AWH_CPA wrote:Have you had a CPA look at the notices to determine if the tax is in fact due? I see notices 3 or 4 times a year where the IRS sends a notice for $100K because the taxpayer for got a 1099 or something. (Usually brokerage accounts). First step is to take it to a CPA with the return in question. Have them look it over and give you their opinion.
As a CPA I would go with another CPA. For some reason a lot of people here like to suggest EAs as the better alternative. EAs are perfect for preparing the retired couple's tax return with a 1099 R and a schedule A. A CPA will generally know more about the more intricate tax issues that high income/complex tax payers face.
Judge me if you will for my statement, but I stand by it. The last EA I met didn't know what form 2106 was for. Jaded me on the entire community.
I really appreciate your insight. I have only ever used a CPA when I was previously married and my ex-husband had a business - the CPA was in another state and suggested by a business consultant we were working with. I am concerned about making sure we find someone who really is knowledgeable. Are there specific questions you would recommend we ask anyone we consider using?
I have asked my husband to request the IRS to send detailed information about how much is owed in both penalty and interest for each year. The letter we received said we could request the information. The frustrating thing is that they also seem to force you to act quickly... Anyway, I told him that now that he submitted his OIC he'd better get the paperwork anyway. I've also learned from this that his record keeping isn't quite up to my standards. We're working on it though...
At the risk of sounding critical, let me suggest that focusing on the penalty and interest right now is a toal waste of time. This Is a classic case of getting the cart before the horse. First thing you need to to is have a professional pull a transcript and reconstruct where the tax liablity originated. If any of the tax liablity can be obviated, then the associated penalty and interest disappears as well.
Once the actual tax liability is established, the next step will be to look at the largest penalty and see if it can be abated, usually by presenting a valid excuse for the circumstances which created the penalty. That might lead into an opportunity to tie that reason to other penalty assessments, or maybe it's a one-shot deal. Interest is satutory and almost never abated (except in very unusual circumstances), so that's the least productive of all the efforts.
If your spouse has already actually submitted the OIC, he may have dug the hole deeper. If he has prepared the OIC but hasn't submitted it yet, he should probablly hold off until you've had a pro do a complete assessment of the situation. You don't want to subnmit an OIC until the tax liability (along with associated P&I) is firmly estbalished and their records show that all delinquent returns have been filed. Otherwise, they will just keep the money you paid with the OIC and deny approval. Then they start levying wages and bank accounts & filing liens. You also need to be careful what you do and don't reveal in an OIC - some things can come back to bite you.
And of course, there are the state taxes which will eventuallly follow, if you're in a state which has an income tax. IRS shares all their information with the states, but there's a time lag. When the state process starts, it beccomes very discouraging. In many cases, IRS is actually easier to deal with than the state.
Bottom line is you need a plan. You need someone who knows how to lay out the plan and to follow through on it. They need to know what they are doing and they won't be cheap. You also need to be prepared to respond to their questions and to obtain docuementation they may require, and to do it alll in a timely manner. Don't expect to just dump all the IRS notices in their lap and tell them to "handle it". Right now you're just putting out fires and dreading every trip to the mail box. You can either get serious about getting a handle on this or continue down your preent path. It's your choice.
You asked about where to begin choosing someone. Since I'm obvioiusly leaning toward using an EA, I'll suggest that you can look at the web site for the National Association of Enrolled Agents and get some recommendations from your geographical area. Then interview a few of them until you find one or two who can communicate, whose prices are reasonable, and who can jump on this quickly. (You may have to settle for 2 out of 3 of those criteria). One good question to ask them is how many OIC's have they prepared in the past couple of years. Based on what you have said already, I doubt an OIC has a chance of approval unless you can establish "doubt as to liability". You'll never get it approved based on "ability to pay" because you've already said he has a good income and my assumptions about your ages. See how quickly the person you speak with sniffs that out and tells you so up front - it might be a good sign that they know a little something about how collections works and they won't be spinning their wheels at your expense while the meter is running.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers