What Should You Check Before You Fix a Client’s IRS Tax Problem?
Check three things before you reach for a solution: whether the client is current on filings and estimated payments, where they stand in IRS collections, and what they can realistically pay. “Before you fix an IRS tax problem, we need to diagnose it,” says Carlos Samaniego, EA. Skip the diagnosis and the fix can make things worse.
Carlos Samaniego is an enrolled agent and the founder of Tax Debt Consultants in Redlands, California, a tax business that doesn’t really do tax prep. It helps individuals and businesses with their IRS and state tax problems. He started preparing taxes in the early 2000s and became an enrolled agent in 2017. Each month he hosts Tax Problem Tuesdays with Carlos Samaniego, a live mentor session for Pronto Tax School’s Dream Team members, and he opened the October 2026 session with this lesson. His audience was tax professionals who don’t specialize in tax resolution but keep seeing clients walk in with IRS letters. Even if you don’t specialize in this area, he argues, you need to understand what’s actually happening when a client owes.
Why shouldn’t you jump straight to an installment agreement?
An installment agreement might be the wrong answer, and there’s no way to know until the problem is diagnosed. Samaniego calls going straight into fix-it mode “one of the most dangerous things you can possibly do to somebody that has a tax problem.”
He learned that principle long before taxes. Samaniego served as an Army medic and later worked as an EMT, where the first rule is that “you don’t start treating somebody until you’ve actually done a triage.” Picture a car accident with several victims. The person screaming might have a broken finger, while the quiet one in the car who isn’t breathing needs help first. Airway, breathing, circulation.
Tax problems work the same way. Clients call him all the time asking for an installment agreement, and then he looks at the numbers: $600,000 owed on $35,000 a year of income. “You can’t afford an installment agreement,” he said. The IRS wouldn’t think so either.
He expects to see more of this. Newer IRS notices show the balance and point taxpayers toward signing up for a payment plan online, and that path doesn’t ask what they can afford. “It doesn’t ask, do you really owe this money?” So people agree to plans they can’t keep up with, sometimes on balances they might not even owe.
Is the client current on filings and estimated payments?
That’s the first triage question, and it has two parts. Every required return has to be filed, and current-year estimated payments have to be made if the client needs to make them. Samaniego says the second part is the one everybody misses.
It’s also a common reason an installment agreement stalls. When a client tries to set one up and the system won’t let them, a lot of times it’s because they haven’t made their estimated payments.
On the filing side, the general rule is the last six years. A client with ten years of unfiled tax returns generally needs to file the most recent six to get current. The older years aren’t off-limits, though. Clients have the right to file them, and sometimes they should.
Here’s the example Samaniego uses. A client hasn’t filed in ten years, and for 2015 the IRS prepared a substitute for return showing a $100,000 balance. All the IRS had was the form reporting a house sale the client forgot to include, so it built a huge liability from that. Filing the real 2015 return gives the client a way to correct it. That’s why triage means looking at the records before accepting the number on the notice. Ask whether the client really owes that money, as he put it, “or is this something the IRS made up?”
Where is the client in IRS collections?
The second question tells you how much time you have. Samaniego’s most common advice to anyone with a tax problem is simple: “Just open up the letters.” Clients have walked into his office with a duffel bag full of unopened IRS mail.
Those letters show whether the client has received a first notice or a final levy notice, or whether the case already sits with a revenue officer. That matters because it tells you which rights the client still has to protect.
The notice to watch for is the LT11, the IRS final notice of intent to levy. Its code sits in the top right corner, and it usually arrives by certified mail. The client has 30 days from the date on the notice. Without a response, the IRS can levy bank accounts and garnish wages. Respond within those 30 days, Samaniego said, and there are multiple ways to protect the client.
Can the client realistically pay?
The third question looks at income, necessary expenses, assets and cash. Samaniego tells clients the IRS usually isn’t as bad as they think. “The IRS cares,” he said. It wants to know a taxpayer can cover rent, utilities and basic living expenses, and then how much is left over to pay.
