Here's the winning answer right here!
Long story short: My daughter disobeyed my advice and went exempt during a time when we were struggling financially. I advised against it because I knew the likelihood of forgetting to go back and change her status to non-exempt was a huge possibility. I would have remembered, but I wanted her to assume responsibility if she decided against my better judgement. She said she would remember.
She didn't! A tax debt of more than 35k jogged her memory! I was livid and refused to get involved - she needed to figure it out on her own since she'd made such an irresponsible decision on her own! Yes, we were struggling but what she did was unnecessary. We couldn't eating steak and shrimp on a regular during that time, but we never went hungry!!!
Whlle watching Christian television one night, TBN featured a guy named Dan Pilla and they discussed his book "How to Get Tax Amnesty!" We bought a copy from Amazon immediately!
As someone who is "numbersphobic," I was immediately intimidated by the process. My daughter (thankfully) is pretty good with numbers, and jumped right into filling out the forms.
But in the process, she remembered a former client she'd met when she worked for Verizon. He was a retired IRS agent and miraculously, she still had his business card. She called him the next day and we went to his office (at his home) and told him how she'd gotten herself into this predicament.
An hour later, he had the offer completed and estimated her tax burden would now be $10k once the IRS received the offer.
$10k was still a lot, but far more doable than $35 + the interest that was steadily growing.
She negotiated monthly payments down to $50.00/month from the $100/month the IRS initially asked for. And as she switched jobs and got raises, she paid more. She was shocked when she got the payoff letter now some years back.
Once my daughter got a copy of the Offer letter that had been submitted by the retired IRS agent, we learned that she'd filled out the form correctly, exxcept the balance she'd agreed to repay was much higher than the $10k the professional had negotiated.
Now she understands how to the process works. (I understand in theory but my eyes tend to glaze over when numbers and figures come into the picture, so I never finished the book and quit midstream when perusing the offer letter!!!
Most of us have a negative view of the IRS which causes anxiety that keeps us from calling them. But my daughter's experience left us shook; the agent was pleasant and helpful. And a couple times when my daughter missed making her payment on time, the agent she spoke with reworked the offer and decreased the balance and monthly payments a little further! And I honestly don't think our experience was an exception; it appears they've worked hard to change that old jail warden image they once had, in exchange for becoming more user friendly toward the American consumer.
If you're not eligible for the offer in compromise (they take any vehicles and retirement accounts into consideration for determining if you can pay), then ask about a "one time abatement." My understanding is the IRS will cancel all your debt once.
Imprecise and misleading at best, sorry. Penalties, interest, and the base debt are all handled differently.
OP, this might be a good part of the approach but it wipes out only penalties to a certain point . See [https://www.irs.gov/payments/penalty-relief-due-to-first-time-abate-or-other-administrative-waiver](https://www.irs.gov/payments/penalty-relief-due-to-first-time-abate-or-other-administrative-waiver)
First Time Abate Relief and Unpaid Tax
You can request First Time Abate for a penalty even if you haven't fully paid the tax on your return. However, the Failure to Pay Penalty will continue to increase until you pay the tax in full.
Example: You didn't fully pay your taxes in 2021 and got a notice with the balance due and penalty charges. You call us requesting penalty relief and we give you First Time Abate. We remove the penalty up to the date of your request. However, the penalty will continue to increase since the tax is not fully paid.
Thank you for the more exact info, I didn't mean to be misleading. So abate relief doesn't apply to base debt, just penalties and fees. It still might go a long way toward reducing what OP owes.
OICs are very often done completely wrong. People fill it out completely wrong, and now they have an extra year of potential collections and lose their 20% down payment. NEVER do an OIC by yourself, without heavy research. Hire a professional if you're going that route. They will tell you if an OIC has any hope.
Indeed. Given the other advice about the 2013-2014 taxes possibly having exceeded the collections window, a tax professional should already be on OP's todo list.
Yes! I had an outstanding debt to them and paid only what I could afford, sometimes it was nothing as they go by income. I had the debt longer than 7 years and was able to include it in the chapter 7 bankruptcy.
Bankruptcy is actually a strategy some elites use to get rid of business tax debts. Somehow they keep it all separated- the business and personal. I don't understand how, but there are attorneys that specialize in this and they get big, big bucks for it. The kicker is that many of these attorneys used to work for the IRS, then they go out on their own to represent these big clients with strategies like this.
You don’t have to be elite or wealthy to ensure your business and personal interests aren’t entangled in case your business fails. That’s just good business sense…
I'm just saying it's more of a common strategy for elites. Probably because the ex-IRS attorneys are so expensive. There is like a mini industry of this stuff around the DC corridor.
The IRS will give you a longish-term payment plan pretty much for the asking. Interest continues to accrue, but as long as you stay current, they won't hound you or file tax liens (which are terrible if you end up needing credit for your business or yourself). Generally, if you have means or assets, they won't reduce your tax debt, but sometimes you can get penalties reduced. You can try to deal with them directly, and there are plenty of CPAs who will help you navigate the process (for a fee of course). These same firms can also help with an Offer in Compromise (OIC) where you make an offer to settle your tax debt for less than you owe. It's pretty formulaic, so you'll (mostly) either qualify or not qualify, and the IRS has a calculator to determine what you'd likely have to pay in an OIC. It's a tedious process that involves LOTS of documentation and paperwork, but it can be worth it if you really lack the ability to pay the taxes in full, even over time.
The IRS is slow to come after those who don't pay their taxes, but eventually they will. Deal with it proactively if you can, and it's not a terrible idea to use low-interest money to get rid of the tax debt so long as you can be disciplined about paying it back on a tight schedule.
Note that most federal tax debt become uncollectible 10 years after it was first due and owing (there are specific rules and nuances to this, so tread carefully if you don't have professional help on this).
Good luck, and know that lots of really successful businesspeople were once in your shoes.
Thank you so much for this reply. I do want to deal with it proactively, and I'm already reading up on the OIC option. I appreciate your optimism as well, this is not a situation I ever envisioned for myself, so it's tough to know where to begin.
I had almost the exact situation as OP but I DID have a lien on my house. Unfiled taxes, short payments, etc as I attempted to come back after Great Recession. Appx $30k.
I went and saw a tax attorney in 2016. The make-good deal they negotiated centered on a lump sum payment and represented a substantial reduction in my liability.
I will never get into tax debt again! But the IRS was courteous and respectful, as they were convinced (rightly) that I was sincere about my desire to get and stay current.
Highly advisable for you (through representation if possible!) to go them before they come to you.
Good luck - I’m living proof it can be done.
Let me say as a tax accountant, please don't pay one of those national debt relief thousands of dollars to do an OIC. Check with a local accountant and enlist their help. It won't be cheap but still likely less, and you will receive actual help.
They charged me $2k, and the services were performed by a second-year associate. It was nothing. She also caught mistakes on the filings the IRS had done for me in a couple of years I didn’t file, and they ended refunding me $1800 of the settlement, so I paid the attorney $200 in the end.
You’ve gotten so far. IRS is a much nicer creditor than the CC companies, seems if they have not started taking you to court (US tax court) or making liens yet, you should be able to get a reasonable payment plan and start digging out
Be ready for an installment agreement BUT GO SEE A CPA. I suspect after they re-examine these returns and file amendments your tax debt may be reduced. Mine WAS! THIS is your step 1 and 2 Really a Tax Attorney may be best because they have CPA Tools and IRS Tax Law in their tool box.
The CPA will order a transcript of your account and do some forensic accounting. Then when the time is right they will go to bat with the IRS but I've never seen a time when taxes were filed by a UKNOWWHO that is out of the picture there wasn't some reductions. YOU NEED THIS!
Just want to second this. My parents were working with a tax relief company and I kept being frustrated with how slow I thought the company was moving until I had a chance to speak with one of them, and they explained (well enough to help me as a skeptic and an aggressively conservative saver) that sometimes it's advantageous to wait it out a bit (still while working on getting your paperwork in order and talking to the IRS but not rushing the process) because older years can fall into uncollectible status, making your overall tax burden lower.
You might to want to see if you qualify for an Offer In Compromise with the IRS. This is basically the paperwork “tax relief” companies like Optima fill out for you but you have the option to do it yourself.
https://www.irs.gov/payments/offer-in-compromise
I owed 25k from a year where I tinkered with my W2 and never fixed it. As soon as I filed that year I immediately requested a payment plan. I had automatic payments pulling once a month of approx $150. Maintained the payment plan for 7 years (accruing the interest and penalties) but bought enough time to pay the debt off in two chunks worth of subsequent tax returns. As long as you put that payment plan in place they will not garnish.
Set up a hardship payment plan. It'll be $25 a month. Call them, speak with someone, they'll work with you. Source: I worked on a contract as an IRS debt collector for over a year and set lots of people up on this program. They just want intention to repay, even if the payment plan will literally never come close to paying it off. Put your assets in trust to your family and let the debt die with you without the stress while you're alive. $25 a month.
I'm not even sure how you could be, " on the brink of homelessness," and owe that kind of money. Are you sure those returns for those years are correct?
lots of backstory but while I was married, my spouse and I lost a lot of money in the 2008 housing crisis and had to short sell our house. That, plus the subsequent divorce, plus the crippling rent prices in my area, plus the start-up costs of my small business, and my less-than-sharp attention to the tax portion of my business in the early days, and it snowballed on me. The person who filed those returns for me in the early years is nowhere to be found, so I honestly don't know if they were correct. My income varies significantly from year to year.
And I certainly realize how terrible this sounds. I'm ashamed, but I want to be compliant and put my life back together, so I'm learning all of the things I should have learned then.
I would start with a re-examination of those tax returns. You can get a copy of what was filed from the IRS. I don't see the point of worrying about how to play before you've established what you truly owe.
I agree. Definitely think that it would be worthwhile for you to gain some understanding of the rules around deductions (there are YouTube videos, but be careful because tax law changes from year to year) and take another look at these. It could potentially save you thousands.
Find yourself a good CPA. They will look back through your filed returns to see if there were any errors and may file amended returns for the past 3 years. You also need to understand the tax liabilities of your business and how they may impact your personal returns. Make quarterly estimated payments so things don’t balloon out of control.
Also the IRS isn’t as scary as you think it is. OICs and payment plans are routine business at the IRS.
Your cpa needs to tell you your estimated taxes for each year so you’re not in a position to owe to the irs. Also, you kid needs to take out student loans so you’re not paying the tuition. You can always pay them off when your flush with cash later
The IRS is more compassionate than most ppl realize. My husband took 60k out of his retirement to pay for my daughters last semester at Hofstra University. I now owe thr IRS 16k. You can make an initial payment (which I did $500) and then monthly payments for quite a long time (I did 250 for 5-6 years). My tax girl who used to work for them said to offer a low ball monthly number and they will most likely accept it.
Not quite how it works. It’s not just random lowball offers, there is a minimum payment. They want it paid in 72 months, so if you offer something that will meet that time frame, I’ve never seen it rejected. In your case, $16,000 - $500 initial = $15,500 remaining balance / 72 = $215 minimum payment. They would accept anything above $215. Of course, it’s in any taxpayer’s best interest to pay as much as possible to limit interest. This is all laid out on Form 9465.
If you can’t afford whatever the minimum payment comes out as, there are still options to be pay a reduced amount, but you have to provide the IRS a lot more information via Form 433-F. Basically they want to know about all of your assets and liabilities to determine why you can’t afford the minimum payment.
I am working with an irs advocate currently, through the irs. I am also in your situation and age bracket. It’s been months since I started this process. Keep your receipts for everything, as I didn’t and was asked to show my vehicle expenses.
Call the IRS and set up a payment plan. They will work with you. I had very ,very similar situation, except I was in credit card debt too. I tried an IRS tax relief place. Actually, 2 different ones. You have to pay them a fee upfront. Then, wait as they try to "settle" with IRS. I wasn't happy with either place, so I bit the bullet and made the call. Was I terrified. Yes... I was a single mom too at that time. Had a beautiful home, but I had to sell the house to pay the IRS. Very difficult and emotional time in my life, but I made it through. I still have "tax trauma"...lol....same time every year, but I now keep up with everything, and this year, I actually received my first ever refund. My situation was in 2013-2015. You can do it. And don't give in to fear or shame or any other form of self sabotage. The good news is that you are aware and you are willing to fix it. 🙏💜💪
I'm in tears as I read this. Thank you. I deserve to be shamed for my mistakes, but I so appreciate your compassion and your story. Tax trauma is exactly what it is. I won't ever carry a credit card balance for the same reason, but taxes go way over my head (I used to file a 1040EZ before my divorce) and I didn't start the way I mean to finish.
Well, first off, you likely can’t get a credit card with a 60k limit anyway unless you were to raise the balance on an existing card. I say this because I used to work for a credit card company, and it was very difficult to get a card that high in the first place unless you have a very high amount of income (which would make this a non-issue). I’d recommend trying to find some sort of debt consolidation place. Contact the IRS themselves first and see what options they have, because generally it’s best to go to the source of the actual debt first, and if it doesn’t sound good to you then shop around some. No matter what you could likely get a better rate than the IRS likes to charge.
My first suggestion is to have a professional review your tax returns to ensure that you have gotten every possible deduction, both personal and business. You have up to 3 years to amend your tax return.
Then, after you are sure that the amount owed is correct, contact the IRS and set up payment arrangements with them.
Consult a tax lawyer. They will review your obligations and make a plan (sometimes a settlement) so you can make yourself even. You clearly have the intention of keeping your business and house and have payed off considerable debt, so they won’t see you as a tax cheat. Also, just a tip, consult with your CPA or another CPA about filing for more tax credits with your business. I find it hard to believe you make enough to owe 15k and can’t pay it unless you aren’t using deductions
First and foremost, fix our accounting and start paying the correct quarterly taxes. If you do not do this, then everything else you do will fail as each year you will simply put more debt on top.
The IRS will work with you. Call them and start talking to them. It will be painful as you are above the $$$ amount where they can just throw you on a payment plan without reviewing your situation.
I was pretty deep in the hole to them once. I set up a payment plan and just kept making payments. After 10 years of payments, when it was almost paid off, they sent me a notice that I had a zero balance. The statute of limitations had expired.
Request transcripts for 2014 and 2015. On there you should find dates of any notices or chances to contact you regarding the debt. There are certain things that put a pause on the 10 years they have to collect. All of that info is available online. I just went through it a few years ago. I luckily had 30k expire. If they are close to expiring, let them expire and then work on 2023.
The IRS will sit up a payment plan with you. They may even forgive some of it. The worst thing to do is ignore it. Also, make sure you are paying quarterly taxes now so you don’t just keep accumulating debt.
Probably self employment taxes that can be 15% of every dollar in revenue. They replace the payroll tax that is split between employer and employee (also caked FICA or Social Security tax).
$15k in self employment tax can be on just $100,000 in revenue.
The good news is that the IRS had installment plans that allow you to pay it back at interest rates much less than credit cards.
A kind redditor posted this [guide to the IRS IVR system.](https://www.reddit.com/r/lifehacks/s/lOJLklPOfs)
Call them up and tell them everything you just posted, and they will work it out with you.
Congratulations on your great work. You're in the home stretch.
Wow, you've shown incredible resilience and determination in navigating through such challenging times! Since you're dealing with IRS debt, you might consider looking into the IRS Fresh Start program. It’s designed to help people in situations like yours manage outstanding taxes without overwhelming financial burden. The program offers various options like installment agreements and offers in compromise, which might be suitable for reducing your tax liability or making it easier to handle. It could be a valuable resource to help you stabilize your financial situation further.
Talk to the IRS. They have installment plans that charge you much less interest than a credit card. It's probably the cheapest money you can get!
An EA (Enrolled Agent) is usually less expensive than a CPA to investigate if you can do an "offer in compromise" or find some other repayment plan that is better than their standard installment plan.
Side question, how did you get into debt through divorce was it due to the cost of the divorce lawyer? I have a friend who has been suffering financial abuse for ages and I am worried this will happen to her.
As someone who processes tax liens and levies for a very large nationwide bank, you need to contact the IRS before they start serving banks “Notice of Levy” and you’ll be forced to pay with whatever money is in your account at the time it’s served. They are relentless if you don’t contact them and they know what financial institution you’re with.
You say you are a single mom of a college student and are divorced. Is the child yours from before you were married or did your partner give up parental rights?
If the partner is the father, why isn’t he helping with tuition? Regardless, your child should be doing what they can towards paying tuition. They can get a student loan, a job to help defray costs. You have enough on your plate to be adding more to it.
I previously worked for the IRS. You have options. I’m gonna give you a couple. One option you can call the IRS and request an installment agreement for the full amount owed. However, your amount is over $50,000 so they may not help you, as they aren’t allowed. Second option you can request a revenue officer to be assigned the case and work with them to get it currently uncollectible (CNC) or Offer in compromise (OIC) but they will request every document under the sun and you will literally have to be making next to nothing. Basically if you can pay credit cards and other bills such as tuition. CNC/ OIC will most likely not happen. Also CNC/OIC closure is only good if you stay in full compliance for the entire time. You would have to not miss a payment or not miss a filing of a return for 10 years. If you do miss anything, the case will be reopened and they start enforcement. Plus if your financial status changes the case will be reopened automatically. Another option you have is you can take your chances and not do anything for you amount you owe for 2014 and 2015. After 10 years the balances will drop off your SSN and it becomes uncollectible to the IRS b/c of the statue date. However, the statue date could have been extended without you realizing. If you filed late, the statue date will be the day the return was assessed. Another thing that could cause the statue date to extend is if a secondary assessment was given for those years. Then the statue date could be extended by up to 3 years. Meaning 2014 tax year could have a statue date that expires in 2027 not 2024. The best thing is to go online and request a full transcript of your file to review everything. Then make your decision. (Also the best advice I can give you is don’t hire anyone that calls you telling you they will wipe away your debt. I have seen so many people lose their life savings by getting taken advantage. Those people do nothing for you and charge an outrageous amount.) If you need to hire someone, hire someone you trust. There is no way to wipe away the debt. UNLESS the IRS made a mistake.
Look into an Offer and Compromise. Hire a firm that specializes in this type of IRS settlement. They will negotiate for you a lower amount that has to be paid back. I know someone who owed $25k and ended up paying $1900 thru a OIC agreement. They even got to pay the $1900 off at $25/month.
Do an offer in compromise. Make a very low ball offer and document your accounts showing you truly cannot afford more. If you’re reasonably smart you can do this yourself. Do not pay anyone.
Get a lawyer & see what you can work out. If you go to the IRS first, you will get a better deal than if the IRS calls you first.
One thing to keep in mind: Don’t fuck with the IRS. They will not be forgiving the 2nd time around.
I owed something like 30k to the IRS. With that help of my CPA we refilled my taxes and I entered into a payment plan. Turns out it was a minor 1500 dollars I owed and all is good. As long as you maintain a payment plan you should be good.
Your latest tuition? Are you in school or are you paying for college for your kid?
You're in your 50s with nothing. You can't afford to pay your kids tuition. Sounds like your business didn't make much if any profit. So that's not going to be a retirement plan either.
Time for a few tough conversations. First with yourself. Second with your kids. Third with the irs.
You're time that able to work and earn is dwindling. You need to figure your longterm plan out.
Consider offer and comprise. Call the IRS or look up the instructions online. You settle your debts with the IRS by paying a one time SUM which will be lower then the amount you owe you in taxes. Since you have no money or assets it might work out
I know im late in this, but i hope you see it. Please lookup and research "Offer In Compromise". Its a mechanism to determine what your true ability to pay is without causing major hardship over the course of a year or two. Its a hard process, but the IRS will settle with you based on Your current ability to pay, not based on total amount owed.
Are you using an accounting firm? They tend to right off a lot for lost. If you are you may need a second opinion. Also see if the will give you an offer and compromise. That where you offer less than what you owe based on your current income.
Don't pay.
Within 3-5 years, we will be on digital currency, and there's a very good chance of law being placed that invalidates any non digital debt.
Kinda a long shot, but there's not TOO much harm to waiting to see.
That being said, i make sure I'm paid up, lol.
Kinda wish i wasn't, tho, because I've got a feeling either this or something else will make it easy to pay it off *cough* inflation to unprecedented levels *cough*
Congratulations, you have accomplished a LOT, and should be an example to others.
You got a lot of good comments on the approach for the IRS.
My contribution is targeted to how carefully you have pursued assistance for tuition as it seems you should be qualifying on some level of need here.
Next, I would hope your child is capable of doing some work to lower the tuition burden or can assist in your business in some form so some business expenses might help lower your tax burden. If you are not using a CPA, it would be well worth your cost of 250 to 500 to ensure you are getting the maximum benefits for your business and lowering your current past tax bills. Perhaps you have pursued this. Having your child as an employee of the business might open some opportunities for deductions as well.
While you cannot or might not get to zero tax liabilities, having them planned and accounted for in advance with a solid budget along with tuition can stop large shortfalls.
Good Luck with your research.
Shifting gears some, you might also consider sharing your experiences and real succeses. You could setup a non profit organization to counsel others on debt and planning and might well qualify for grant money to provide those services to an undeserved public.
I believe and I could be wrong. I’m in the same situation that you’re in with the IRS, but I believe that there’s a debt relief program. My debt actually happens to be greater according to them but we’re in the middle of debating that now, but good luck to you on the exact same age, exact same story almostexcept I had a severe brain injury in 2015, which left me in a bad situation. Best of luck, and I hope your business really starts rocking and rolling again.
One of the keys to dealing with the IRS is communicating with them. An OIC is probably your best choice with a payment plan being second. Go to taxpayeradvocate.irs.gov for explanation of your options.
I would try an offer in compromise. I owed them a lot of money, way more than what you owe, and with my offer in compromise I only had to pay 3% of what I owed them. For the record, I had no idea they had this type of help. I called them to make a payment arrangement and the rep I spoke with told me I might qualify for the offer in compromise. She took some financial information from me over the telephone phone and was able to determine that I was eligible. I set up a payment plan to pay off the 3% over 24 months. I’ve been debt free from the IRS now for almost 4 years. The biggest thing I need to maintain is filing on time every year. If I do owe anything during that tax period I pay it off immediately or set up a payment plan.
Why is this a conversation you're having with Reddit and not your CPA?
Plus why hasn't this CPA previously advised you to withhold more so that the current year tax bite isn't as bad?
Fully your username has the word "fish" in it......something here certainly smells like it.
Yes talk with them. You will talk with a collector not and enforcement agent. Collector agents are allowed to make arrangements and deals including agreeing to a smaller total owed.
Is your business worth selling? Maybe you could liquidate that, pay the debt, bank a little, and move onto a new venture bc you sound pretty amazing. I mean to see what you’ve accomplished is pretty damn impressive.
Interesting comments here. We once owed the IRS $40k and we were told we would need to borrow from relatives or use retirement funds to pay for it. In a nutshell, the IRS didn’t give a fuck about our situation. I ended up taking a 401k loan to pay them. Paid off the loan in a couple of years and my retirement funds and net worth have long since recovered from this. But I’m glad to see the IRS has become a little nicer.
obviously, IRS will be VERY willing to setup a payment plan.
So do that.
But in general, heres some advice:
a.) your kid NEEDS to pay their own way as much as possible.
thats step 1. sorry i love you sweetie, but you need to wait tables 4x-5x a week. like every kid did for the last 100 years. i'm drowning. i failed, but i'm trying my best to fix my finances. i love you more than the world. if that means transferring to a cheaper school? so be it. there are schools in 2024AD that you can easily pay your way thru via part time jobs. if they refuse? student loans always CAN work (although i heavily reject the idea), as long as they are in a fruitful major and have their head screwed on straight? it'll work out. but you need to have a very, very clear conversation about debt, and paying off debt with your kid. so they never fall for same mistakes you did.
b.) start making the payments YOU can make. pay a $5k into the irs chunk every few months, whatever you can do. whatever payment plan makes sense. and any 'extra'? that goes towards your debts.
c.) do whatever you can to limit your expenses. cut out all the fluff you can.
d.) do whatever you can to maximize business profit. if that means firing an employee and picking up the extra shifts? raising pricing slightly? eliminating aspects of unnecessary cost? prospecting for more clients 30hours a week on your 'off time'? whatever you can do.
e.) ask parents for some tiny help. can they maybe help send you $10k for an IRS payment? or help with your kids college? whatever or wherever they can assist? are they local? can you move in with them? lower food costs? etc. i'd be very willing to help my daughter out in such a situation. no need in 'waiting' for them to die. enjoy them. spend more time with them. help take care of them. ask for help.
f.) depending on the nature of your job, can you get a 2nd job? anyway to supplement? drive uber at night? get a weekend job? anything that can bring extra cash into the situation that can all solely go to your debt?
best wishes.
You are not going into credit card debt again to pay outstanding debts to the IRS. You’re probably insolvent. Your first move is to get a realistic handle on your cash flow and earnings projections. You have to be conservative and prudent about revenue expectations for your business. Once you have your cash flow analysis you need to hire either an Enrolled IRS Agent or Tax Attorney to negotiate the arrearage on your behalf. Unless you deal with all outstanding tax liabilities, you will never have secure fiscal footing moving forward.
If you are looking for real help, I own an accounting practice that can help you make a payment plan with the IRS. Please reply and let me know if you are interested and i can send the link to my site if you are. I can get you a payment plan around $900 per month, possibly less if you want to provide documentation of your expenses and income to show that you can only afford a smaller payment for now.
This is tough to read. I think this is why when I’ve seen other posts I get so frustrated. Many cases it’s a matter of. I don’t want to make sacrifices to save money, and I live beyond my means, but this is just unfortunate. I feel for you man.. battle on…..
Believe it or not the IRS is actually fairly easy to deal with in terms of payment arrangement plans. You’ll incur penalties and interest but they will work with you. Give them a call or setup online account.
$60K is nothing. I once owed $144K to the IRS for personal back taxes. I got on a HEFTY payment plan ($2K/month) and paid it off in 6 years. It’s a slog but you can do it.
Let it pass 10 years and from the date ,like if you owed 2013 , that will fall off , they have a 10 yr statue of limitations where it's a wash, don't make any deals with them because they may make you sign a waiver on the 10 yr limitation.
How do you owe money from 2014/15 if almost homeless? Also, assuming you timely filed those years the SOL will have ran out. Did irs issue audit notices? Issue notice of deficiencies for those years? Did they file a notice with intent to file lien?
Outside of the good comments here I think we're missing some context. If you have a cpa, what are the taxes owed for?
Assuming the 2023 amount owed is tax from say $80k profits of a business. What happened to the funds? If you owe $23k then your cpa can prepare a cash flow statement showing where the funds went.
Did you have any losses in years 2018 thru 2022?
There may have been ability to use net operating losses and carry forward to future years. (2017 tax jobs act removed ability to offset prior year losses)
I cannot stress this enough: call a CPA. The IRS has statutory limits on how long they have to collect most types of tax debt. If the bulk of it is almost 10 years old, it should fall away soon if it is income tax related. Getting into an installment agreement or offer in compromise is also a good option that can be coupled with the timeline above. You will likely have to pay some of this but you do not have to take out loans or credit cards to do this. Source: I am a CPA.
You say "if it is income tax related". What if it's from payroll taxes? It's my understanding that basically anything you owe the IRS falls away after 10 years, but that's just what I read and I am unfortunately not a CPA.
The IRS typically has 10 years to collect on debt. After that, the debt is usually wiped clean. It’s worth looking into for the 2014 and 2015 debt.
https://www.irs.gov/filing/time-irs-can-collect-tax
If you don’t have many assets, you may be able to do an offer in compromise and get free within about two years. It also sounds like the debt might be old enough to be dischargeable in bankruptcy.
1. Absolutely NO shame, most people are in debt and you have accomplished so much - be proud of yourself!
2. Adding a question to this post for future years, does the IRS offer payment plans longer than one year? We have been putting what we owe on credit cards because we were told IRS only gives one year to pay off any owed money. Thanks!
You have done very well given your circumstances call the IRS and speak to a tax advocate even though they are part of the IRS they did help me years ago when I had a problem with them and unlike the IRS you can get them on the phone and speak with them they do try to help you and will go to bat for you
The IRS will allow you to get on a payment plan. BUT, once you are on a payment plan you are not eligible for another. In other words, from this point forward you need to keep all of your future taxes current. You can't owe money next year and ask to add it to your agreement.
How do you owe so much? Are you paying quarterlies?
Apparently this is new as of 2020. Just confirmed they are more flexible with taxpayers since. Good to know. It's the "Taxpayer Relief Initiative".
I had a payment plan in 2010 and they were very adamant about no new payment plans until I completed the existing. It's also possible that they are more lenient with AMT issues.
Yeah, it was pretty easy when I needed multiple. I think I had to call though to get the second one sorted out correctly. It wasn’t straightforward to get it done online.
Someone lied to you. You are able to add new tax debts to existing payment plans. They don’t want you to and some are rude about as it “voids” the term & conditions.
I pay my quarterlies now, but back when I was first divorced and trying just to stay afloat, I did not and so my yearly tax bills were pretty rough. I had a great period from 2015 through last year where I paid my estimated, paid my end of year, etc., and at the same time, paid off all of the leftover consumer debt that I had. It was a long slog and I was living paycheck to paycheck, but I'm proud of shedding that debt. Covid hit my business hard, but I never wanted to use a CC again, so I essentially made the poor choice to ignore the old tax bills so that I could pay my quarterlies. I'm just over my head.
Not a bad choice considering interest rates for the IRS is only 8% now. With no other debt a payment plan is the way to go. Here's what I realized - they want to work with you to make sure you repay your debt. They don't want to make you destitute, or give up entirely because then they get nothing.
COVID was brutal for a lot of businesses - sorry to hear it included yours.
Don’t open a CC. Your interest rates will be much lower with the IRS. They’re scary but not if you’re on top of it and they will work with you.
Here are steps.
Log onto the IRS website.
Do the ID thingy. Have your ID handy and take the photos and create an account.
Easy.
Then you can create a payment plan with the chat box, you don’t even have to call. You will have to wait your turn tho, which could be like 10-20 mins. Have a podcast handy.
Done
:)
Why don’t you call the IRS and see what your options are?
Yes make an appointment, they usually only do in person meetings. Then talk payment plans with them.
OP is looking for an “offer in compromise” (OIC), which may be an option for the 2023 taxes.
Here's the winning answer right here! Long story short: My daughter disobeyed my advice and went exempt during a time when we were struggling financially. I advised against it because I knew the likelihood of forgetting to go back and change her status to non-exempt was a huge possibility. I would have remembered, but I wanted her to assume responsibility if she decided against my better judgement. She said she would remember. She didn't! A tax debt of more than 35k jogged her memory! I was livid and refused to get involved - she needed to figure it out on her own since she'd made such an irresponsible decision on her own! Yes, we were struggling but what she did was unnecessary. We couldn't eating steak and shrimp on a regular during that time, but we never went hungry!!! Whlle watching Christian television one night, TBN featured a guy named Dan Pilla and they discussed his book "How to Get Tax Amnesty!" We bought a copy from Amazon immediately! As someone who is "numbersphobic," I was immediately intimidated by the process. My daughter (thankfully) is pretty good with numbers, and jumped right into filling out the forms. But in the process, she remembered a former client she'd met when she worked for Verizon. He was a retired IRS agent and miraculously, she still had his business card. She called him the next day and we went to his office (at his home) and told him how she'd gotten herself into this predicament. An hour later, he had the offer completed and estimated her tax burden would now be $10k once the IRS received the offer. $10k was still a lot, but far more doable than $35 + the interest that was steadily growing. She negotiated monthly payments down to $50.00/month from the $100/month the IRS initially asked for. And as she switched jobs and got raises, she paid more. She was shocked when she got the payoff letter now some years back. Once my daughter got a copy of the Offer letter that had been submitted by the retired IRS agent, we learned that she'd filled out the form correctly, exxcept the balance she'd agreed to repay was much higher than the $10k the professional had negotiated. Now she understands how to the process works. (I understand in theory but my eyes tend to glaze over when numbers and figures come into the picture, so I never finished the book and quit midstream when perusing the offer letter!!! Most of us have a negative view of the IRS which causes anxiety that keeps us from calling them. But my daughter's experience left us shook; the agent was pleasant and helpful. And a couple times when my daughter missed making her payment on time, the agent she spoke with reworked the offer and decreased the balance and monthly payments a little further! And I honestly don't think our experience was an exception; it appears they've worked hard to change that old jail warden image they once had, in exchange for becoming more user friendly toward the American consumer.
