Help.. I've fallen behind & I CAN'T PAY!
Scotty
looking for an out. She has been self employed as a nanny in child
care for years and her income had been so marginal that she has fallen
way behind on both taxes and various loans & finance. She is now
employed by a company, but still dosn't make enough to even start to
catch up. She is paying the IRS a meager amount, as well she is
working through a collection agency to try to pay off her old debts.
There dosn't seem to be any way that she will ever be able to catch
up with her taxes, her credit is that where she can not get a loan to
do so. And now the IRS sent here a letter stating she has to pay more
than she has been, she just dosn't have the money.
Now the Question.. I once heard that the IRS would delete part or all
of past taxes if you filled out a form of inablity to pay, and I
supposed you would have to prove such. Is anyone familiar with such a
procedure? Or are there any other suggestions or recomendations.
All help is greatly appreciated, more than you could imagine. The IRS
can be scary.
Thanks for your attention, Scotty
David Patnoe
>
>
>Now the Question.. I once heard that the IRS would delete part or all
>of past taxes if you filled out a form of inablity to pay, and I
>supposed you would have to prove such. Is anyone familiar with such a
>procedure? Or are there any other suggestions or recomendations.
>
>All help is greatly appreciated, more than you could imagine. The IRS
>can be scary.
>
>Thanks for your attention, Scotty
>
as to Collectibility. The local IRS office should have forms 656 and 433A
to fill out. The 656 will have basic information about the offer and give
you some idea what its about.
Good luck.
Patricia Moran
>That's what I'm hearing from my friend Joan, and she is desperarely
>looking for an out. She has been self employed as a nanny in child
>care for years and her income had been so marginal that she has fallen
>way behind on both taxes and various loans & finance. She is now
>employed by a company, but still dosn't make enough to even start to
>catch up. She is paying the IRS a meager amount, as well she is
>working through a collection agency to try to pay off her old debts.
>There dosn't seem to be any way that she will ever be able to catch
>up with her taxes, her credit is that where she can not get a loan to
>do so. And now the IRS sent here a letter stating she has to pay more
>than she has been, she just dosn't have the money.
>Now the Question.. I once heard that the IRS would delete part or all
>of past taxes if you filled out a form of inablity to pay, and I
>supposed you would have to prove such. Is anyone familiar with such a
>procedure? Or are there any other suggestions or recomendations.
>All help is greatly appreciated, more than you could imagine. The IRS
>can be scary.
>Thanks for your attention, Scotty
The IRS has an Offer in Compromise program that might be appropriate for
your friend. The forms to request from the IRS are 656 (Offer in
Compromise) and 433A (Individual Financial Statement). If possible, your
friend should get professional help in making an OIC. Depending on the
amount of money involved and the availability of affordable assistance
wherever you are, I understand that might not be feasible. With that in
mind, I offer the following generalizations:
1. An OIC is an offer you make to the IRS to settle your outstanding tax
bill. The OIC will only be accepted if the IRS thinks it is getting more
from the OIC than it could get otherwise. For example, if your Form 433A
(the financial statement you have to submit with an OIC) shows that you
have $10,000 in immediately collectible assets and your tax bill exceeds
$10,000, the IRS won't settle for less than $10,000. The newspaper
stories you read about in which people settle for 10 cents on the dollar
often involve tax shelters, divorced people, etc. and not situations
where people get fabulous deals from the IRS.
2. In determining what it can collect from you, the IRS looks at your
likely income and expenses for the next five years (or less if the
statute of limitations has less than five years to go), and then
discounts that to a present value of X dollars. Added to that is your
net worth, in IRS terms. Assets are valued based on what the IRS would
get on a forced sale.
