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The IRS Payment Demands Are Crippling Us With Our Other Bills. What Can We Do?

“Dear Jim,

Our employer (my husband and i worked for the same company for the past 5 years) took deductions for state and federal taxes totaling 11% instead of the usual 25% which we, unfortunately, caught too late. We are now on a payment plan for the states we owe (there are two since we relocated from one state to another for work) and with the IRS but the payments are crippling us. While we have made paying it off our first priority (Federal and State taxes amounting to more than $20K), our other bills, including our mortgage, are suffering and are now being paid late or not at all.

To make things even more difficult, I am currently going through treatment for cancer and taking care of our one year old while working from home. I still haven’t found a second job (or third if we count childcare) that will fit with the limited time I have and allow the money we would need to offset a sitter.

Is there any way for us to put a hold on the taxes we currently owe, or is there a tax consolidation loan that would cover both Federal and State taxes? We can’t afford an attorney now but are there pro bono tax attorneys who could help and how can we find one in our area?”

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The Answer

I am sorry to hear about your hardships. Let me see if I can help.

I will try to summarize your questions and provide answers:

Can you put the IRS on hold (called “currently not collectible” status) for a time period until you are able to pay?

The answer is yes- if you qualify. You will need to provide the IRS a collection information statement (Form 433F) and documentation to prove your hardship. You will have to contact the IRS directly and request currently not collectible and go through the process of proving that you are not collectible.

Can you put the States on hold also?

Technically yes. However, each State has unique rules. In many states, it requires that you are unemployed to receive currently not collectible.

Your situation requires a clear understanding of the facts. I would be glad to assist you by answer some specific questions related to your facts and/or pointing you in the right direction.

Thanks

Jim

The IRS Payment Demands Are Crippling Us With Our Other Bills. What Can We Do?Jim Buttonow is one of the resident debt experts here at GetOutOfDebt.org that helps people for free. Jim is a licensed CPA who spent 19 years with the IRS coordinating large compliance teams of IRS agents and specialized personnel. In the last 5 years, Jim has invented consumer and practitioner software and treatises on how to address many different tax issues. He has also represented many people before the IRS examination, collection, filing, and appeals functions. He currently assists taxpayers on an active pro bono tax practice aimed at serving people in need. He can be reached at IRSMind.com.

If you have a tax question you’d like to ask just use the online form. I’m happy to help you totally for free.

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About Jim Buttonnow

Jim Buttonnow
Jim Buttonow, CPA/CITP, is cofounder of Beyond415. He has more than 26 years of experience in IRS practice and procedure. Reach Jim at [email protected].
  • Grateful Subscriber

    Thanks so much for your advice!  You couldn’t imagine the weight that’s been lifted just knowing there is a possibility of getting past our issue.  And I can’t say enough about how quickly you responded!  The advice was certainly helpful but I couldn’t believe how fast we had an answer.  I’ll follow-up with your suggestions and, again, thanks for your help and the quick response.  

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