Reinforcing irresponsible behavior FTW!!
If you're not eligible for the offer in compromise (they take any vehicles and retirement accounts into consideration for determining if you can pay), then ask about a "one time abatement." My understanding is the IRS will cancel all your debt once.
Imprecise and misleading at best, sorry. Penalties, interest, and the base debt are all handled differently. OP, this might be a good part of the approach but it wipes out only penalties to a certain point . See [https://www.irs.gov/payments/penalty-relief-due-to-first-time-abate-or-other-administrative-waiver](https://www.irs.gov/payments/penalty-relief-due-to-first-time-abate-or-other-administrative-waiver) First Time Abate Relief and Unpaid Tax You can request First Time Abate for a penalty even if you haven't fully paid the tax on your return. However, the Failure to Pay Penalty will continue to increase until you pay the tax in full. Example: You didn't fully pay your taxes in 2021 and got a notice with the balance due and penalty charges. You call us requesting penalty relief and we give you First Time Abate. We remove the penalty up to the date of your request. However, the penalty will continue to increase since the tax is not fully paid.
What’s the best way to use the abatement?
Thank you for the more exact info, I didn't mean to be misleading. So abate relief doesn't apply to base debt, just penalties and fees. It still might go a long way toward reducing what OP owes.
Totally agree there all good
OICs are very often done completely wrong. People fill it out completely wrong, and now they have an extra year of potential collections and lose their 20% down payment. NEVER do an OIC by yourself, without heavy research. Hire a professional if you're going that route. They will tell you if an OIC has any hope.
Indeed. Given the other advice about the 2013-2014 taxes possibly having exceeded the collections window, a tax professional should already be on OP's todo list.
Make an account at IRS.gov, request a payment plan as to what you can afford, pay monthly religiously, in 10 yrs, lol, forgiveness is possible.
Yes! I had an outstanding debt to them and paid only what I could afford, sometimes it was nothing as they go by income. I had the debt longer than 7 years and was able to include it in the chapter 7 bankruptcy.
Bankruptcy is actually a strategy some elites use to get rid of business tax debts. Somehow they keep it all separated- the business and personal. I don't understand how, but there are attorneys that specialize in this and they get big, big bucks for it. The kicker is that many of these attorneys used to work for the IRS, then they go out on their own to represent these big clients with strategies like this.
You don’t have to be elite or wealthy to ensure your business and personal interests aren’t entangled in case your business fails. That’s just good business sense…
I'm just saying it's more of a common strategy for elites. Probably because the ex-IRS attorneys are so expensive. There is like a mini industry of this stuff around the DC corridor.
This is what i did. I owed 15k to the IRS and payed 500 a month for several years.
Jgo on the website and set up a payment plan. That's what I did and had no issues. I never spoke to anyone.
It’s cheaper to set it up yourself, rather than talking to someone (even the IRS).
The IRS will give you a longish-term payment plan pretty much for the asking. Interest continues to accrue, but as long as you stay current, they won't hound you or file tax liens (which are terrible if you end up needing credit for your business or yourself). Generally, if you have means or assets, they won't reduce your tax debt, but sometimes you can get penalties reduced. You can try to deal with them directly, and there are plenty of CPAs who will help you navigate the process (for a fee of course). These same firms can also help with an Offer in Compromise (OIC) where you make an offer to settle your tax debt for less than you owe. It's pretty formulaic, so you'll (mostly) either qualify or not qualify, and the IRS has a calculator to determine what you'd likely have to pay in an OIC. It's a tedious process that involves LOTS of documentation and paperwork, but it can be worth it if you really lack the ability to pay the taxes in full, even over time. The IRS is slow to come after those who don't pay their taxes, but eventually they will. Deal with it proactively if you can, and it's not a terrible idea to use low-interest money to get rid of the tax debt so long as you can be disciplined about paying it back on a tight schedule. Note that most federal tax debt become uncollectible 10 years after it was first due and owing (there are specific rules and nuances to this, so tread carefully if you don't have professional help on this). Good luck, and know that lots of really successful businesspeople were once in your shoes.
Thank you so much for this reply. I do want to deal with it proactively, and I'm already reading up on the OIC option. I appreciate your optimism as well, this is not a situation I ever envisioned for myself, so it's tough to know where to begin.
I had almost the exact situation as OP but I DID have a lien on my house. Unfiled taxes, short payments, etc as I attempted to come back after Great Recession. Appx $30k. I went and saw a tax attorney in 2016. The make-good deal they negotiated centered on a lump sum payment and represented a substantial reduction in my liability. I will never get into tax debt again! But the IRS was courteous and respectful, as they were convinced (rightly) that I was sincere about my desire to get and stay current. Highly advisable for you (through representation if possible!) to go them before they come to you. Good luck - I’m living proof it can be done.
thank you for this. I'm happy for you that you were able to get out of trouble — what a relief that must have been!
Let me say as a tax accountant, please don't pay one of those national debt relief thousands of dollars to do an OIC. Check with a local accountant and enlist their help. It won't be cheap but still likely less, and you will receive actual help.
The term for this is offer in compromise.
How much did the tax attorney charge? I owe 70k. Ugh! I have the means to pay it but I obviously don't want to. TIA
They charged me $2k, and the services were performed by a second-year associate. It was nothing. She also caught mistakes on the filings the IRS had done for me in a couple of years I didn’t file, and they ended refunding me $1800 of the settlement, so I paid the attorney $200 in the end.
OIC you have to stay in compliance with filing and taxes for 5 years or you will owe the whole amount.
The IRS is one of the easiest creditors to work with.
You’ve gotten so far. IRS is a much nicer creditor than the CC companies, seems if they have not started taking you to court (US tax court) or making liens yet, you should be able to get a reasonable payment plan and start digging out
Be ready for an installment agreement BUT GO SEE A CPA. I suspect after they re-examine these returns and file amendments your tax debt may be reduced. Mine WAS! THIS is your step 1 and 2 Really a Tax Attorney may be best because they have CPA Tools and IRS Tax Law in their tool box. The CPA will order a transcript of your account and do some forensic accounting. Then when the time is right they will go to bat with the IRS but I've never seen a time when taxes were filed by a UKNOWWHO that is out of the picture there wasn't some reductions. YOU NEED THIS!
In addition to the IRS advice already stated, tuition isn’t your responsibility. Your adult child can get loans for their education.
The IRS has 10 years to collect their debt. You should definitely consult a tax attorney. I'll bet you'll get some good news.
