpayer who owes $31,000 to the IRS, because I wonder how Taxmasters or Associated Tax or JK Harris or another company staffed with salespeople and closers would have handled the interview.

Taxpayer negotiated a $250 payment plan to the IRS on a $31,000 debt. He lives on a small $24,000 pension annually. He can't afford the payment. His taxes were older (2003, 2004 and a little owed for 2008). When I learned that he also had $15,000 in credit card debt, I knew that I shouldn't take on his case.

I referred him to a bankruptcy attorney for the following reasons:

1. His credit card debt could be discharged in BK.
2. His older tax debt could be discharged in BK. (His more recent debt -2008 would survive the bankruptcy but be small enough to manage - $800).
3. Filing an Offer in Compromise would be fraught with problems, as the IRS doesn't allow for credit card payments in the calculation of the Offer.
4. He couldn't make his monthly payment he agreed to.

Most fly-by-night salespeople of tax resolution services overlook these kinds of things, and sell services to people like this gentleman that they don't need! Based on my experience, and the stories I've heard, this guy very easily would have been sold an Offer in Compromise -- for a $1500 to $3000 fee. He would have received nothing for the fee except more headache.

Thoughts for the new year. Be careful out there.

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