One thing nobody's mentioned yet - check if the notice you received is actually from the IRS! There are TONS of tax scams that look like official IRS letters. Real IRS notices always have a notice number (like CP501 or LT11) in the upper right corner and always include info about your appeal rights. Never call phone numbers listed in the letter - instead call the main IRS number (800-829-1040) to verify it's legit. And the IRS never demands immediate payment via gift cards, wire transfers, or cryptocurrency, which is a dead giveaway for scams.

I've been through exactly this with old tax debt. Here's what worked for me: 1) Get your account transcripts for that tax year 2) File Form 12277 "Application for Withdrawal of Filed Notice of Federal Tax Lien" if they've filed a lien 3) Consider an Offer in Compromise if you can't pay the full amount 4) Look into "Currently Not Collectible" status if you're facing financial hardship The IRS can be reasonable if you're proactive. Just ignoring it is the worst thing you can do. And if you've had major life events like job loss, medical issues, etc., mention those when you contact them - sometimes they take hardship into consideration.

Just a heads up - when you're married filing separately, there are a bunch of other limitations beyond just the mortgage interest deduction. You lose a lot of credits and deductions when you choose MFS status. Have you considered whether filing jointly might be better overall, even with this mortgage interest situation?

When I went through my divorce, I learned you can actually request your ex's tax transcripts from the IRS if you filed a joint return in any previous years. Might be helpful to see exactly what she claimed so you know what you're dealing with.

As an additional tip - one thing that helped me immensely was creating a "tax events" document throughout the year. Every time something happens that might affect your taxes (starting a new client, buying business equipment, making charitable donations, etc.), I add it to a running document with the date and any relevant details. When tax time comes around, I'm not trying to remember everything that happened 9-12 months ago. Has saved me from missing deductions multiple times!

Just want to add that most CPAs actually prefer clients who come organized rather than just dumping a shoebox of receipts on their desk. But don't go overboard creating elaborate spreadsheets that might actually make things harder. Ask your new accountant what format they prefer to receive information in. Some want digital files organized in specific ways, others have their own systems and prefer you just organize by category. A 15-minute phone call asking about their preferences could save both of you hours of frustration later.

As a practical matter, here's the breakdown of what you actually need: For a complex case like yours with $850k revenue, multiple unfiled years, and state levies already happening, you ideally want BOTH a CPA and a tax attorney, but in a way that minimizes cost. Here's what I'd recommend: 1. Have a CPA prepare all your actual returns with proper expenses (much cheaper than an attorney doing this) 2. Have a consultation with a tax attorney (1-2 hours) to assess if there's risk of criminal charges 3. If no criminal risk, let the CPA handle the IRS negotiations 4. If there is risk, then yes, retain the attorney I've gone through this with my business. Initially used just a CPA, but when the IRS started making noises about willful neglect, I brought in an attorney. The attorney only handled the specific negotiations and communications, while the CPA did all the preparation work. This hybrid approach kept my costs reasonable while still getting proper protection.

Don't overlook the penalties here - they're gonna be massive after 5 years of non-filing. Make sure whoever you hire talks about penalty abatement. The IRS has "first-time penalty abatement" and "reasonable cause" options that could save you tens of thousands. I had 2 years unfiled and the penalties were almost 40% of what I owed! My CPA got most of them removed by showing I had health issues that prevented timely filing.

One thing nobody's mentioned yet - don't ignore the letter or miss the deadline to respond! Even if you haven't hired help yet, send something in writing acknowledging receipt of their notice and stating that you're in the process of gathering records and seeking professional assistance. I made the costly mistake of missing the 30-day window to contest an IRS assessment, and it severely limited my options after that. At minimum, request an extension while you find representation. You can always do this yourself even before hiring someone.

Been through this. For $140k, definitely get a tax attorney first, then let them decide if you need a CPA too. Don't cheap out here - a good tax attorney literally saved me about $70k on a $120k assessment. Make sure whoever you hire specializes in tax controversy/IRS disputes specifically. Regular CPAs who just do tax prep often make things worse in audit situations. Look for someone with at least 10+ years experience dealing with the IRS.