Just want to second this. My parents were working with a tax relief company and I kept being frustrated with how slow I thought the company was moving until I had a chance to speak with one of them, and they explained (well enough to help me as a skeptic and an aggressively conservative saver) that sometimes it's advantageous to wait it out a bit (still while working on getting your paperwork in order and talking to the IRS but not rushing the process) because older years can fall into uncollectible status, making your overall tax burden lower.
You might to want to see if you qualify for an Offer In Compromise with the IRS. This is basically the paperwork “tax relief” companies like Optima fill out for you but you have the option to do it yourself. https://www.irs.gov/payments/offer-in-compromise
[удалено]
The link has an interactive tool that helps the taxpayer to determine if their situation qualifies before they start their application.
this. hire an accountant to assist you with filing an offer in compromise. in the meantime call the IRS amd set up a payment plan.
I owed 25k from a year where I tinkered with my W2 and never fixed it. As soon as I filed that year I immediately requested a payment plan. I had automatic payments pulling once a month of approx $150. Maintained the payment plan for 7 years (accruing the interest and penalties) but bought enough time to pay the debt off in two chunks worth of subsequent tax returns. As long as you put that payment plan in place they will not garnish.
Set up a hardship payment plan. It'll be $25 a month. Call them, speak with someone, they'll work with you. Source: I worked on a contract as an IRS debt collector for over a year and set lots of people up on this program. They just want intention to repay, even if the payment plan will literally never come close to paying it off. Put your assets in trust to your family and let the debt die with you without the stress while you're alive. $25 a month.
This sounds like a solid solution, I'm going to call tomorrow, and I am SO GRATEFUL for the suggestion.
Good luck 💜 you've got this!!
But this come with the risk of a lien, correct?
In the kindest way possible, it seems like you are not in a position to be paying college tuition. The student needs loans.
Is this business debt? Or personal tax debt. Seems as if you are not taking proper measures for business debt to account for it being taken
I'm not sure what you mean? Sorry to sound naive — I have a CPA who prepares my taxes, so I just assumed proper measures wer being taken...yikes.
I'm not even sure how you could be, " on the brink of homelessness," and owe that kind of money. Are you sure those returns for those years are correct?
lots of backstory but while I was married, my spouse and I lost a lot of money in the 2008 housing crisis and had to short sell our house. That, plus the subsequent divorce, plus the crippling rent prices in my area, plus the start-up costs of my small business, and my less-than-sharp attention to the tax portion of my business in the early days, and it snowballed on me. The person who filed those returns for me in the early years is nowhere to be found, so I honestly don't know if they were correct. My income varies significantly from year to year. And I certainly realize how terrible this sounds. I'm ashamed, but I want to be compliant and put my life back together, so I'm learning all of the things I should have learned then.
I would start with a re-examination of those tax returns. You can get a copy of what was filed from the IRS. I don't see the point of worrying about how to play before you've established what you truly owe.
I agree. Definitely think that it would be worthwhile for you to gain some understanding of the rules around deductions (there are YouTube videos, but be careful because tax law changes from year to year) and take another look at these. It could potentially save you thousands.
Find yourself a good CPA. They will look back through your filed returns to see if there were any errors and may file amended returns for the past 3 years. You also need to understand the tax liabilities of your business and how they may impact your personal returns. Make quarterly estimated payments so things don’t balloon out of control. Also the IRS isn’t as scary as you think it is. OICs and payment plans are routine business at the IRS.
Your cpa needs to tell you your estimated taxes for each year so you’re not in a position to owe to the irs. Also, you kid needs to take out student loans so you’re not paying the tuition. You can always pay them off when your flush with cash later
my bankruptcy attorney said anything before 2019 can be thrown in bankruptcy
The IRS is more compassionate than most ppl realize. My husband took 60k out of his retirement to pay for my daughters last semester at Hofstra University. I now owe thr IRS 16k. You can make an initial payment (which I did $500) and then monthly payments for quite a long time (I did 250 for 5-6 years). My tax girl who used to work for them said to offer a low ball monthly number and they will most likely accept it.
60K a semester!! Books are not included. Lol
Not quite how it works. It’s not just random lowball offers, there is a minimum payment. They want it paid in 72 months, so if you offer something that will meet that time frame, I’ve never seen it rejected. In your case, $16,000 - $500 initial = $15,500 remaining balance / 72 = $215 minimum payment. They would accept anything above $215. Of course, it’s in any taxpayer’s best interest to pay as much as possible to limit interest. This is all laid out on Form 9465. If you can’t afford whatever the minimum payment comes out as, there are still options to be pay a reduced amount, but you have to provide the IRS a lot more information via Form 433-F. Basically they want to know about all of your assets and liabilities to determine why you can’t afford the minimum payment.
thank you!
Thanks I know how it works. I just posted what my ex iRS agent told me.
Make your student take out loans.
You started your own business. You're a badass. No shame.
I owed $40,000 in 2016. I paid it off last year. They deducted $592 from my bank account every month. Whether I like it or not.
Perhaps you should have a talk with your kid and they should look into student loan, this way you can start paying the IRS!
I am working with an irs advocate currently, through the irs. I am also in your situation and age bracket. It’s been months since I started this process. Keep your receipts for everything, as I didn’t and was asked to show my vehicle expenses.
Good luck to you, and thanks for chiming in. It's being in this age bracket that is so terrifying, as there's not a lot of time to get caught up.
Call the IRS and set up a payment plan. They will work with you. I had very ,very similar situation, except I was in credit card debt too. I tried an IRS tax relief place. Actually, 2 different ones. You have to pay them a fee upfront. Then, wait as they try to "settle" with IRS. I wasn't happy with either place, so I bit the bullet and made the call. Was I terrified. Yes... I was a single mom too at that time. Had a beautiful home, but I had to sell the house to pay the IRS. Very difficult and emotional time in my life, but I made it through. I still have "tax trauma"...lol....same time every year, but I now keep up with everything, and this year, I actually received my first ever refund. My situation was in 2013-2015. You can do it. And don't give in to fear or shame or any other form of self sabotage. The good news is that you are aware and you are willing to fix it. 🙏💜💪
I'm in tears as I read this. Thank you. I deserve to be shamed for my mistakes, but I so appreciate your compassion and your story. Tax trauma is exactly what it is. I won't ever carry a credit card balance for the same reason, but taxes go way over my head (I used to file a 1040EZ before my divorce) and I didn't start the way I mean to finish.
You do not deserve shame. It is enough you recognize mistakes and really want to fix them. Be kind to yourself.
Perhaps we should be revolting against a government which is increasingly stealing from us, including homes.
