What IRS Tax Resolution Is
IRS tax resolution refers to the process of addressing an existing or escalating problem with the Internal Revenue Service — whether that is a disputed tax assessment, an inability to pay a tax debt, years of unfiled returns, or active collection enforcement such as a lien or levy. Resolution is different from ordinary tax compliance work: rather than preparing returns for a completed year, it involves navigating the IRS enforcement and appeals system on behalf of a taxpayer who is in a difficult situation with the agency.
Many New Jersey taxpayers find themselves facing IRS problems through no malicious intent — a business cash flow crisis led to payroll taxes not being remitted, or years of self-employment income were underreported because no one explained quarterly estimated taxes, or a divorce or life event created income that was simply never reported. The IRS has a range of resolution programs designed to bring non-compliant taxpayers into compliance and resolve outstanding balances in a manageable way — but navigating these programs effectively requires expertise.
ProAxis represents NJ taxpayers at all levels of the IRS process: correspondence audits, in-person examinations, Collection Due Process hearings, Appeals Office conferences, and installment agreement and Offer in Compromise applications. We also represent clients before the New Jersey Division of Taxation, which has its own audit, collections, and dispute resolution processes.
IRS Problems We Handle
IRS Audits & Examination Defense
From simple correspondence audits (CP2000 notices) to full field examinations, we prepare your documentation, respond to IRS requests, and advocate for the correct outcome. We handle the communication so you do not have to.
Federal Tax Liens
A Notice of Federal Tax Lien attaches to all your property and can damage your credit and prevent asset transfers. We pursue lien withdrawals, subordinations, and discharges, and negotiate resolutions that make lien removal possible.
Bank Levies & Account Seizures
When the IRS levies a bank account, it can seize everything in the account up to the tax debt owed. We act quickly to request a levy release or establish an arrangement that halts further seizure while a resolution is pursued.
Wage Garnishments
IRS wage garnishments can take a significant portion of your paycheck. We negotiate with the IRS to release or reduce the garnishment while establishing a compliant resolution path forward.
Unfiled Tax Returns
Years of unfiled returns create serious legal exposure and escalating IRS enforcement risk. We reconstruct income and deduction records, prepare all unfiled returns, and negotiate a resolution that addresses the resulting balances.
Penalty Abatement
IRS penalties (failure to file, failure to pay, accuracy-related) can add 20%–25% or more to a tax balance. First-time penalty abatement and reasonable cause abatement can eliminate significant penalties for qualifying taxpayers.
Offer in Compromise
For taxpayers who genuinely cannot pay the full amount owed, an Offer in Compromise allows settlement for less. We conduct a thorough financial analysis to determine whether you qualify and prepare the strongest possible OIC application.
Installment Agreements
An IRS installment agreement allows you to pay your tax debt in monthly payments over time. We negotiate the terms — including payment amount and duration — to keep payments manageable while bringing you into compliance.
Innocent Spouse Relief
When a tax problem stems from errors or omissions on a jointly filed return that were attributable to your spouse or former spouse — and you did not know about them — innocent spouse relief can protect you from liability for taxes you did not cause. We evaluate eligibility and prepare the required IRS Form 8857 application.
What to Do When You Receive an IRS Notice
Receiving an IRS notice is unsettling, but it does not automatically mean you owe more money or are in serious trouble. The IRS sends millions of notices each year for a wide range of reasons, from routine requests for clarification to formal audit notifications. The most important thing you can do is respond appropriately and on time.
Do not ignore it
Every IRS notice has a deadline — either for responding or for paying. Missing the deadline can eliminate your right to appeal or trigger enforcement action. Even if you believe the notice is wrong, you must respond.
Identify the notice type
IRS notices are identified by a number in the upper right corner (e.g., CP2000, CP504, Letter 525). The notice type tells you what the IRS is asserting — a proposed tax change, a balance due, an audit initiation, or imminent collection action.
Do not call the IRS or respond without counsel
Anything you say to the IRS can and will be used in the resolution process. A casual comment about income or assets can create problems that did not previously exist. Let a tax professional review the situation first.
Contact ProAxis immediately
We will review the notice, explain what it means, and develop a response strategy. In many cases, we can be formally appointed as your representative by filing IRS Form 2848 (Power of Attorney), after which all IRS communication goes through us — not you.
The ProAxis Representation Process
Our IRS resolution engagements begin with a thorough review of your IRS account transcripts, filed returns, any existing notices or liens, and your current financial situation. This gives us a complete picture of the problem and the range of available solutions before we commit to a specific approach.
We file IRS Form 2848 to establish our authority to represent you, which means the IRS contacts us rather than you. This immediately reduces the stress of direct IRS contact and allows us to manage the resolution process efficiently. We handle all communications, information requests, and negotiations — our clients focus on their lives and businesses while we handle the IRS.
Throughout the process, we keep you informed with regular updates on the status of your case, explain all options and trade-offs clearly, and ensure you understand and approve any resolution before it is finalized. We never accept a resolution that is worse than what the law and the facts warrant.
Once a resolution is in place, we also help you establish the tax planning and compliance practices necessary to ensure the problem does not recur. Many taxpayers who face IRS problems get into them partly because of inadequate tax planning — see our tax planning service for how we help clients stay ahead of their obligations.
Frequently Asked Questions
What should I do if I receive an IRS notice?
First, do not ignore it — IRS notices have deadlines, and ignoring one can cause a manageable situation to escalate quickly. Read the notice carefully but do not call the IRS or respond without first consulting a tax professional. Contact ProAxis as soon as possible so we can review the notice, assess the situation, and develop the appropriate response. Many IRS notices are routine and resolved with a straightforward written response; others require more involved action. The notice number in the upper right corner tells us immediately what we are dealing with.
Can you stop a tax lien or levy?
In many cases, yes. A bank levy or wage garnishment can often be released or delayed by demonstrating hardship, entering an installment agreement, or requesting a Collection Due Process (CDP) hearing, which temporarily halts collection action. A federal tax lien is more difficult to remove outright but can be subordinated or discharged in specific circumstances. Acting quickly is essential — once a levy is issued, the IRS can seize funds within days. If you have received a Final Notice of Intent to Levy (CP504 or Letter 1058), contact us immediately.
What is an Offer in Compromise?
An Offer in Compromise (OIC) is a formal agreement with the IRS that allows a taxpayer to settle their tax debt for less than the full amount owed. The IRS accepts OICs when there is doubt as to collectability, doubt as to liability, or when collection of the full amount would create an economic hardship. Qualifying requires a detailed financial analysis — the IRS calculates your Reasonable Collection Potential (RCP) based on income, allowable living expenses, and asset equity, and will only accept an OIC that meets or exceeds the RCP. Not everyone qualifies, but when appropriate it can provide significant relief on large tax debts.
How long does the IRS resolution process typically take?
Timelines vary by issue type. A correspondence audit might resolve in 4 to 12 weeks with the right documentation. An installment agreement can often be established within 30 to 60 days. An Offer in Compromise currently takes 9 to 24 months for the IRS to process. A full field audit can run from several months to over a year. Our goal throughout is to keep collection actions suspended where possible and move the case forward as efficiently as the IRS timeline allows — and to keep you informed at every stage.