Tax Resolution

If You Owe Money to the IRS: Best Practices and Options for Tax Resolution

Taxpayers facing back taxes, IRS notices, or unfiled returns often feel overwhelmed, but tax resolution is a structured process with proven methods for resolving tax issues. Whether you are an individual, self-employed, or a business owner, knowing your legal rights and options under IRS guidelines is essential. This guide outlines the most effective tax resolution strategies and best practices to help you regain compliance and minimize penalties, interest, and stress.

Write to Tax@S-CorpTax.com, or call (858) 779-4125.

What Is Tax Resolution?

Tax resolution refers to the process of working with the IRS or state tax authorities to address and resolve outstanding tax liabilities. It includes everything from setting up payment plans to negotiating debt reduction, filing missing returns, or disputing incorrect tax assessments. The IRS offers multiple formal programs to help taxpayers who cannot pay in full.

Best Practices for Effective Tax Resolution

  1. Act Promptly
     Ignoring IRS notices or delaying response increases penalties, interest, and enforcement actions. Contact a qualified tax advisor as soon as you receive a notice.

  2. Work with an Enrolled Agent (EA)
     Enrolled Agents are federally licensed tax professionals who specialize in IRS representation. They have the highest credentials issued by the IRS and are authorized to practice in all 50 states.

  3. Gather All Documentation
     Before contacting the IRS, collect tax returns, W-2s, 1099s, account transcripts, and any prior correspondence. This allows your tax professional to assess your liability accurately.

  4. Avoid Making False Promises
     Don’t agree to unaffordable payment plans. It is better to negotiate realistic terms through formal IRS channels.

  5. File All Past-Due Returns
     The IRS will not consider any resolution option until all required tax returns are filed. Your EA can assist with quick and accurate catch-up filings.

  6. Maintain Compliance
     For most IRS programs, you must stay current on your current-year tax filings and estimated payments. Missing future obligations can void resolution agreements.

Key IRS Tax Resolution Options

  1. Installment Agreement (IA)
     A monthly payment plan for those who cannot pay their tax liability in full. Terms vary based on the amount owed and taxpayer's financial situation.

    • Guaranteed Installment Agreement: For liabilities under $10,000.

    • Streamlined Installment Agreement: For liabilities under $50,000 without needing to submit financials.

    • Non-Streamlined Agreements: For higher debts requiring detailed financial disclosure.

  2. Offer in Compromise (OIC)
     Allows eligible taxpayers to settle their tax debt for less than the full amount owed. Qualification is strict and based on a thorough analysis of assets, income, and expenses.

    • Doubt as to Collectibility: When the taxpayer cannot afford to pay the full liability.

    • Doubt as to Liability: When the tax debt is believed to be incorrect.

    • Effective Tax Administration: Rare cases where payment would cause exceptional hardship.

  3. Currently Not Collectible (CNC)
     For taxpayers who cannot afford to pay any amount toward their tax debt. The IRS temporarily suspends collection activity. Interest and penalties continue to accrue.

  4. Penalty Abatement
     Taxpayers may request removal of penalties for failure to file or pay on time. The IRS considers reasonable cause (e.g., illness, disaster) or a clean compliance history.

  5. Innocent Spouse Relief
     Protects a spouse from being held liable for taxes resulting from a partner’s improper actions, such as underreporting income.

  6. Appeals and Audit Reconsideration
     Taxpayers who disagree with an IRS decision can file a formal appeal or request a review of prior audits based on new information or errors in the original examination.

Scorpio Tax Management can support High Income Earners and Business Owners in all 50 states

Please write us at Tax@S-CorpTax.com, or call 858 779 4125!

California

We assist business owners in all the following California cities and their surrounding areas:

  • San Francisco, including Marin County (Sausalito, Mill Valley, Tiburon), Silicon Valley (Palo Alto, Menlo Park, Mountain View), and the entire East Bay (Oakland, Berkeley, Fremont).

  • Paso Robles, including Atascadero, San Luis Obispo, Morro Bay, and all other parts of the Central Coast.

  • Santa Barbara, including Buellton, Santa Ynez, Montecito, Ventura, Oxnard, and Carpinteria.

  • Los Angeles, including Malibu, Santa Monica, Beverly Hills, Hollywood, South Bay (Manhattan Beach, Redondo Beach), and Pasadena.

  • Orange County, including Anaheim, Huntington Beach, Newport Beach, Irvine, Laguna Beach, and Costa Mesa.

  • San Diego, including Del Mar, La Jolla, Rancho Santa Fe, Encinitas, Oceanside, and Carlsbad.

  • Palm Springs, including Palm Desert, Rancho Mirage, Indio, La Quinta, and all other parts of the Coachella Valley.

Florida

We serve business owners across Florida’s vibrant cities and regions, from bustling urban centers to coastal communities:

  • Miami, including Miami Beach, Coral Gables, Coconut Grove, Key Biscayne, and the greater Miami-Dade County area.

  • Fort Lauderdale, including Hollywood, Pompano Beach, Weston, Davie, and all of Broward County.

  • West Palm Beach, including Boca Raton, Delray Beach, Jupiter, Palm Beach Gardens, and the entire Palm Beach County area.

  • Tampa, including St. Petersburg, Clearwater, Sarasota, Bradenton, and the broader Tampa Bay region.

  • Orlando, including Winter Park, Kissimmee, Lake Buena Vista, Celebration, and the greater Central Florida area.

  • Jacksonville, including St. Augustine, Ponte Vedra Beach, Amelia Island, and all of Duval and St. Johns Counties.

  • Naples, including Marco Island, Bonita Springs, Estero, and the entire Collier County and Southwest Florida region.

Nevada

Our tax services extend to Nevada’s key business hubs and surrounding communities, supporting entrepreneurs in a tax-friendly state:

  • Las Vegas, including Henderson, Summerlin, North Las Vegas, Boulder City, and the entire Clark County area.

  • Reno, including Sparks, Carson City, Truckee, and the broader Washoe County and Northern Nevada region.

  • Lake Tahoe (Nevada side), including Incline Village, Stateline, Zephyr Cove, and the surrounding South Lake Tahoe area.

  • Henderson, including Green Valley, Anthem, Seven Hills, and nearby communities in the Las Vegas Valley.

  • Elko, including Spring Creek, Carlin, and the greater Northeastern Nevada region.

  • Mesquite, including St. George (nearby Utah border), Bunkerville, and the Virgin Valley area.

  • Pahrump, including Nye County and surrounding rural communities west of Las Vegas.

Tennessee

We support business owners in Tennessee’s dynamic cities and regions, from music hubs to growing entrepreneurial centers:

  • Nashville, including Franklin, Brentwood, Hendersonville, Murfreesboro, and the greater Davidson and Williamson County areas.

  • Memphis, including Germantown, Collierville, Cordova, Bartlett, and the broader Shelby County region.

  • Knoxville, including Farragut, Maryville, Oak Ridge, Sevierville, and the entire East Tennessee area.

  • Chattanooga, including Lookout Mountain, Signal Mountain, Hixson, and the surrounding Hamilton County and Southeast Tennessee region.

  • Clarksville, including Hopkinsville (nearby Kentucky border), Springfield, and the greater Montgomery County area.

  • Johnson City, including Kingsport, Bristol, Elizabethton, and the Tri-Cities region of Northeast Tennessee.

  • Gatlinburg, including Pigeon Forge, Sevierville, and the Smoky Mountains area, catering to tourism-driven businesses.

We are not limited to the above states… Reach out to us! Our contact info is below.