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Home > Reader Questions > My Disability Income is Being Garnished And I Was Thinking About Blue Tax. – Gene

My Disability Income is Being Garnished And I Was Thinking About Blue Tax. – Gene

PRESENTLY MY TOTAL INCOME IS FROM A PRIVATE DISABILITY POLICY AND SOCIAL SECURITY DISABILITY. RECENTLY I DISCOVERED THAT IRS HAS GARNISHED 15% OF MY SOCIAL SECURITY INCOME AND 90% OF MY PRIVATE DISABILITY INCOME. I WAS CONSIDERING USING A TAX RELIEF SERVICE (BLUE TAX) AND I APPRECIATE YOUR APPREHENSION ABOUT THEIR DECEPTIVE ADVERTIZING AND THEIR FAILURE TO GIVE YOU A PHYSICAL ADDRESS AS WELL FOUNDED. I HAVE ALSO READ ALL OF THE POSTINGS REGARDING OTHER MEMBER EXPERIENCES WITH THEM. BASED UPON ALL THAT I HAVE READ INCLUDING YOUR POSTING, I’M MORE THAN A LITTLE BIT APPREHENSIVE.

MY TWO SIMPLE QUESTIONS ARE DO YOU KNOW OF A LEGITIMATE TAX RELIEF CO AND ARE THEY EFFECTIVE IN GENERAL?

This is your chance to be a hero and help out this person by providing your feedback and answer to the question in the comments section below.

My Disability Income is Being Garnished And I Was Thinking About Blue Tax. - Gene by

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This is information that was submitted by a third party and not generated by GetOutOfDebt.org or Steve Rhode.
  • Don’t Panic

    Hi Gene, I hope I can provide some information to assist you with your current situation. If you write a post on here most likely you will get limited information in regards to a specific question you want answered. I am going to remain anonymous as I truly respect this website for brings great people who are willing free information to the consumer. Before I begin, just a little background on myself, l am a licensed tax practitioner and a tax consultant. I work very closely with tax attorneys and Enrolled Agents here at my office, but my goal here is not to persuade you to contact me but to try to give you some information that could possibly help you in your decision making before contacting any tax resolution firm.

    Key facts that you will need to know first before you make that phone call to the IRS or any tax firm.

    1. Are you up to date on all your tax filings? Generally the IRS will require that you demonstrate being in full compliant before they discuss any levy release or resolution to your case.  If no, than the first step is to file any missing tax years. The IRS will not accept any resolution agreement or release any type of levies unless you are up to date and current on all your tax filings.

    2. Let’s supposed you are current on all of your tax filings, the next step to look at and consider is figuring out if you have assets with equity you can either borrow against or liquidate?

    Example: Stocks/Bonds, home equity or means to borrow from family and friends to pay the full tax bill off lump sum? If you have the ability to borrow or have equity to pay off your tax liability in full than the IRS will require you do so. If you have no assets or equity in assets to borrow from, than let’s take a look your current income. But before you start divulging all your personal information to either the IRS or a tax firm, let’s explore some resolution alternatives that might be right for you.

    Do you meet the Streamline Installment Criteria? New IRS Fresh Start Program http://www.irs.gov/newsroom/article/0,,id=255312,00.html has extended the length you can be in a Streamline Installment Agreement. If you owe $25k or less including penalties and interest, just divide the total amount by up to 72 months.

    Example: Total Tax Owed $24,000
    $24,000 divide by 72 months = $334. By going this route you are not required to disclose your financials, such as equity or assets. You just simply ask the IRS for the Streamline method or you can apply online http://www.irs.gov/individuals/article/0,,id=149373,00.html

    If you owe less than $50,000 with the new Fresh Start Program, you are now able to apply online as well. http://www.irs.gov/individuals/article/0,,id=149373,00.html without having to make a call to the IRS.

    Now once you have figure out that the Streamline is either not affordable or you owe more than the $50k than we can explore you true ability to pay each month by completing a 433F Collection of Information Statement.

    Your Collection of Information Statement is the main instrument to determine your potential to repay what you owe. If you visit http://www.irs.gov/individuals/article/0,,id=96543,00.html you will find calculations of the National and Local Standards that you will be allowed to spend each month and it is all depends on the number of people in the household.

