rs-irs-tax-debt-resolution Archives - Page 5 of 10

How Does an IRS Payment Plan Work?

July 5, 2026July 17, 2020 by Brotman Law

So an IRS payment plan and negotiating one is both an art and a science. Let’s talk about the science side of things. So IRS payment plans start based on a formula and the formula looks at the available assets that a taxpayer has and the IRS determines whether the taxpayer could full pay or substantially pay the liability based on the value of those assets. So for example if you owe the government $50,000 and you have $50,000 sitting in your bank account, the IRS is going to want that absent some good reason. So they go through your expenses, they look at your house, in certain cases they look at the equity in your house, can you borrow against any assets, things like that. If they determine that you don’t have sufficient equity in your assets, then it becomes an income and expense analysis they look at your various sources of income they usually average it over a three-month period and then they’ll look at your ordinary and necessary living expenses. So the real kicker with this is the term ordinary and necessary. The IRS has standards and they’re based on both national standards and local living standards on how much things should cost. So like for example, with your housing the IRS has an average based on where you live of how much housing is in your area. If you go to.

Key Takeaways

So an IRS payment plan and negotiating one is both an art and a science. Let’s talk about the science side of things.
the IRS website and look up IRS housing standard, the number is probably not very much to your liking but the IRS comes up with these standards and then that’s what they consider to be your ordinary and necessary living expenses.

If I Owe Money to the IRS How Do They Look at Credit Cards?

July 5, 2026July 17, 2020 by Brotman Law

Key Takeaways

Topic: If I Owe Money to the IRS How Do They Look at Credit Cards?
Read the full article below for complete details on this topic.

If I Owe Money to the IRS How Do They Look at Credit Cards? So this is a topic of conversation we have a lot of clients and let me give you the position from the IRS side of things the IRS takes the position that they are not a bank so if you owe tax debt they consider themselves to be the supreme creditor so anything that is an unsecured debt including a credit card debt the IRS considers itself to be more of a priority than that debt so the practical effect of that is that when negotiating an IRS payment plan they will not allow you to write off your credit card expenses and this is a big shock for taxpayers because what happens isn’t going through a financial analysis income minus necessary expenses a lot of people will list their credit card debt and unless that credit card debt was incurred for let’s say business expenses or for something else that. The IRS considers necessary they won’t write in minimum credit card payments and will require you to pay a monthly installment agreement pay a payment that’s much higher because they’re not including the credit card down that so just keep in mind that credit card debt is not a saving grace if you have a substantial amount of credit card debt and it’s affecting your cash flow you’re going to want to speak with an attorney or qualified representative to help.

Have a Tax Question or Notice?

If you’re dealing with an IRS audit, collection action, California state tax matter, or any other tax issue, we can review your situation in a free 15-minute call.

Schedule a Free Call → Or call: (619) 378-3138

I Owe Money to the IRS, How Will the IRS Look at Educational Expenses?

July 5, 2026July 17, 2020 by Brotman Law

Key Takeaways

For college-age children and private educational expenses, here’s the bad news.
When factoring in an IRS payment plan or when negotiating a collection resolution, the IRS does not include any expenses that you have for your college-age children or any private educational expen…
The reason for this is that the government views those expenses as luxury items even though most taxpayers in the system in that situation would disagree.

For college-age children and private educational expenses, here’s the bad news. When factoring in an IRS payment plan or when negotiating a collection resolution, the IRS does not include any expenses that you have for your college-age children or any private educational expenses. The reason for this is that the government views those expenses as luxury items even though most taxpayers in the system in that situation would disagree. A lot of the pushback that we get from taxpayers is well if it’s a choice between paying for taxes and sending my kids to college, I’m going to send my kids to college and while I understand that sentiment as a parent myself, you have to understand that the IRS employees that you’re negotiating with often make a salary that’s a lot less than yours. So you’re dealing with somebody who would also view that expense as a luxury item. This is particularly true for kids who are over the age of 18. The IRS considers those children to be adults and therefore kicks them out of the nest. Now with that said, it does not mean that you cannot get an allowance for educational expenses or for supporting college-age children but there’s some tricks and tips to doing that and you’re going to have to be very careful on how you put those expenses in the file. So rather than go into that, what I recommend that you do is contact a qualified representative or tax attorney and have us walk you through how to best include those expenses and how to get your resolution.

