How to Resolve IRS Tax Problems for Independent Insurance Adjusters

Tax Relief Insights & IRS Help Articles

By Randell Martin, CPA and Tax Advisor at IRSProb.com

As an independent insurance adjuster, you’re constantly on the move—evaluating claims, climbing roofs, handling policyholders, and working disaster zones. But when tax season rolls around, the claim you dread most may be the one from the IRS. Adjusters working as independent contractors receive 1099 income. That means no tax is withheld, and you’re responsible for income taxes, self-employment taxes, and quarterly estimated payments. If you fall behind, IRS penalties and interest can build faster than a storm system in hurricane season. Under IRC §6651(a)(1), the Failure to File penalty can reach 25% of the unpaid tax. Combine that with the Failure to Pay penalty (IRC §6651(a)(2)) and interest (IRC §6601), and you’re suddenly handling a liability bigger than your last catastrophe claim.

Paying Off the Entire Debt

Paying off your tax bill in full is the quickest way to settle up and avoid further penalties or collection actions like liens or levies. Unfortunately, income as an adjuster can be inconsistent—especially if your work is seasonal or disaster-based. When full payment isn’t realistic, the IRS offers other paths forward.

Installment Agreements (IA)

Installment Agreements allow you to pay over time. If your IRS debt is $25,000 or less, you can often qualify for a streamlined plan—no financials required. For balances above that threshold, or if you need longer terms, you’ll have to submit documentation outlining your income and expenses. These agreements stop collections, but interest and penalties continue to accrue.

Partial Payment Installment Agreement (PPIA)

If your debt is too large to manage—even over 72 months—a Partial Payment Installment Agreement (PPIA) might be appropriate.

Pros:

Monthly payments are based on what you can actually afford.
IRS collections are paused while the agreement is active.
You may end up paying significantly less over the life of the agreement.

Cons:

Requires complete financial disclosure.
IRS may request updates if your financial situation improves.
Payments may be adjusted or the agreement may be revoked.

Navigating a PPIA successfully requires precision, strategy, and professional guidance to avoid oversharing or missteps that could backfire.

Currently Not Collectible (CNC)

When business slows to a crawl and you truly can’t make any payments, you might qualify for Currently Not Collectible status. But CNC isn’t a simple mercy plea—it’s a strict numbers game. You’ll need to submit a comprehensive financial disclosure showing your income, assets, debts, and living expenses. And that disclosure? It’s signed under penalty of perjury. If you forget to list something, the IRS can interpret it as fraud. If you include too much, you might weaken your case unnecessarily. This is when having a seasoned tax professional makes all the difference. Even if approved, CNC status is temporary and subject to periodic review. The IRS will keep checking in until your financial situation improves—or until time runs out on the collection clock.

Offer in Compromise (OIC)

The Offer in Compromise is the IRS’s settlement tool—allowing you to pay less than what you owe if you truly can’t afford to pay the full amount. But this isn’t something you can DIY. Like CNC, it requires full financial disclosure, including income from past deployments, equipment, accounts, property, and more. Leave something out, and you could face criminal penalties. Include something irrelevant, and your offer might be denied. The IRS calculates your ‘reasonable collection potential’ to decide if they’ll accept your offer. Even if accepted, you’ll be required to stay squeaky clean for five years—file everything on time and pay all taxes owed—or the deal’s off. A professional who knows the IRS playbook is absolutely essential here.

Trust the Experts

Independent adjusters are used to assessing damage and managing high-stakes situations. But dealing with the IRS is a different beast entirely.

Whether you’re behind on filings, fielding collection notices, or unsure how to fix a growing tax problem, a tax professional can help you protect your income, assets, and peace of mind.

Tax relief is a process—but with the right guide, it’s one you can navigate successfully.

About the Author

Randell Martin, CPA, is the founder of IRSProb.com, a national tax resolution firm that helps independent professionals—including insurance adjusters—navigate IRS issues, reduce tax liabilities, and find long-term solutions. With more than 25 years of experience, Randell specializes in audits, collection relief, and complex tax strategy.

He’s helped adjusters from storm zones to wildfire claims keep their businesses afloat and their books clean. When not untangling IRS problems, he’s watching Texas football or explaining to clients why a drone camera isn’t a deductible expense—unless it’s used exclusively for claims (and no, your vacation footage doesn’t count).