Peter Stephan of the Tax Resolution Institute gave an in-depth interview at the beginning of October about the wealthy and their sudden increase in income tax difficulties. In Part 2 of this interview, Mr. Stephan shows how initial financial difficulties spiral out of control. Once the money crunch hits the home, wealthy families tend to make bad choices. After all, if they have a couple of kids in private schools or in college, what comes first: the education of the kids or their IRS income taxes? From the wealthy couple’s perspective, obviously the kids come first, but not according to the Internal Revenue Service.
Peter Stephan points out that such protective perspectives quickly become a recipe for financial disaster. Mr. Stephan repeatedly has seen wealthy couples in Orange County and the San Fernando Valley who were bringing in an average of $35,000 a month in income during the good old days. Suddenly that becomes $3,500 a month, and the family is suddenly no longer sustainable as a unit.
Buried in credit card debt with a second mortgage and with all the value taken out of their equity line, such families are no longer affluent. They find themselves in serious financial trouble, and they find the IRS notices in their mailboxes. When the C-504 notice evolves into a Notice of Intent To Levy from the Internal Revenue Service, action has to be taken before there is no turning back. It’s no use asking how this could possibly happen to you. As Mr. Stephan points out from his years of expertise and experience, tax problems can happen and do happen to everyone across the financial board.
Peter Stephan understands how hard it is for a successful business owner with serious financial obligations whose business suddenly drops off a cliff and is not coming back to health any time soon. Often there is a trickle down effect because they had family working in the business. Not only can they not sustain themselves, but also the crisis is like a contagious disease that the whole extended family catches. This type of financial disaster is what Peter Stephan refers to as the “Snowball Compound Effect.” What becomes essential is to recognize that the problem is not going to resolve itself and proactive steps must be taken.
When such new clients enter the office for a consultation, Peter Stephan is straightforward and honest with them. Mr. Stephan knows that other people tend to put on a happy face and promise pennies on the dollars. In contrast, Peter Stephan and the Tax Resolution Institute deal with real solutions that will solve a tax problem. Whether it is a bankruptcy where the delinquent income taxes can be discharged along with the credit card debt if the proper amount of time has passed or even Currently Not Collectible status, what is essential is to give the family the time to regroup and put their lives back on track.
Yes, the once wealthy couple might have to move into a smaller rental or send the kids to public school, but this is not the end of the world. What is the end of the world is to ignore an income tax tax problem and a financial crisis until there are no viable options left to take. In a majority of cases, less drastic measures are needed, and an Offer In Compromise or an Installment Agreement can work as a positive resolution.
The goal of Peter Stephan and the Tax Resolution Institute is to provide their clients with the best tax resolutions that work and solve the delinquent tax problem at hand. It is true that serious tax problems happen to wealthy people in this tough economy. If you take action and contact the Peter Stephan and the Tax Resolution Institute, viable tax resolution answers can be found as well.
About Peter Y. Stephan
Peter Y. Stephan, executive director of the Tax Resolution Institute, has been helping people resolve large, complex payroll tax problems and personal income tax problems for over 25 years. Peter has written a book "The Ultimate Tax Resolution Guide" and speaks on Tax Resolution topics frequently.