In Arizona, from the stunning red rocks of Sedona to the bustling urban centers of Phoenix and Tucson, residents enjoy a unique quality of life. But even in the Grand Canyon State, tax problems can arise, casting a long shadow over your financial stability. Whether it’s an unexpected notice from the IRS or an audit from the Arizona Department of Revenue (ADOR), a tax issue can be a stressful and confusing experience.
At ONeill Tax Resolution, we understand these challenges. Based in Prescott, Arizona, our firm, led by Patti ONeill, is dedicated to providing strategic and compassionate tax resolution services to help individuals and businesses find relief. Patti has over 35 years of experience in tax and accounting, a master’s degree in taxation, and is a Certified Public Accountant (CPA). Her philosophy is simple: she approaches every situation with expertise and kindness, “tells it like it is,” and works tirelessly to find the best possible outcome for her clients.
This guide will walk you through the most common tax problems we see in Arizona and the proven solutions we use to help our clients reclaim their peace of mind.
The Arizona Department of Revenue: Your Guide to State Tax Issues
For Arizona residents, dealing with the ADOR can be as daunting as dealing with the IRS. It’s important to understand the state’s specific tax structure and the collection methods the ADOR can use.
- Arizona Individual Income Tax: Arizona’s income tax is based on a taxpayer’s federal adjusted gross income, with state-specific adjustments. The ADOR actively audits returns, often triggered by a mismatch between your federal and state filings.
- Transaction Privilege Tax (TPT): Commonly referred to as sales tax, the TPT is a significant source of revenue for the state and its cities. The ADOR and local municipalities, including those in the Prescott area, conduct TPT audits to ensure businesses are correctly collecting and remitting this tax. An audit can be particularly challenging for small business owners who may not have a perfect record-keeping system.
The ADOR, like the IRS, has the power to place tax liens on your property and can seize assets, including bank accounts, to satisfy a tax debt. An unresolved state tax problem can have just as serious an impact on your credit and finances as a federal one.
Common Tax Problems We Solve
Regardless of whether your tax debt is with the IRS or the ADOR, the problems you face often feel the same. Here are some of the most common issues we help our clients resolve.
1. The Back Taxes Burden
Owing back taxes is a problem that only gets worse with time. Daily-accruing penalties and interest can turn a small, manageable debt into an overwhelming liability. The fear and stress of this growing debt often lead taxpayers to ignore notices, which only gives the tax agencies more power.
- Our Solution: The key is to take action. Our team will first get you into filing compliance by preparing and filing any delinquent returns. This is a critical step because many tax relief programs require you to have all of your returns filed. We will then work with the tax agencies to negotiate a settlement that is affordable and sustainable for you.
2. Audits and Assessments
A tax audit is a serious business. The ADOR has three audit sections: Individual Income Tax Audit (IIT), Corporate Income Tax Audit (CIT), and Transaction Privilege Tax Audit (TPT). Auditors are trained to find discrepancies and assess additional tax.
- Our Solution: You have the right to be represented by a professional during an audit. Our role is to act as a buffer between you and the auditor, handling all communication and ensuring your rights are protected. We will meticulously review your financial records, prepare all necessary documentation, and build a strong legal argument to challenge any unfair assessments.
3. Overwhelming Penalties and Interest
It’s not uncommon for penalties and interest to make up a significant portion of a tax bill. For many taxpayers, this is the most demoralizing part of their tax problem, as it feels like an endless cycle of debt.
- Our Solution: We can request Penalty Abatement from both the IRS and the ADOR. This is a formal request to have the penalties removed or reduced. It is often granted for “reasonable cause,” which means you can prove that your failure to comply was due to circumstances beyond your control, such as a serious illness, a natural disaster, or other extenuating circumstances.
Arizona-Specific Tax Relief Options
Both the IRS and the ADOR offer several programs to help taxpayers resolve their debts. A successful tax resolution strategy requires a deep understanding of these options and a personalized approach.
- Offer in Compromise (OIC): An OIC allows you to settle your tax debt for less than the full amount you owe. This is an ideal solution for taxpayers who have overwhelming tax debt and a demonstrated inability to pay it in full. The ADOR will consider an OIC in situations where there is “doubt as to collectability” or where it promotes “efficient tax administration.”
- Installment Agreement: If you can pay your tax debt but need more time to do so, an installment agreement is a structured payment plan. This allows you to make manageable monthly payments over a set period, bringing you back into compliance and stopping all aggressive collection actions.
- Currently Not Collectible (CNC) Status: If you are experiencing a temporary financial hardship and cannot afford to pay your tax debt or even enter a payment plan, we can work to have your account placed into CNC status. While the debt is not forgiven, the government will cease all collection efforts for a period of time, giving you the breathing room you need to get back on your feet.
Your Trusted Partner in Arizona Tax Resolution
At ONeill Tax Resolution, we believe in providing our clients with a clear path to resolution. Our owner, Patti ONeill, is a seasoned professional who is dedicated to fighting for her clients. We handle the paperwork, the phone calls, and the negotiations, taking the stress and burden off your shoulders. We are your advocate, your guide, and your champion in the fight against tax problems.
If you are a resident of Prescott or anywhere in Arizona and are struggling with back taxes, an audit, or any other tax issue, don’t wait for the situation to get worse.
Contact ONeill Tax Resolution today at (928) 378-8490 for a confidential consultation.