3. OIC's have advantages and drawbacks. On the plus side, a good faith
OIC will usually halt collection efforts while the offer is pending, and,
if accepted, result in settling a liability for less than what the IRS
claims it is owed. On the negative side, 1) the 433A gives the IRS a
roadmap to your collectible assets; 2) if the OIC is accepted, the IRS
gets an extra year to collect the taxes due plus the time the offer was
pending (relevant especially when you've got a very old tax bill); 3) if
accepted, your name, address, terms of your offer, etc. become a public
record and available to anyone who wants to snoop through their IRS'
office OIC records; 4) if you don't live up to the terms of your accepted
offer, the IRS can collect the full amount originally due (and now has
more time to collect it than it would have had if you hadn't made the
OIC), 5) any refund due in the year the offer is made and/or accepted may
be forfeited (and not necessarily credited towards the amount offered in
the OIC); and 6) you have to pay and file timely for the following five
years or the IRS can back out of the deal.
4. There is a wide discrepancy among IRS districts in their OIC
acceptance rates. Manhattan (New York) is one of the worst; Albany (New
York) is one of the best. It can pay to know how your district handles
OIC's.
People have written books about OIC's and professional advice is highly
recommended.
I would also note that whoever hired your friend probably should have
withheld taxes for her. Why such taxes were not withheld, and whether
your friend has any legal recourse, is a matter than can be taken up with
a professional. You should also be aware that a tax professional may
explore other possible options, such as an installment agreement or an
abatement.
Good luck.
Patricia Moran
WitchSwan
little, and owes much. In response so far are people from obviously elite
and priviledged backgrounds who assume that rough times mean one fired the
gardner on the 350 thousand dollar Southern California ranch house, in a
desperate moment was delinquent on the BMW's insurance payment, and has
access to professional help. Only those who can plunk approximately 1500
on a lawyers desk to retain has the start of access. The woman in
question faces that life stinks anyway she turns and that all answers are
a walk through hell itself with tentacles into her future. She needs to
file bankruptcy. The court will hold off the IRS as a part of the
bankruptcy. She will have to pay those taxes. She will not escape and
often what one person thinks is too impovershired to pay the IRS does not.
She needs to get bankruptcy going to stay out of trouble and jail etc with
the IRS. She needs to answer any calls to her home or in the mail. Since
she is in grueling poverty as it is bankruptcy might clear her enough that
she can get more on her feet. I failed to read about things like a house
worth so much money and I do think inappropriate elite boops are on for no
other purpose than to show off not knowing what asses they are making of
themselves.
Dave Ennes
Gary A. Zwick
response as well as responses from others to the question asked by Scotty re:
the individual who cannot and will never be able to pay back taxes, I must
disagree with you.
The advice about seeking an offer in compromise for this person is the
correct advice. Bankruptcy is a last resort and may not discharge all of the
taxes owed by this person.
An offer in compromise was made for this person. Wealthy individuals who
just happen to fall behind in their taxes but have substantial assets and/or
large future earnings potential are not candidates for offers in compromise.
They rarely are able to cut an acceptable deal. People with little in the
way of assets and earnings potential are usually able to get very favorable
deals in exchange for a promise to keep up with their tax payments for a five
year period.
If the individual is unable to pay a professional, they can fill out the one
page form 656 and the four page 433A by themselves. If she truly has little
or no assets, the forms will be a piece of cake to complete. As far as
cutting the deal with the IRS revenue officer, it usually works out best if a
disinterested person does the talking but she can talk to the IRS herself if
she likes. The worst that can happen is the RO says "no". If that happens,
she can appeal to the next level at the IRS and if she feels uncomfortable,
she can hire someone at that time.
Gary.
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David Patnoe
>
>Can't she go bankrupt on the IRS for anything more than three years old?
>
needs to be done of every tax period for which the taxpayer owes. There
are many things to consider:
Did the taxpayer file a return themselves? Makes a difference in
Chapter 7 and 11 proceedings.
Was the return filed on time or was it late? If it was late was it
more than two years ago?
When was the tax assessed? And is there more tax that could be
assessed now? Makes a difference.
There are at least thirty to forty little questions that need to be
answered prior to bankruptcy filings to get rid of taxes.
Better find a bankruptcy attorney who understands discharge issues
in relation to taxes before considering this.
L.R.A.
Chapter 13 if not!