Are you worried about your past-due taxes? If so, you’re not alone!
IRS non-compliance is a major problem among independent contractors in the trucking industry, as well as virtually any industry where there are independent contractors. Why is it such a common problem? For truckers, there are a few reasons:
No one teaches truckers about taxes before they become business owners
Bookkeeping is hard and boring, so it’s easy to fall behind on the road
Because drivers fall behind on bookkeeping, they tend to fall behind on paying and filing taxes too
All of that adds up to drivers falling behind with the IRS and getting saddled with back taxes, which is a big problem.
So, what should you do if you are behind with the IRS? You may hear all kinds of advice out there, but the reality is that much of what you hear is either incorrect, misguided, or not appropriate for owner-operators in the trucking industry. If you’re a trucker who needs help with tax resolution, then we recommend following ATBS’ Proven Path to getting out of debt with the IRS. Let us show you how!
This path is deceptively simple, but trust us: The devil is in the details! The ATBS Proven Path is as follows:
Become IRS Compliant
Negotiate with the IRS (if needed)
Manage IRS Compliance
The ATBS Proven Path works because it first gets you into a position where you are in filing compliance and eligible for a resolution and then allows you to focus on achieving a successful negotiation while learning the tools to help you stay in compliance moving forward.
Now let’s discuss each of these steps in more depth.
Have you fallen behind on your taxes or stressed about paying off your debt to the IRS? We are happy to announce that we are now accepting new clients into our Tax Debt Pit Crew program!
Become IRS Compliant
So what does it mean to be “Compliant” with the IRS? It’s actually fairly simple:
You need to pay your taxes on time each quarter (four times per year).
You need to file your tax return on time each year and pay any remaining balance owed.
It seems simple but in reality, it’s very hard to stay compliant, especially as an Owner-Operator in the trucking industry.
If you can manage your compliance, then you’ll live in a world where the IRS is no more than an afterthought.
Let’s identify a few situations that cause people to be non-compliant with the IRS:
Drivers can’t pay the full amount of their quarterly tax amount due
Drivers wait to pay their taxes until their annual tax return, and they can’t afford to pay
Drivers can’t file their annual tax return on time
These are all very common problems. To stay ahead of these as best you can...
Don’t underestimate your quarterly taxes (also known as QTE’s)
Pay as much as possible for your QTE’s if you can’t pay the full amount due
File your annual tax return even if you can’t pay the full amount
If there’s no chance you’re going to be able to file on time, request an extension - remember though that the extension is only an extension of time to file and NOT an extension of time to pay.
So, as you can see, there are many ways we can work to strategize to stay in compliance. While not always easy, finding a good system to stay in compliance will make managing your tax obligations much more simple.
If you do run into a pitfall with your tax obligations and find yourself owing back tax, then you will want to first address getting into a groove with your current tax payments and filings. Once you have your current compliance figured out, you are eligible to negotiate a resolution on the back tax you owe. This brings us to our next topic.
Negotiate with the IRS (if needed)
Alright, let’s talk about what happens when you aren’t able to stay ahead of Compliance problems with the IRS. This tends to be one of the least understood topics related to taxes and the IRS: What exactly happens if I don’t pay or file my taxes?
First things first - it is important to understand that the IRS will NOT work with you to set up a resolution on your back tax until you are in compliance with filing and current tax payments.
Why? Because until you show the IRS that you’re willing and able to get caught up on your taxes, they have no interest in negotiating the balance due. So, the first step in the ATBS Proven Path is to Become IRS Compliant, and beyond that, also prove to the IRS that you’re willing to remain in compliance so that you do not fall behind in the future.
Let’s walk through a few topics to help you Become IRS Compliant and complete the 1st of the ATBS Proven Path.
You need to commit to correcting practices that have landed you in trouble with the IRS
You need to get caught up on filing your taxes
You need to be caught up on current year Quarterly Estimated Tax Payments
That being said, we find that many clients still owe significant amounts of money to the IRS by the time they obtain compliance. If that’s the case, ATBS can move on to the 2nd step of the process - Negotiating with the IRS.
How to Negotiate With the IRS
First, it is important to always remember that IRS Agents are human beings.The most important thing to remember as you work on negotiating with the IRS is that the person on the other side of the phone is, in fact, a person. The worst thing you could possibly do is treat that human being like something other than a human being.
Second, it is important to have an understanding of what to expect when you are negotiating with the IRS. The IRS Negotiation process is different for every single person, but in general, there are really two key things that need to be done each time:
Determine the total amount you owe once in filing Compliance;
Obtain a payment plan with the IRS if you cannot afford to pay the total you owe.
Third, it is important to be well-prepared for the negotiation you are about to embark on.
You know you are in compliance, you know what to expect when talking with the IRS and you are now ready to prepare your proposal for repayment of the debt to the IRS.
It is important to have your finances clearly laid out to support the requested monthly payment you are looking to achieve. The IRS has a few different financial forms that they utilize to determine how much you should pay them monthly. Should you wish to have ATBS assist in your negotiations, our team will help in gathering this financial information from you and reviewing it with you prior to the IRS ever seeing that documentation.
