Honest to God’s truth, not a single one of my clients intended to create the tax liabilities they now face. Tax debt is not a cause; it is a consequence of something else. It could be a liability produced by insufficient withholding, lack of adequate planning, or even ignorance of the law. The liability is often preventable, but not always.
Mental illness is the cause I want to touch upon today. I know of people who have gone through hell, lost everything, and have nothing left but the debt that now shadows them. I am not a doctor, but I can say with certainty that a sizable tax liability is a formidable obstacle to mental health. If you do not believe me on that point, I don’t care.
For some of my clients, that formidable obstacle seems insurmountable in the beginning. I simply ask that they trust me to help them manage the debt. And notice how I used the word “manage.” Managing a client’s tax debt is a multi-step process. An offer in compromise is never the first step, may not be the last, and in some cases, is not a step at all.
Mental illness presents opportunities not afforded to all taxpayers. A client may be eligible to file a claim for abatement of penalties for the tax years affected by the mental illness. Also, clients otherwise not eligible for refunds due to the expiration of the statute of limitations could argue the statute of limitations was tolled due to their financial disability.
Regardless of the situation taxpayers find themselves in, especially if they suffer from mental illness, no amount of tax liability is impossible to overcome. Some hills are just harder to climb, and I would be more than happy to be the guide.