Welcome to the start of summer. This is supposed to be a time of fun and vacation. For some of you, that is what you have planned. Others, you find yourself walking or riding your bike to more places.

Our economy is in turmoil. With inflation, rising interest rates, and high prices from gas to food to just about every necessity, it seems inevitable that there will be more to come. Some people will lose their jobs, while others will just not be able to afford to cover their everyday expenses. This means that they will have to make difficult choices. For some, that means not paying their U.S. income taxes. That is the start of a dangerous game people play.

You start racking up a large tax liability one year after the next. Then you hear: “Do you owe $10,000 or more to the IRS? Are you fed up with income taxes eating 30% or more of your profits? If you pay $75,000 or more in taxes each year, let our tax resolution experts help you. Typically, we negotiate with the IRS and reduce our clients’ taxes 30-40% netting an average of $100,000 or more each year in tax reductions. Our strategies are proven and IRS-compliant.”

Does this sound familiar to you? Have you heard these commercials on the radio or TV? There is a good chance you have. Now that you owe the IRS money, you pay attention more intently to these commercials. If your debt has been out there for a few years, it is possible you could have even received some official-looking postcard or letter in the mail from one of these companies offering to help you.

While there are options to help you “negotiate” with the IRS, it really is not that simple. On the other hand, it is also not rocket science. There really are only a few options available to deal with your IRS tax debt. You can generally do one of the following:

· Pay the tax debt in full with cash, investments or retirement money you have laying around. Yeah, right.

· Sell or refinance an asset (house, boat, car, stocks) to generate the cash to pay down or pay off the tax debt in full. Of course, you need the IRS's permission to sell or refinance.

· Enter into an Installment Agreement (IA). This is what the IRS calls it, but you know it as a payment plan. Generally, if you can make the monthly payments that will pay off the tax debt in full within the remainder of the 10-year collection period and the amount is under $250,000, you won’t have to provide financial information.

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· File financial forms (Form 433) to ask for Currently Not Collectible (CNC) status. This is where they take your account and set it off to the side, until the collection period expires. This is assuming your ability to pay from your current income is zero and you have little to no equity in assets. Oh, and you cannot have a major change in your income during the collection period.

· File financial forms (Form 433) to ask for a Partial Pay IA (PPIA). This is where your financial status shows an ability to pay in an amount that will not allow you to full-pay the tax debt over the remainder of the collection period. You WILL have to provide financial information and renew this status every two years.

· File financial forms (Form 433 and 656) to ask for the Offer-in-Compromise (OIC) program. This is where you “settle for less than what you owe." But please do not mistake this for “negotiation." To qualify for this program (OIC) (or any of the programs named before), it is based completely on your facts and circumstances, and it is done using a mathematical formula.

We don’t want to oversimplify this process. It is something that every taxpayer can do for themselves. The question is: Should you? Just like they say you should not represent yourself in a lawsuit, you probably should not deal with the IRS directly if you owe them. Well, at least if you don’t owe them more than $10,000.

Please seek the help of a licensed tax professional (CPA, EA, attorney). Of course, this is what we do at our firm. Not only that, but we have the experience to handle many situations.

If you find yourself in this situation and you are ready to deal with your state of affairs head-on and tired of losing sleep, please reach out to our office. We will be happy to help you with a supportive and nonjudgmental attitude.

Until next month, keep your head up. Being thankful for what you have will help you maintain a positive attitude.

Dan Henn, CPA, is a local certified public accountant. His firm specializes in IRS audit and collections representation, real estate and medical taxation, year-round tax planning and tax preparation in Rockledge. You can contact his office at 321-684-7800 or at danthetaxman@danhenncpa.com.