Once the financial form is reflecting your financial situation correctly and accurately, the information is provided to the IRS and the negotiation is completed. The goal here is to obtain a payment plan that allows you to prioritize current taxes moving forward and allow you to pay your normal living expenses without impediment from the IRS. We care more about what you can afford to pay, and NOT what the IRS wants you to pay.
Fourth, it is important to effectively complete the conversation with the IRS regarding your proposal to be placed in an Installment Agreement.
Getting an IRS Representative on the phone is hard and requires a ton of patience! You’d be surprised how long it often takes to get an IRS agent on a live call… sometimes it takes waiting all day on hold to get one person on the line! If you don’t have the patience to wait, sometimes it’s better to have someone do this work on your behalf.
When you get an agent on the line, be sure to gather their badge number for your records. Recordkeeping is a key part of your negotiation because, more often than not, you’ll end up speaking to more than one agent during your negotiation. Always be sure to gather their info and document your call!
Once you get an agent on the line, it’s time to review your financial form and propose your desired monthly payment amount. Helping the agent get a good understanding of your situation is the foundation you’ll build on during your negotiation!
Lastly, you will wait for acceptance of your proposal. The IRS will send notice via US Mail of their decision. That notice will let you know if they’ve accepted your proposal and will reiterate the terms of the agreement. Once you receive that by mail, you are out of active Collections. If you do not receive that notice within the 2 weeks they have to send it to you, it is important to call them back and check the status of your account.
Once the negotiation ends and a plan is in place, it’s time to move on to Step 3 in the ATBS Proven Path: Managing IRS Compliance.
Managing IRS Compliance
What does managing IRS compliance look like?
First, you need to ensure you stay current with any Installment Agreements (payment plans) that you negotiated with the IRS.
Second, you need to pay your taxes on time moving forward (each quarter).
Finally, you need to file your annual taxes on time each year.
It’s important to remember that any missed payments, new balance, or delinquent tax return will default any existing agreement and you will need to start back at square one.
While this is pretty simple and straightforward in theory, as we discussed earlier, it can be very easy to fall behind on your IRS Compliance.
ATBS’ main goal in assisting clients with tax resolution is to effectively help them navigate the IRS Collections System in a way that results in lasting relief and compliance.
How Can ATBS Help With Trucker Tax Resolution?
Remember, ATBS can help with each step in the process. It’s part of what makes our relationship with our clients so unique. Where most companies can help with one or two aspects of the tax process, ATBS is set up to put all of the pieces together.
If you aren’t familiar with ATBS, we have been in business for over 20 years, and we’ve helped over 150,000 owner-operators stay out of trouble with the IRS. We focus on saving drivers time, we help them earn (and keep) more income, and we reduce the stress of dealing with taxes so they can focus on driving their truck while keeping the IRS from being a daily burden. . We do that via bookkeeping, accounting, tax, and business consulting services - specifically designed for owner-operators.
When it comes to IRS Compliance (Step 1 and Step 3), our RumbleStrip services are what our clients use to stay out of trouble with the IRS.
Not only can we help clients become compliant via our tax preparation services (Step 1), but our monthly RumbleStrip services are specifically designed to keep owner-operators compliant with the IRS (Step 3).
Now, the reason why most of you are reading this is because you are looking for help negotiating with the IRS (Step 2). Great news: ATBS can help with that too!
ATBS Tax Debt Pit Crew
ATBS’ Tax Debt Pit Crew is our team of trucking-specific tax resolution specialists who spend their days helping truckers - especially owner-operators - navigate the IRS Collections system and reach resolutions tailor-made for their specific financial aims and needs.
We have several different levels of service available to help our clients, so let’s briefly highlight each one.
We start with an Inspection. There is a one-time fee associated with this service. Our team of experts contacts the IRS, obtains historical and current data on a client’s account with them and uses that information to draw a roadmap of possible resolution options. Once that inspection is concluded, the client will determine if they are all set to tackle the IRS issues on their own. If they wish for ATBS’ team to assist in implementing and negotiating the appropriate resolution strategy, then they will take advantage of one of our additional services.
This service allows us to find out what is going on with the IRS and provide specific and appropriate options before ever quoting a client for full representation. This keeps things fair for our clients when it comes to making an educated decision on how they’d like to address their IRS tax debt.
For clients who are starting to fall behind with the IRS, are missing a few years worth of tax returns or who owe between $10,000-$50,000 - we have our “Tax Relief Tune-Up” program.
For clients who have more extensive issues to address with the IRS - greater than $50,000 in liability or more complex concerns - we recommend our “Tax Relief Overhaul” program.
If you are in trouble with the IRS, or if you’re just trying to get ahead of any future problems with the IRS, our Tax Relief Pit Crew will be able to help you out!
Summary
We sincerely hope that this has offered you some knowledge and insight into the different ways that tax debt can be effectively prevented and managed.
At ATBS, we know truckers, and we know how hard it is to overcome the feeling of hopelessness that can come with being behind with the IRS. Just remember that you are NOT alone! And, always remember that you can reach out to ATBS anytime to learn more about how we can help you put the IRS in your rearview mirror for good.
Thank you for everything you do to keep America moving. We wish you all the best in your trucking business, and we’d be happy to talk with you more about ATBS and our Proven Path if you decide you’d like to learn more.