by Dave Horwedel, EA, CEO of Torchlight Tax

This is a common situation in 2024.  Many individuals and businesses took a hit on their income in 2024.

Many got governmental assistance—federal unemployment compensation, Payroll Protection Program loans, Employee Retention Credit, and so on, during the Pandemic.

Some taxpayers got a LOT of assistance. But now it is gone. Some must pay it back.

Inflation has increased expenses.  Many individuals and businesses found the post-pandemic period from  2022 -2024  worse than the peak pandemic times financially.

For many, their IRS debt has spiraled out of control.  There seems no possible way to pay it off.  Penalties and interest keep adding on.

You keep dreaming of a fantastic income year to handle it, and it does not happen.

Each year the debt increases.

IRS Notices and Letters flood the mailbox. IRS tax liens, bank levies and wage garnishments CRUSH any hope of financial recovery.

Many Americans do not realize that there are legal provisions to protect the taxpayer who is unable to pay his tax debt.

Yes. That is right. Congress has passed laws for those who would like to pay their debt, but simply cannot do so.

Indeed, from an IRS debt negotiation standpoint, a huge IRS debt that you cannot possibly pay is the ideal situation to get IRS tax debts cancelled or reduced.

I realize this is counter intuitive. It is a mistake to apply standard business logic to IRS tax situations.

Setting aside money so you can cut a deal with the IRS and get them to accept a lower payment is fruitless.

Any deal you cut will be increased by the money you have set aside.

The IRS can levy your bank account take the set-asides. They do not even need to go to court to do so.

They can demand the full balance PLUS accruing interest.

Is it hopeless???

NO!  But to deal with the IRS you must know the rules they operate by.  They are very powerful.

THEY ARE THE LARGEST COLLECTION AGENCY IN THE HISTORY OF EARTH.

But, like a massive weight lifter confronted by a black belt martial artist, their very size does not guarantee victory.

Moreover, the IRS is supposed to work with the taxpayer if they cannot really pay off their tax debt.

Our job at Torchlight Tax is to help the IRS and the taxpayer resolve the taxpayer’s situation in the fairest and most equitable fashion.

Congress has passed laws, and the IRS has regulations to facilitate this.

I am an Enrolled Agent—the highest federal tax credential.

An Enrolled Agent or EA, like a tax attorney, has unlimited rights of representation before the IRS.

This means an EA can represent any taxpayer, whether they are an individual, a sole proprietor, a partnership, an LLC, a C Corporation, an S Corporation, a trust or an estate.  The taxpayer must sign IRS Form 2848 IRS Power of Attorney and the EA can represent him before the IRS.

This is the same form the taxpayer would sign to have a tax attorney represent them before the IRS.

Dealing with the IRS requires a specialist.

IRS employees are not generally evil or vindictive.

Because of Covid and other factors, many IRS employees are new or wearing new hats.

We can assist the taxpayer in understanding what to do and can work out the taxpayer’s best settlement under existing law.  We then present this settlement to the IRS in an approvable format.

The taxpayer either needs to study up on the IRS rules or hire some who already has.

We at Torchlight Tax would like to represent you before the IRS.

If your tax debt seems un-confrontable, contact Torchlight or GuardDog Tax at 1-877-758-7797 or email us or click here for a free consultation.

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