Personal Finance: Ask the Experts

Get advice on money matters from The Bee's Claudia Buck and a panel of local experts

October 16, 2012
Can I pay back taxes in monthly installments?

Q. I currently owe federal taxes in the amount of $12,200 and California state of $11,000. I understand and have contacted three companies that say they can help me, but I have to pay them $3,000 to $5,000. The IRS is taking over $1,500 out of my retirement and I am having problems taking care of my bills. Do you know of any company that will let you pay monthly payments? I don't work but get Social Security and military retirement. I would appreciate whatever help you can give me. Thank you! Phil, Citrus Heights

It sounds like you have contacted some of the companies that advertise help with offers-in-compromise with the IRS and the FTB. They typically charge fees in advance.

There are alternatives to the companies that charge their fees in advance. First, consider contacting the IRS and the FTB directly. This can be done by telephone or in person. The notices that you are receiving regarding your unpaid taxes will contain phone numbers. If you are not already on installment payment plans, consider calling and asking for help requesting them.

Use IRS Form 9465 and FTB Form 3567 to ask for installment payment arrangements based on what you can pay each month. For more on this topic, see my August 23, 2012 posting. The local IRS walk-in office is located at 4330 Watt Avenue just north of I-80 in North Highlands. The local FTB field office is located at 3321 Power Inn Road in Sacramento.

If you do not want to work with the IRS and FTB yourself, many CPAs and Enrolled Agents offer help with IRS and FTB collection matters. Some are former IRS Revenue Officers or Appeals Officers who are very familiar with the IRS collection system. Some charge fees based on the time it takes to work your case as opposed to a flat fee in advance. Some may be willing to take monthly payments for their services.

I would suggest contacting the California Society of CPAs or the California Society of Enrolled Agents and asking for referrals to local CPAs or Enrolled Agents who include helping people with IRS and FTB collection matters as part of their practice. Both of these organizations have chapters in Sacramento. You can also ask friends and family members or other professionals, such as attorneys, for referrals.

Once you get some names, interview them. Ask them how many collection cases they have worked. Describe your situation and ask them what they would recommend and how much it would cost. Ask if they would be willing to take monthly payments given your circumstances. After you have interviewed several tax professionals who have experience with IRS and FTB collection matters, you should be better able to choose someone to help you.

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Meet Our Financial Experts

Claudia Buck

Claudia Buck is The Sacramento Bee's personal finance columnist. Read all her columns here. Contact her at cbuck@sacbee.com

Terri Carpenter

Terri Carpenter offers advice on job hunting, retraining and career counseling. Carpenter works at Sacramento Works Inc., the career and job training arm of the Sacramento Employment and Training Agency (SETA). With 15 years in the field, she has hands-on experience with everyone from first-time job seekers to career professionals seeking advice after a layoff or looking for a mid-career change. Ask her a question.

Carlena Tapella

Carlena Tapella is a partner in the law firm of Webb & Tapella Law Corp. in Sacramento. The firm specializes in estate planning and probate, such as estates, trusts, conservatorships and litigation. She is a past president of the Sacramento County Bar Association's Estate Planning & Probate Section. Ask her a question.

Kimberly Foss

Kimberly Foss, certified financial planner, is the founder of Empyrion Wealth Management in Roseville. With nearly 30 years in the financial industry, her clients include women in transition, small business owners, retirees and "pre-retirees." Ask her a question.

Jesse Weller

Gregory Burke, a CPA and tax expert with John Waddell & Co. in Sacramento since 1984, worked as an IRS tax auditor for six years. He’s a past chairman of the California Society of CPAs. Ask him a question.

Daniel Tahara

Daniel Tahara takes your questions about California taxes. Tahara, a spokesman for the state Franchise Tax Board, has 10 years of experience as a tax auditor. Ask him a question.



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