Have a Tax Question or Notice?

If you’re dealing with an IRS audit, collection action, California state tax matter, or any other tax issue, we can review your situation in a free 15-minute call.

Schedule a Free Call → Or call: (619) 378-3138

If I Owe Money to the IRS Are They Going to Take My House?

July 5, 2026July 17, 2020 by Brotman Law

Key Takeaways

Topic: If I Owe Money to the IRS Are They Going to Take My House?
Read the full article below for complete details on this topic.

If I Owe Money to the IRS Are They Going to Take My House? So let’s start by saying that yes the IRS can take your house if you are living in a house and you own that house free and clear and you owe money to the government the IRS is either gonna want you to borrow against that asset or they could potentially seize that asset now that’s a scary thought but for example if you’re living in a multi-million dollar home and owe the government a million dollars they’re not going to want you to continue to live in your multi-million dollar home and oh the government a million dollars so there’s gonna be a little bit of give and take there however the good news from the perspective of most taxpayers is number one it’s not very popular for the IRS to kick people out of their primary residences so seizing primary residence and kicking people out of their homes does it play out very well in the media so the IRS doesn’t usually seize principal residences at alas there are extreme or extenuating circumstances number two is there’s a lot of paperwork involved in seizing a house the IRS agents have to fill out a whole bunch of forms those forms have to get multiple signatures on them they have to go through an attorney and they have to get go through a court process and order through. The IRS to foreclose in your home so that’s a lot of work the IRS agents much prefer to go after low-hanging fruit they go after cash assets they go after bank accounts they go after stock accounts they go after wages to go after things that they can very easily seize so while they can take your house that’s not the first play in the IRS is playbook so generally speaking if you’re proactive in resolving your tax liability your house is generally safe.

Have a Tax Question or Notice?

If you’re dealing with an IRS audit, collection action, California state tax matter, or any other tax issue, we can review your situation in a free 15-minute call.

Schedule a Free Call → Or call: (619) 378-3138

Can Tax Debt Get Discharged in Bankruptcy?

May 25, 2026July 17, 2020 by Brotman Law

Income tax debt can be discharged in bankruptcy, but only when specific conditions are all met at the same time. This is one of the most misunderstood questions in tax law — the short answer is yes, under the right circumstances, but the conditions are strict and they all have to line up.

The rule is sometimes called the 3-2-240 test. To discharge income tax debt in a Chapter 7 or Chapter 13 bankruptcy, you need to satisfy all three of the following: the tax debt must be for a return that was due more than three years ago (counting extensions); you must have actually filed that return more than two years before you file for bankruptcy; and the IRS must have assessed the tax more than 240 days before your bankruptcy filing. Each of those is a separate, independent requirement. All three must be true for the same tax period or the debt does not qualify.

Two other conditions apply regardless. The return cannot have been fraudulent, and you cannot have willfully attempted to evade the tax. If either of those is true, discharge is off the table — period — under 11 U.S.C. § 523(a)(1). Fraud and willful evasion are separate from ordinary negligence or failure to pay. Most taxpayers with unpaid income tax do not have fraud or evasion issues; they simply ran out of money. But this is worth verifying before you file.

There are things this rule does not cover. Payroll taxes — the trust fund portion of FICA, the employer’s share, the amounts you withheld from employees’ paychecks — are not dischargeable in bankruptcy. Period. Neither are tax penalties that are punitive in nature. If your primary tax problem is payroll tax debt, bankruptcy will not solve it.

