What leads people to problems with the IRS
The four D(s) Disease, Death, Divorce, Distraction
As I discuss each of these scenarios, the underlying premise is DISTRACTION the ultimate D.
Our Federal Tax System is based on voluntary compliance. That means that we as taxpayers voluntarily have our tax returns prepared and filed with the IRS. An example of an involuntary tax would be sales tax that is collected at the point of purchase.
In my decades of experience, people get behind with the IRS because of some underlying distraction. And once they fall out of compliance, that is, they are not filing, and not paying or even filing and under paying, they continue along this path. The problem becomes unmanageable.
Death -When someone is gravely ill, the focus is to get the person healthy again and thus everyone involved becomes distracted by other important things in life, one of which is finances and income tax compliance.
We have had clients who have come to us following the death of a spouse, and the spouse who died was the one that usually took care of the Income Taxes. Suddenly, the surviving spouse realizes that tax returns have not been filed for years.
How do we fix this? After being engaged, we have our client complete an IRS power of attorney and we immediately contact the IRS, explain the situation and get a hold placed on any collection (if necessary). We then order wage and income transcripts, meet with the client, gather information, prepare and file the missing returns. We have been successful in getting penalties abated in these cases to due to the gravity of the illness that led to the spouse’s death. Payment plans are also available.
Disease – People suffering from grave diseases often lose track of their income tax compliance obligations. If you, your spouse, or loved one has had a serious illness, these are also cases where IRS is more apt to abate penalties.
Divorce– The King and Queen of mental Distraction. Divorces are contentious, disruptive, and of course major life distractions. There are a whole host of reasons as to why taxes are not being filed or paid in a divorce situation. We can help put the pieces back together, even if we do not have the cooperation of the ex-spouse. In some cases, a spouse may qualify for innocent spouse relief. We can work with both spouses to get to the finish line.
Distraction By Addiction- It goes without saying, people in the throes of drug, alcohol and/or gambling addictions are often, also neglecting their income tax responsibilities. We can help you if you are in recovery trying to get your financial life back in order.
