TAX TIPS (and other stuff)

By Kelly J. Bullis, CPA

2025-November 8th

There are two types of IRS collection letters (called “Notice Of Intent To Levy” letters) that you must NEVER ignore.  LT11 (generated by the IRS computer) and LT1058 (sent by a real person).  The smart action is to immediately turn to your tax preparer for assistance.

There are four immediate actions available, depending on your financial status.  1) Pay in full immediately.  2) Setup an installment agreement (usually over up to 5-7 years).  3) Make a partial payment immediately (in 30 days, you’ll get another IRS letter, but it buys you a month to find money to pay the balance).  4) Ask for a “Currently not Collectible (CNC) due to Financial Hardship” status (usually reviewed by the IRS annually).

There is a process called “Offer In Compromise” (OIC) that is worth at least considering.  Most folks do not qualify.  The IRS’ goal is to collect what is owed to the US Government.  They take that seriously and it takes a lot to convince them that attempting to collect a debt is a waste of their efforts.  To have a successful OIC, the taxpayer’s net worth needs to be almost zero and their ability to earn enough to pay is questionable.  The OIC route happens to be where the scammers focus.  In their promise to get IRS debt forgiveness, they usually charge very high fees up front, then submit an OIC, knowing full well that it will most likely be rejected.  A professional tax preparer knows how to assess a taxpayer’s net worth and ability to pay before considering attempting to go the OIC route.

Other options to consider, sell assets, refinance home or rentals, and the last resort is to get the IRS to wait 10 years.  The law requires the IRS to write off debt that is 10 or more years old.

The IRS is charged with the requirement to collect as much as possible.  They are not rated on how “nice” they are to taxpayers; they are rated on how much they successfully collect.  Yes, they are required to be courteous, and professional in their dealings, but only so far.  They must use every legal means at their disposal to do their job.

Be aware that the IRS gets downright nasty with taxpayers who get “creative” in how to avoid paying taxes.  The criminal act of “Income Tax Evasion” isn’t just filing a fraudulent tax return, it also is evasion of payment activity.  Such as putting your assets temporarily in someone else’s name or bank account OR deliberately moving to new bank accounts that the IRS doesn’t know about OR lying on collection information statements or to a revenue officer.  All of these actions are considered CRIMINAL and can cause the taxpayer to end up in jail.  It is always best to deal honestly with the IRS and use the legal processes available to properly attempt to settle with the IRS.

Have you heard?  Romans 13:7a says, “Therefore give everyone what you owe: if you owe taxes, pay taxes;”

Kelly Bullis is a Certified Public Accountant in Carson City.  Contact him at 775-882-4459.  On the web at BullisAndCo.com  Also on Facebook.