The three-year clock for the due date is measured from the original due date, not any extended due date. The two-year clock for when you filed runs from the actual filing date — a return filed the day before you petition for bankruptcy does not qualify. The 240-day assessment period can also be tolled if you were in an offer in compromise or a prior bankruptcy during that window.

Bankruptcy is one tool in a broader toolkit for resolving tax debt. It makes sense for some people. For others, an offer in compromise, installment agreement, or currently-not-collectible status is a better fit. The analysis depends on your specific numbers. Book a free 15-minute call at (619) 378-3138.

Will the IRS Waive Interest and Penalties?

July 5, 2026July 17, 2020 by Brotman Law

Key Takeaways

Which can increase it dramatically.
Interest on tax liability is set by a statutory rate, so absent some major error by the IRS in the calculations, you are probably not going to get the interest waived.
The penalties on liability are usually pretty stiff, however penalties can be waived under certain circumstances with reasonable cause if there is a good faith excuse for why the tax debt was incur…

Clients will often owe fifty thousand, one hundred thousand or even millions of dollars in liability, and while they do not often object to the actual amount that is owed, they do object to the interest and penalties that get tacked on to the liability. Which can increase it dramatically. Interest on tax liability is set by a statutory rate, so absent some major error by the IRS in the calculations, you are probably not going to get the interest waived. The penalties on liability are usually pretty stiff, however penalties can be waived under certain circumstances with reasonable cause if there is a good faith excuse for why the tax debt was incurred. If there is a genuine reason why the debt was incurred and if you believe you may have reasonable cause, you can get advice from a tax attorney on how to assess your chances of successfully having penalties waived.

Have a Tax Question or Notice?

If you’re dealing with an IRS audit, collection action, California state tax matter, or any other tax issue, we can review your situation in a free 15-minute call.

Schedule a Free Call → Or call: (619) 378-3138

Will the IRS Take My Car?

July 5, 2026July 17, 2020 by Brotman Law

Key Takeaways

So the IRS has had a long history of doing really nasty things to people.
In the early to mid-nineties, one of the things that they would do to people is they would call them in for meetings and then they would take their cars while they were in the meetings.
They would tow and impound, so Congress responded and had the IRS reform and restructure.

So the IRS has had a long history of doing really nasty things to people. In the early to mid-nineties, one of the things that they would do to people is they would call them in for meetings and then they would take their cars while they were in the meetings. They would tow and impound, so Congress responded and had the IRS reform and restructure. The IRS can’t take your car, because generally speaking there are protocols in place. The IRS is not just going to come by and sweep your car off the street. But the IRS does view your car as a physical asset, and if there’s value there, they’re going to want you to borrow against the car or they’re going to want you to sell that asset. In addition, for a lot of people, their car is a necessary expense for them or a necessary asset because it drives them to work. It allows them to produce income, so IRS agents do look at cars as reasonable and ordinary living expenses because they view them as a part of essential transportation. So yes, the IRS can technically take your car but no they’re probably not going to.

Have a Tax Question or Notice?

If you’re dealing with an IRS audit, collection action, California state tax matter, or any other tax issue, we can review your situation in a free 15-minute call.

Schedule a Free Call → Or call: (619) 378-3138

What Actions Will the IRS Take Against Me If I Owe a Liability?

July 5, 2026July 17, 2020 by Brotman Law

Key Takeaways

Topic: What Actions Will the IRS Take Against Me If I Owe a Liability?
Read the full article below for complete details on this topic.