Trouble starts when taxpayers go quiet. Once someone stops responding, the government has no idea what’s going on, so it comes after everything it can. California, he added, is a different animal.
What should you do first when a client asks for a settlement?
Review the notices, the filing history, the collection status and the finances before starting any solution. Samaniego tested the room with a case based on a real client, with the numbers changed.
A client owes roughly $38,000. They come in to get their 2025 return done, haven’t filed 2023 or 2024, and hand over a collection notice. Then comes the question: can you get them one of those settlements where they only pay pennies on the dollar, like the Fresh Start program they heard about on the radio?
The choices were to start preparing an offer in compromise, tell the client to request a payment plan, or review the notice, filing history and collection status. Of the three, the review is the right first move. Everything else comes after the diagnosis.
Why is next year’s tax bill the most important one?
Almost every way out of an IRS balance depends on it. “The most important tax bill you have, whether you owe $50,000 or $500,000, is your next year’s tax bill,” Samaniego said, and he tells every one of his clients the same thing.
He lays out four main IRS options for a client who owes:
- An installment agreement
- A partial-pay installment agreement
- Currently not collectible status, the hardship option
- An offer in compromise
Bankruptcy is a fifth. When a client is making enough money to pay, currently not collectible is off the table, which leaves the other three. Each of those requires the six years of returns plus current estimated payments. Hardship is the exception, since a client asking for currently not collectible status doesn’t have to make estimated payments.
That’s why Samaniego rushes the most recent year’s return, even for someone who hasn’t filed in ten years. He wants to see what the client’s finances look like right now. If the return shows they’re barely making any money, a hardship status may stop bank levies and wage garnishments, from the IRS and from California’s Franchise Tax Board alike. When they are making money, the return tells you what their estimated payments need to be.
What else belongs in the first conversation?
Ask about the state early. In every free consultation about an IRS problem, Samaniego’s next question is about California, or New York, or wherever the client lives, because “we know they’re going to move much faster than the IRS.” Getting the state resolved quickly often comes first.
Set expectations, too. With these clients, he never promises a quick, simple fix. Give them the worst-case scenario and let any good news come later.
And keep a record of every IRS call. Samaniego points out that many experienced IRS employees have quit or retired, and a lot of the people answering the phones now are new, with limited training. Before anything else, ask the representative for their name and ID number, “just for our records.”
Common questions about client IRS tax problems
What does a client need before the IRS will approve an installment agreement? According to Carlos Samaniego, EA, the client needs the last six years of returns filed and current-year estimated payments made. Missing estimated payments is a common reason the IRS system won’t let a client set up an installment agreement.
How many years of unfiled tax returns does the IRS require? Generally the last six years, says Carlos Samaniego, EA. Clients can still file older returns, which is worth doing when the IRS prepared a substitute for return that overstates what they owe.
What is an LT11 notice? The LT11 is the IRS final notice of intent to levy, usually sent by certified mail. Carlos Samaniego, EA, says the client has 30 days from the notice date to respond before the IRS can levy bank accounts and garnish wages.
Does a client need estimated payments for currently not collectible status? No. Carlos Samaniego, EA, notes that a client requesting currently not collectible hardship status doesn’t have to make estimated payments. Installment agreements, partial-pay installment agreements and offers in compromise all require them.
Should you deal with the state or the IRS first? Ask about the state early. Carlos Samaniego, EA, says states like California and New York move much faster than the IRS, so resolving the state balance quickly is often the priority.
Samaniego sees more and more clients bringing IRS letters to tax pros who don’t specialize in tax resolution. The first step is the same either way: diagnose before you fix.
Bring your client’s IRS letters to a live session. Dream Team members can join Tax Problem Tuesdays with Carlos Samaniego every month and work through real IRS and state tax cases with an enrolled agent who focuses on them. Explore the Dream Team →
This article was curated and adapted by the Pronto Tax School team from a live mentor support session, Tax Problem Tuesdays with Carlos Samaniego, recorded by Carlos Samaniego, EA. The ideas, examples, and guidance are original Pronto Tax School material. © Pronto Tax School. All rights reserved.
