Burdened Taxpayers Figure Out How to Make a Deal With IRS
San Jose Mercury News (03/31/01) Vol. 105, No. 12 p.D1; Schwanhausser, Mark

Tax experts say this tax season will bring huge bills and conflicting advice on how to pay them. Some employees must deal with alternative minimum tax bills on vanished paper profits from incentive stock options, while some investors are struggling with tax bills from mutual funds that distributed capital gains while falling in value. Paying large tax bills of any stripe generally starts with borrowing, or selling investments and other assets. However, if those options will not do, taxpayers can try to work out installment plans, file bankruptcy, or negotiate offers in compromise. Tax attorney Robert E. McKenzie says none of these options are palatable to honest taxpayers because they are devastating to the average middle-class citizen. The best strategy depends on a multitude of factors, and experts frequently favor the solution that they specialize in. Bankruptcy attorney Ike Shulman says that taxpayers should investigate all options. But experts also agree on some things. Hiding is a bad idea; interest and penalties build up until one files. Filing on time avoids penalties, begins the statute of limitations, and allows negotiation. Sometimes an extension is a good idea. Taxpayers should calculate their bills, assess their networths, explore their options with professionals, and pay the state tax first. Negotiate honestly with the Internal Revenue Service, and do not negotiate alone. Do not panic, and do not make hasty decisions.


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