What Actions Will the IRS Take Against Me If I Owe a Liability? So the IRS uses the carrot and stick to get people into compliance and to get the liabilities resolved generally they use to stick more than the character so what happens is the more time that passes from when the IRS is aware that you owe a liability the more significant and strong the actions they take against you are again they want you in compliance they want you to pay your taxes they want you to get on a payment plan if you can’t afford to pay your taxes in fall and they’re not going to tolerate you owing money to. The government so what happens as time passes is the IRS we take an increasingly serious action against you so the starts with letters you start getting letters you start getting correspondence of increasing urgency and then what the IRS does is they generally go after low-hanging fruit they start seizing bank accounts they start using wages they can take a portion of your Social Security they’re looking for assets that they can quickly find and quickly liquidate in order to satisfy the liability if they can’t find those assets depending on how much liability you owe then they may take stronger action against you they may send a field agent after you to come to your house they may summons you and bring you in for an interview they may demand the production of financial information or other documents and they look to get their money back so what happens is the longer that IRS liabilities go unresolved more serious. The government is and the harder and faster they move so it’s really important from a planning perspective as soon as you become aware of an IRS liability where as soon as you’re in a position to take care of a tax problem that you do so as quickly as possible taking swift and prompt action will mitigate most IRS problems and will do so very quickly.

Have a Tax Question or Notice?

If you’re dealing with an IRS audit, collection action, California state tax matter, or any other tax issue, we can review your situation in a free 15-minute call.

Schedule a Free Call → Or call: (619) 378-3138

What’s the Strategy for Dealing With IRS Collection Cases?

May 25, 2026July 17, 2020 by Brotman Law

Key Takeaways

Our strategy is we always focus on the end goal, where is the client now, what is their current financial situation, what is their current personal situation and where do they want to be.
Then with an understanding of where you are and where you want to be, how do we fit the IRS into the picture.
You may owe the IRS some money, you may not be able to pay that sum of money, but really the important thing is not that you pay the money but that your life moves forward and that you’re able to m…

Our strategy is we always focus on the end goal, where is the client now, what is their current financial situation, what is their current personal situation and where do they want to be. Then with an understanding of where you are and where you want to be, how do we fit the IRS into the picture. You may owe the IRS some money, you may not be able to pay that sum of money, but really the important thing is not that you pay the money but that your life moves forward and that you’re able to meet your personal, professional and financial goals. So we start with an understanding of what the goal is and then we work on the solution so that solution can look like a lot of things. It can look like a payment plan, it can look like a tax settlement but the long and short of it is let’s work on hitting the goal. Let’s work on achieving the goal of moving the client forward and working the IRS into a resolution based on what the client wants, not based on what the government wants. So the way that we approach IRS collection issues and the way that we approach the strategy behind that is to start by looking at a situation, figuring out where we want to be, figuring out the fastest way that we’re going to get there and then navigating the government through that way.

Dealing with IRS Collections?

Once the IRS moves into active enforcement — levies, liens, revenue officer visits — the options still exist but the timeline tightens. A brief review can identify where you are in the process and what resolution path makes sense for your specific situation.

Discuss My Collections Situation → Or call: (619) 378-3138

How to Deal With Collections Issues for High Net Worth Clients

July 5, 2026July 17, 2020 by Brotman Law

So high net worth clients present several challenges. From dealing with things from an IRS perspective, the first challenge that you’re going to have is that high net worth clients don’t fall within the IRS’ unusual guidelines for ordinary and necessary expenses. So take for example San Diego. For a single person living in San Diego, the local housing and utilities standard is about $2,500 a month, so the IRS allows you $2,500 a month as a single person for your housing and utilities. I always play a fun exercise to see where you can get housing for a single one-bedroom apartment for $2,500 a month in San Diego including your utilities and the reality of the situation is you can go to Oceanside which is 45 minutes north of here or you can go to Tijuana which is 45 minutes south. And those are about the only places where you’re going to find $2,500 a month rate including housing and utilities but for high net worth clients this presents a big problem because number one you’re dealing with income levels that are way above the IRS as ordinary standards so the fact of the matter is you may have somebody with an $8,000 mortgage or $10,000 mortgage or $25,000. Just because

Key Takeaways

the IRS disallows that $25,000 mortgage or at least a large chunk of it doesn’t mean the taxpayer isn’t actually paying that much for their mortgage.
I do in a whole year, why can’t they pay their taxes. The reality is that’s slightly insensitive to the particular person’s situation in my experience. When a client has more money their situation is more complicated.