So, you are trying to solve a tax problem. Well, you’re not alone. Each year, it’s estimated that over 20 million taxpayers have a tax issue with the IRS. And the chances are, you are dealing with a tax problem that is covered in the Tax Problems and Solutions Handbook.

In 2022, Congress passed the Inflation Reduction Act, greatly increasing IRS enforcement resources. Translation: the IRS will be sending more notices, doing more audits, and enforcing more non-filing and underpayment non-compliance. Effectively resolving tax problems will become more of a critical component of tax help in years to come when the IRS focuses on closing the tax gap.

IRS compliance enforcement has been limited since the beginning of the COVID-19 pandemic in March 2020. However, in 2024, the IRS restarted many of their campus compliance enforcement programs, including collection and non-filing enforcement. Taxpayers and their tax professionals will be seeing more IRS enforcement in the future, especially with the growing IRS enforcement resources from the Inflation Reduction Act.

Working with the IRS can be complicated and frustrating — even for the most knowledgeable tax professional. The rules in resolving tax problems often appear unclear — and change frequently, leaving tax professionals and taxpayers with no line-of-sight to resolving their tax problem. The Handbook provides you with the most current practical know-how to give you that line-of-sight.

What This Handbook Covers

The Handbook will help you resolve the most common IRS problems for individuals. The first section provides guidance on the most common post-filing issues: contacting and working with the IRS to obtain information and helping tax professionals practice effectively before the IRS. The remaining sections of the Handbook focus on each of the major tax problem categories: audits/underreporter notices, collection issues, penalties, unfiled returns, spousal issues, and the trust fund recovery penalty. The issues in these categories make up most of the problems experienced by individual taxpayers and provides solutions for these taxpayers.

Practically, data shows that most taxpayers and their tax professionals will engage in one of these five post-filing actions:

• Contact the IRS to get a tax history and information related to a tax problem.
• Respond to a CP2000 (underreporter) notice or mail audit inquiry.
• Evaluate and obtain a collection alternative, such as a payment plan or an extension to pay.
• Request penalty abatement for the failure to file and/or failure to pay penalty.
• Research source documents, prepare, and file, and process a late, past-due tax return.

This Handbook covers these most common issues extensively, providing the taxpayer/tax pro the background, guidance, steps, and practical resources to resolve the issue quickly, effectively, and with the best outcome considering the taxpayer’s facts and circumstances. The Handbook also covers other enforcement areas such as the trust fund recovery penalty and spousal issues.

The IRS is constantly changing procedures, compliance focus areas, and solutions for taxpayers. The Handbook provides the most up-to-date solutions to the most common problems facing taxpayers. This year was no exception. Although the IRS has had limited enforcement actions during periods of shutdowns in operations, the IRS is resuming and increasing its enforcement presence as it receives more funding from Congress to close the widening tax gap.

What This Handbook Does Not Cover

The Handbook provides taxpayers and their professionals with guidance and lays out the steps to be taken to work administratively with the IRS to solve problems. The Handbook references issues that should involve a tax attorney or specialist. For example, potential criminal tax implications, including issues like international voluntary disclosures and tax shelter involvement, are not covered. Issues not commonly seen by many taxpayers are also not covered.

How to Use This Handbook

Almost all tax problems are solved administratively within the IRS. That is, taxpayers and tax pros work within the IRS compliance unit and/or IRS Appeals from beginning to end. Very few cases end up in the courts.

To work effectively with the IRS, you must understand how it works administratively. In the Handbook, most of the references cited will not be to tax law (i.e., Internal Revenue Code sections). Most citations reference IRS procedures found in its Internal Revenue Manual (IRM). The IRM lays out how the IRS works and includes legal citations. But most importantly, knowledge of the IRM is the key to obtaining information from the IRS and to resolving a tax problem. As such, IRM knowledge is essential to resolving most tax problems efficiently and effectively.

When approaching a tax problem or responding to an IRS notice, the taxpayer/tax pro should begin with the section’s “Quick Chart” to obtain a baseline of practical knowledge and set expectations for each specific tax problem. With this baseline knowledge in hand, the taxpayer/tax pro can proceed to the most appropriate section(s) that address the problem area(s) and solutions(s). Each section will provide an overview of the issue, possible solutions, and steps to reach each solution. At the end of most sections are the forms and templates needed to execute the solution. Practice tips provide insight and set expectations when addressing the issue.

A Final Word

The Tax Problems and Solutions Handbook is based on practical experience in resolving thousands of tax problem cases with the IRS. From this experience, one truth is clear: the IRS is not an easy government agency to navigate — especially when trying to resolve a tax problem. Taxpayers and tax professionals should not expect to resolve a problem immediately. In fact, some complicated tax problems can take over a year to resolve. This Handbook will provide you with expectations concerning the resolution time based on the solution(s) selected. The Handbook will also provide the steps and tips to most efficiently resolve the problem.

To this end, the Tax Problems and Solutions Handbook can be used by both taxpayers and tax professionals to address the most common post-filing issues. The reality is that most tax problem-solving (especially complex problems) will be done by tax professionals. In the Handbook, the guidance and step-by-step help provided refer to the “taxpayer” as the problem solver. Authorized tax professionals should substitute themselves as the problem solver while completing the steps.

Finally, a word of encouragement. Statistics show that most people, including tax professionals, do not like to work with the IRS after filing. In fact, almost two-thirds of taxpayers fear dealing with the IRS after filing. Based on my experience from years of both working for the IRS and many more years helping taxpayers with tax problems, I can assure you that your problem can be resolved. I wrote the Handbook to remove the mystery and anxiety of working with the IRS after filing. Use the Handbook to resolve the tax problem and you will have line-of-sight to getting into good standing with the IRS.

Jim Buttonow

April 2024