Tax resolutions are the product of an IRS audit which was missed. Maybe the correspondence was not answered because of non-delivery or not being answered properly. At any rate, not showing up at an audit results in the IRS assessing taxes on the whole amount of income reported and disallowing all deductions. This can be especially tough if it is a business audit. Avoidance of tax matters only worsens them and they hate a no-show. Lately, they have been mailing copies of tax audits compiled this way, BEFORE the audit dates, which results in thoroughly terrified clients.
I had a pending audit for a client who died in the process [old age, not fear of audits did him in]. I called the auditor and he wanted to do the audit anyway [even though it would be pretty hard to collect on the results afterward]. I showed for the audit and it went unchanged. The IRS does not recognize death as an excuse.
At a later time, there will be some terrible correspondence followed up with a liens, garnishments, or seizure of bank pension, and investment accounts by the IRS. Because the 90-day appeal notice was ignored, the Tax Court Appeal option is no longer available. What to do? Before when this happened I had to visit a Congressman’s office to get the door opened again. Now there is a Tax Resolution IRS Agency that will restart the process.
A formal request must be made in writing [there is no application form] and it should be accompanied by data that would be allowed at the missed audit. The IRS should stop all liens and garnishments during this time while it reviews the materials. This can take three to six months and can even be shuffled off to the local IRS Audit office at which time the petitioner is invited to the audit they avoided. The materials presented by mail at the Resolution or in the audit should be fastidiously compiled with back-up copies of important documents because of the importance of a stranger remotely going over very old materials. Then you are on your own unless you have an EA with a Power of Attorney(POA).
* Phillip B Chute is an Enrolled Agent, tested, licensed, and appointed by the IRS directly. He has prepared or supervised over 25,000 tax returns over 30 years.