Would Appreciate Some Opinions: How to Handle Client's Back Tax Issues
Thank you to everyone that replied! I wanted to provide a final update: I was able to submit a new TIA request using the client's old address (thank you u/theflow165**) and I was able to get through to the IRS this AM. The woman was the nicest person I have ever spoken with there. She initiated a payment plan, and if/when her manager approves it then my client will start making payments next month. Thank you all again for the wisdom, this sub is so great!**
--Original Post Below--
I am pulling out my hair with the inability to reach the IRS so I am coming to the collective brain trust today in the hopes that someone here that knows more than me (which wouldn't be hard!) can help me fix a problem. Apologies for the length, but I want to give all pertinent details.
The Situation:
I started working with a client for TY24 for filing his 1040 as a married small business owner. He and I got along great right from the start, and he has now become my top client (based on annual fees), and I happen to like him as a friend too.
He has not paid Federal taxes consistently since 2020 when he started his business. We're in state without income taxes so at least no state obligations.
- In 2020 he paid $0 of his tax liability, currently sitting at ~$14k
- In 2021 he paid $0 of his tax liability
- In 2022 he paid a few estimated payments, but still has a balance leftover
- In 2023 he paid $0 of his tax liability
- In 2024 he actually paid 100% of his tax liability because he had to as a condition of a bank giving him a mortgage when he upgraded his personal home (I know, don't get me started)
- In 2025 he paid $0 of his tax liability
He "only" owed ~$15-20k each year, and he mostly filed on time, but with interest and penalties he's close to $100,000k owed to the IRS right now (just under, but within dollars as of last calculation).
Due to the efficiency of our IRS hard at work, the IRS has sent him letters for all the years but at the moment they're only threatening to tax lien him for 2020 via CP504 notice. No major threats yet for 2021-2025. And due to the extreme competency of our current administration, both he and I have been unable to speak with anyone at the IRS for the past several months to begin a payment plan because we keep getting the automated message saying they're too busy.
The Big Problem:
Other than the obvious above, he has been trying to speak to the IRS to create a payment plan for several months, well before the CP504 showed up. He visited the local office three times, all times he was turned away and told he needed to call. Last week I began being more proactive (up until now I felt this was his problem to deal with as our engagement doesn't explicitly cover this) because I like him and I want to help.
- I submitted an 8821/TIA request via my IRS Tax Pro portal and he checks daily to see if that request shows up and it does not.
- I have called the Tax Practitioner Hotline every day last week and only one allowed for me to get a call back, the other days I get the message saying they're too busy and to try back another day
- On the one call back I got, I had the woman on the phone for 1-2 minutes while I repeatedly gave her the CAF number that she said wasn't right, then she said she was going to look into it further, and then she disconnected from the call
So at this point, what else can I do??
When he logs into his individual IRS account he does not have any option to initiate a payment plan online. I am not a highly experienced tax pro, but:
- Several months ago I recall that he and I filled out the IRS papers to request a payment plan, we mailed it via USPS certified mail, and never heard back. I do not remember form names.
- He currently has ~$3k to pay towards 2020, but not the ~$14k that would be required to make this problem go away.
Many thanks and a ton of appreciation to anyone that can help with this situation. AI did not write this, I did, so any mistakes belong to me :)
***UPDATE ABOVE****