We are often asked, what is the best way to handle an IRS problem. The answer is very simple and really straightforward, once you know a few things about how the IRS works. In sum the best way to handle the IRS is to arm yourself with the law and be completely candid, open and truthful with the IRS.
Understanding the IRS is fairly easy for anyone who has ever served in the military. If its in the manual, do it. It the manual says don’t do it, you can’t do it, and if the manual doesn’t say anything it is best not to do it unless someone orders you to do it. The IRS is, after all, a government agency, it is bound and regulated by the law. So, knowing the law and knowing what the IRS can and cannot do to you is essential.
Dealing with the IRS, once properly armed with the law, is very straightforward. You must tell them the truth. Simple. Most people avoid telling the IRS the truth by avoidance, omission rather than commission. But, the IRS is not, contrary to ad campaigns that are geared at scaring you into hiring national tax resolution services, a monster. They are not a business desperate to collect the maximum dollar. The IRS is an agency required to follow procedures. They are judged, promoted, assessed on their compliance, and their ability to get you to comply, more than they are judged on the amount of money they collect.
So, don’t hide from the IRS. That is a loosing strategy, they will find you and they will make it their mission (which it already is their mission) to make you comply with the law. That is NOT the same thing as making you pay money, or loose things. Remember, if you lie to the IRS you commit a crime. Tell them the truth and, for the vast majority of families, the IRS will work with you because they must work with you.