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.