    Example: One Person in a household for Category “Food,Clothing and Misc” equals $556 total monthly allowance. Regardless if you spend $200 to eat, the IRS will allow you $556 to spend in that category.

    ExpenseOne PersonTwo PersonsThree PersonsFour PersonsFood $301$537$639$765Housekeeping supplies$30$66$65$74Apparel & services$86$162$209$244Personal care products & services$32$55$63$67Miscellaneous$116$209$251$300Total$565$1,029$1,227$1,450
    There are four categories “Food/Clothing Misc”, “Housing and Utilities”, “Transportation” and “Out of Pocket Health Care”.with a National Standard and Local Standard which the data has been collected by US Consensus Bureau. For all other expenses such as taxes, court orders etc… You will need to provide documents substantiating those items are being paid.

    The IRS when determining what is allowable or not allowable expense are based on two things. 1. “Must be necessary for the health and wealth fare for you and your family.” 2. “Must be necessary for production of Income.” If you are paying for three phone lines, than you must prove to the IRS why each line is deemed necessary.

    Now once you have figure out what is allow as your monthly expense minus that with your current income and if you show a disposable amount like $80 than that amount will be your monthly installment until your tax liability is paid off in full or the statute of limitation on your balance has expired whichever is first.

    3. If your Collection of Information Statement shows negative disposable than you most likely would qualify for a CNC Currently Non Collectible, which is a temporary suspension on your account until your finance has improved over time. CNC does not erase your liability but it will give you some breathing room as to not having to worry about enforcement actions taking place and not having to pay anything at this present time unless your financial situation has improved.

    The IRS will want to revisit and open your case from time to time to see if anything has changed since.
    I will not get into the Offer In Compromise which is the last resort to tax amnesty because the explanation is much more complex and the difficulty level in achieving this is tremendously hard and the numbers can speak for itself.  http://www.irs.gov/taxstats/article/0,,id=207457,00.html

    Activity
    2010
    2011

    Taxpayer delinquent accounts
    (thousands):

    Number in beginning inventory
    9,667 
    10,391 

    Number of new accounts
    7,994 
    8,011 

    Number of accounts closed
    7,269 
    7,593 

    Offers in compromise
    (thousands) [5]:
     
     

    Number of offers received
    57 
    59 

    Number of offers accepted
    14 
    20 

    Amount of offers accepted
    129,668 
    154,092 

    Enforcement
    activity:
     
     

    Number of notices of Federal
    tax liens filed [6]
    1,096,376 
    1,042,230 

    Number of notices of levy
    served on third parties
    3,606,818 
    3,748,884 

    Number of seizures
    605 
    776 

          
    From looking at this data chart provided by the IRS website http://www.irs.gov/taxstats/article/0,,id=207457,00.html, in 2011 59,000 Offer In Compromise request submitted to the IRS but only 20,000 were accepted out of 7,593,000 closed accounts.  That is .0026 of percent chance to get an Offer Accepted. Do I need to say more?

    Well Gene, I hope this is somewhat useful to you so go thru those steps because it is the exact same steps and procedure the IRS will be discussing with you once you give them a call. If this is still a bit complicated, than i would recommend contacting a tax firm that will be upfront and not try to over promise you anything without making a thorough assessment on your tax matter and last but not least, shouldn’t charge you a high upfront fee to this. This information here should give you a basis to start your homework with before making a call to anyone. Best of luck!

  • http://www.facebook.com/profile.php?id=100003400693790 Richard Close

    I write up blogs on tax debt relief companies that are a scam all the time. While it is important that you look up BBB ratings, also make sure you are dealing with a company that has been around for a long time. If what they’re telling you on the phone sounds too good to be true, it probably is. Before you talk to anyone (tax pros or the IRS) get educated on what you’re facing and possible solutions. Take a look at my blog if that helps. http://irs-hitman.blogspot.com

  • Msullivan

    The IRS has a process for considering settlement type agreements called “offer in compromise.” Go to http://www.irs.gov if you want to watch a video on the process.You do need to hire anyone to take you through the process but it can be intimidating for most of us. I would suggest you find a CPA who specializes in federal tax issues and pay the hourly fee for assistance. 
    The Better Business Bureau can help you find a CPA with a good consumer record. Do not call anyone who advertises on television. The only way to afford TV advertising is to charge more than other providers.

    Good Luck!

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