Dealing With Tax Debt

Rena McDonald, McDonald Law Group

Fortunately, in Nevada, we don't have a state personal income tax. But that doesn't mean we don't have state business and federal taxes for both you and your businesses that you are liable for. September 15, 2017, is the final deadline to file your 2016 corporation, S corporation, or partnership tax return if you filed for an extension.

Owing money for back taxes can be frightening. The IRS or state tax department will seize and or file liens against your business and personal assets, send you nasty letters, garnish your wages, and call you to harass you for payment. Fortunately, though, you can negotiate with them to resolve these issues. It is better to deal with these issues quickly. The longer you wait, the more tax you will pay.

Typically, before any negotiations can begin you must become a compliant taxpayer. For most that will mean you must file delinquent tax returns and demonstrate that you are keeping up with your current tax payments.

Repaying the full IRS back tax debt may not be an option for you and your business if you are a struggling with a large tax debt. In fact, it may seem like an invincible financial hurdle you will never overcome.

But it is not all bad news; the tax departments have the power to conform to a settlement of your tax debt for less than the actual amount you owe called an offer in compromise. It is not a complete elimination of your tax debt, it is a way to reduce down your tax debt and have the compromised amount of money considered as payment in full for the back tax indebtedness.

The paperwork for the tax debt settlement programs is complicated. You will have to complete a full financial disclosure, bear witness that you will never be able to pay back the whole tax debt, or that paying off your tax debt will cause undue severity. The tax department looks at your income and all your expenses. They will even require an inventory of all your bank accounts, stocks, possessions, and the equity in your home.

As complicated as this process is, it can save you hundreds of thousands of dollars in tax debt. While you can represent yourself, due to the complexity of this process, hiring a competent tax relief attorney can ensure success in this process. But as always beware, unfortunately, many attorneys "practice" in this area in the hopes of running up your fees without doing much work. Always ask to speak to an attorney, not a paralegal or "case specialist/manager". If they cannot explain the entire process to you, then they probably don't know what they are doing. If you have questions please call us at (702)448-4962 for a free consultation. This information is provided for informational purposes only. It is not legal advice and does not constitute an attorney-client relationship.

Rena McDonald is the managing partner of the McDonald Law Group who practices in the fields of Bankruptcy, Foreclosure Prevention, Real Estate Litigation, Estate Planning, Family Law, Personal Injury Litigation, Contract Litigation and Review, and Small Business Development with an emphasis on Entity Formation and Real Estate Development. To learn more about Rena, please visit

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