When notices from the IRS or state are hitting your client’s mailbox faster than a prairie fire with a tailwind, you know something must be done to address the mounting tax debt. Especially because we all know that the IRS and states are focusing on aggressive collection tactics once again, thanks to our governments spending tax dollars like drunken sailors. But how do you know if it’s something your clients can handle on their own, when it’s something you, as their CPA or accountant, should handle, or when it’s time to refer them to an experienced tax debt resolution professional? While this decision comes down to a client’s personal choice, let me share some information that should help.

First, a taxpayer CAN handle an income tax debt with the IRS or state on their own as long as it is a nominal balance. What does “nominal” mean? Typically, if they owe less than $10,000 to the state or $20,000 to the IRS, all in, and are not at risk of adding new balances to the debt. If it is a business income tax balance, the same parameters apply.

However, if the business has a payroll or sales tax debt, steer them far away from the notion of DIY’ing it. These two types of taxes come with a personal responsibility component. Not only will the IRS or state seek repayment of those tax debts from the business, but unless the business can pay the taxes owed within a few months, they will also seek to personally assess any responsible parties involved with the accrual of the debt. It’s absolutely NOT something they should mess with.

When is it appropriate to have you, as their CPA or accountant, get involved with the tax debt? This depends on a couple of things:

1. Do you have experience handling similar tax debts with the agencies owed?
2. Do you have the time available to get involved?
3. Do you even want to get involved?

Many CPAs and accountants have dedicated areas of focus for their practice: tax preparation and planning, retirement planning, bookkeeping, financial analysis, estate and trust tax preparation, business consulting, and more. Proficiency in each of these areas requires years of study and experience; the same holds true for tax debt resolution.

I was once in a continuing education class presented by a prominent CPA firm from the East Coast, and the presenter said, “If you’ve never handled a tax debt for your client, go ahead and give it a try. Dip your foot in the pool. It can’t hurt.” To say I cringed at that comment is an understatement; I nearly jumped out of my seat, yelling, “NO!!!!” Remember that every single move you make with a tax debt case can impact the Collection Statute Expiration Date and the future collection decisions made, even if they are made with nothing but the best intentions.

If you have the time to dedicate to your client’s tax debt and want to get involved, be honest with your experience and know your limitations. I’m not saying this to be rude or disrespectful; I’m saying this as someone who has become involved in too many cases where a well-meaning CPA or accountant began to handle a client’s tax debt, and the situation quickly ran away from them.

For CPAs and accountants who do want to get involved to help their clients out but don’t have a lot of experience, a safe cap is at a personal or business income tax liability of $50,000 and a business payroll or sales tax liability of $25,000. Beyond that, an extensive understanding of the IRM or state laws that dictate the handling of collection cases and first-hand experience working through the Collections and Appeals Divisions of the tax agencies involved is best. I provide these parameters with a huge asterisk attached: each and every client’s tax debt situation is different. Assess each case on its own merits and make a decision from there.

If you have a client with a tax debt situation above the appropriate DIY level and you don’t have the time or inclination to get involved, reach out to the Golden Lion Tax Solutions team for help. We love working with our referring CPAs and Accountants throughout the process so you can understand what we are doing and why, as well as the thought process behind the more involved tax debt resolution scenarios. We are always an open, collaborative book and unwaveringly dedicated to doing everything needed to solve our client’s tax debt woes.

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Trust. Protection. Wisdom.

Your future and your family deserve the right protection. Golden Lion Tax Solutions will be your advisor and confidant throughout the entire journey. We guarantee to offer you or your business best-case solutions for your tax debt. We are by your side every step of the way. Start now and get your life back.

For help with your tax debts, email contactus@goldenliontaxsolutions.com or call 833-LION-TAX (833-546-6829)

Disclaimer: There are requirements that must be satisfied in order to qualify for some of the tax solutions we discuss on our website. Not all of our services will be suitable for every client. Golden Lion Tax Solutions is here to help you find the most appropriate solution to fit your situation.