I failed to file for the years 1999 through 2006. I have now filed all of the missing returns, as of the end of 2011. The resulting tax and penalties is $300,000+. My financial situation is very bad, as the result of two periods of unemployment. I don’t have the savings or the income to pay this debt. I, also, don’t have the money to pay an attorney to help me. I paid an attorney $5,000 and through that process filed all the unfiled returns but got no help on tax relief or repayment.
Can I deal directly with the IRS to resolve my problem, without an attorney? Can you suggest the best course of action for someone who has no money to pay for counsel?
Sorry to hear about your situation – but you are headed in the right direction to getting your taxes behind you. Filing your back returns is the first step to going forward.
You can address your outstanding liability with the IRS directly. Because the amount you owe is above $100,000, you will be assigned to a local IRS Revenue Officer. This person will investigate your ability to pay.
You can deal with them directly. However, you are going to need to be able to assess whether the Revenue Officer will provide you guidance on you best collection options. Most times, the Revenue Officer will just look to collect in the most expeditious manner.
You need to consider all options and determine what is best for you. Those options include:
- Currently not collectible status – that is, having the IRS put your account on “hold” until you are able to pay. This requires that you prove to the IRS that you cannot pay them (lots of documents)
- Installment agreement – this is a payment plan to the IRS based on your financial ability to pay (this is a calculation and also requires many documents)
- Offer in compromise – this is a settlement of all of your tax liabilities for an “offer amount.” The offer amount is based on your net equity in assets plus the reasonable collection potential from future installment agreement payments (this is also computational and you also must be able to pay the computed “offer amount”)
Your situation requires a review of your financial status (net equity in assets, dissipated assets, and your monthly disposable income). You will need to complete a Form 433A, Collection Information Statement for Individuals. Because you owe over $100,000, you will have to wait to be contacted by a Revenue Officer for a currently not collectible determination or an installment agreement. If you are filing an offer in compromise, you should do so soon if you qualify.
I hope this helps. Your outcome will be based on your specific financial details.
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.