The Federal budget deficit is big and getting bigger. As you may be aware, our political leadership in both parties is not fond of cutting spending despite what they may say to voters from time to time. Since raising taxes is not popular, a decision has been made to get tough on the taxes that are owed to Uncle Sam. The IRS is now getting very tough on collecting tax debts. Enforcement Action is up and Offer-in-Compromise settlements are way down over the last few years.

If you or a client of yours owes delinquent Federal taxes, be prepared for a financial proctology if you want to set up a payment plan or settle with IRS for less than what is owed. An IRS Form 433A or 433F may be required for individuals and a 433B for business taxpayers. Many expenses claimed are subject to limits known as the "IRS National Standards." Get the current IRS standards from their website.

If more than $25K is due, the following documented proof may be required by IRS to set up a payment plan:

1. Three months of all bank account statements the taxpayer has in their name;
2. 401k Statements;
3. Three months of pay stubs or proof of year-to-date earnings and deductions;
4. Proof of monthly bills (rent, mortgage, utilities, childcare, etc.);
5. Paid medical bills and prescription drugs; and
6. Car note, car valuation, mortgage balance, insurance costs.

If you own property, IRS may require that you apply for a loan before they will grant you an Installment Agreement or Temporary Hardship. A loan denial letter might be required to be submitted to the Revenue Officer (RO) or to the Automated Collection System (ACS) representative working the case.

The best thing that you can do if you want to avoid being put through the ringer on providing financial data is to pay your balance in full or get it below $25,000 before it gets to an IRS collector. If you can get it below $25K, chances are you can get a