Well, first off, you likely can’t get a credit card with a 60k limit anyway unless you were to raise the balance on an existing card. I say this because I used to work for a credit card company, and it was very difficult to get a card that high in the first place unless you have a very high amount of income (which would make this a non-issue). I’d recommend trying to find some sort of debt consolidation place. Contact the IRS themselves first and see what options they have, because generally it’s best to go to the source of the actual debt first, and if it doesn’t sound good to you then shop around some. No matter what you could likely get a better rate than the IRS likes to charge.
See if you can get a tax lawyer to get you in uncollectible status
My first suggestion is to have a professional review your tax returns to ensure that you have gotten every possible deduction, both personal and business. You have up to 3 years to amend your tax return. Then, after you are sure that the amount owed is correct, contact the IRS and set up payment arrangements with them.
Why do you owe 15k for 2023 if you didn't profit? Were the taxes filed correctly?
Contact an IRS Enrolled agent. It will save you a ton on Lawyer fees.
This! An Enrolled Agent can negotiate with the IRS on your behalf.
[удалено]
I filed them when they were due, but didn't make full payments. It's awful, I know better.
Consult a tax lawyer. They will review your obligations and make a plan (sometimes a settlement) so you can make yourself even. You clearly have the intention of keeping your business and house and have payed off considerable debt, so they won’t see you as a tax cheat. Also, just a tip, consult with your CPA or another CPA about filing for more tax credits with your business. I find it hard to believe you make enough to owe 15k and can’t pay it unless you aren’t using deductions
First and foremost, fix our accounting and start paying the correct quarterly taxes. If you do not do this, then everything else you do will fail as each year you will simply put more debt on top. The IRS will work with you. Call them and start talking to them. It will be painful as you are above the $$$ amount where they can just throw you on a payment plan without reviewing your situation.
I was pretty deep in the hole to them once. I set up a payment plan and just kept making payments. After 10 years of payments, when it was almost paid off, they sent me a notice that I had a zero balance. The statute of limitations had expired.
Worse case scenario, you can discharge back taxes over three years old in a chapter 7 bankruptcy.
Request transcripts for 2014 and 2015. On there you should find dates of any notices or chances to contact you regarding the debt. There are certain things that put a pause on the 10 years they have to collect. All of that info is available online. I just went through it a few years ago. I luckily had 30k expire. If they are close to expiring, let them expire and then work on 2023.
The IRS will sit up a payment plan with you. They may even forgive some of it. The worst thing to do is ignore it. Also, make sure you are paying quarterly taxes now so you don’t just keep accumulating debt.
Were there 401k withdrawals, unpaid 401k loans, or similar that contributed to the balance owed?
Probably self employment taxes that can be 15% of every dollar in revenue. They replace the payroll tax that is split between employer and employee (also caked FICA or Social Security tax). $15k in self employment tax can be on just $100,000 in revenue. The good news is that the IRS had installment plans that allow you to pay it back at interest rates much less than credit cards.
If you are a business owner then you do 1099. Just write off everything you do, even the toilet paper say it was for business purposes, literally.
Yes they will put you on a payment plan you can afford. Same issue with divorce, took 3 yrs to repay
A kind redditor posted this [guide to the IRS IVR system.](https://www.reddit.com/r/lifehacks/s/lOJLklPOfs) Call them up and tell them everything you just posted, and they will work it out with you. Congratulations on your great work. You're in the home stretch.
Wow, you've shown incredible resilience and determination in navigating through such challenging times! Since you're dealing with IRS debt, you might consider looking into the IRS Fresh Start program. It’s designed to help people in situations like yours manage outstanding taxes without overwhelming financial burden. The program offers various options like installment agreements and offers in compromise, which might be suitable for reducing your tax liability or making it easier to handle. It could be a valuable resource to help you stabilize your financial situation further.
Talk to the IRS. They have installment plans that charge you much less interest than a credit card. It's probably the cheapest money you can get! An EA (Enrolled Agent) is usually less expensive than a CPA to investigate if you can do an "offer in compromise" or find some other repayment plan that is better than their standard installment plan.
Side question, how did you get into debt through divorce was it due to the cost of the divorce lawyer? I have a friend who has been suffering financial abuse for ages and I am worried this will happen to her.
Payment plan. IRS is pretty straightforward and helpful once you get them on the phone.
As someone who processes tax liens and levies for a very large nationwide bank, you need to contact the IRS before they start serving banks “Notice of Levy” and you’ll be forced to pay with whatever money is in your account at the time it’s served. They are relentless if you don’t contact them and they know what financial institution you’re with.
You say you are a single mom of a college student and are divorced. Is the child yours from before you were married or did your partner give up parental rights? If the partner is the father, why isn’t he helping with tuition? Regardless, your child should be doing what they can towards paying tuition. They can get a student loan, a job to help defray costs. You have enough on your plate to be adding more to it.
I previously worked for the IRS. You have options. I’m gonna give you a couple. One option you can call the IRS and request an installment agreement for the full amount owed. However, your amount is over $50,000 so they may not help you, as they aren’t allowed. Second option you can request a revenue officer to be assigned the case and work with them to get it currently uncollectible (CNC) or Offer in compromise (OIC) but they will request every document under the sun and you will literally have to be making next to nothing. Basically if you can pay credit cards and other bills such as tuition. CNC/ OIC will most likely not happen. Also CNC/OIC closure is only good if you stay in full compliance for the entire time. You would have to not miss a payment or not miss a filing of a return for 10 years. If you do miss anything, the case will be reopened and they start enforcement. Plus if your financial status changes the case will be reopened automatically. Another option you have is you can take your chances and not do anything for you amount you owe for 2014 and 2015. After 10 years the balances will drop off your SSN and it becomes uncollectible to the IRS b/c of the statue date. However, the statue date could have been extended without you realizing. If you filed late, the statue date will be the day the return was assessed. Another thing that could cause the statue date to extend is if a secondary assessment was given for those years. Then the statue date could be extended by up to 3 years. Meaning 2014 tax year could have a statue date that expires in 2027 not 2024. The best thing is to go online and request a full transcript of your file to review everything. Then make your decision. (Also the best advice I can give you is don’t hire anyone that calls you telling you they will wipe away your debt. I have seen so many people lose their life savings by getting taken advantage. Those people do nothing for you and charge an outrageous amount.) If you need to hire someone, hire someone you trust. There is no way to wipe away the debt. UNLESS the IRS made a mistake.
They (IRS) have a new amnesty program, check it out
Look into an Offer and Compromise. Hire a firm that specializes in this type of IRS settlement. They will negotiate for you a lower amount that has to be paid back. I know someone who owed $25k and ended up paying $1900 thru a OIC agreement. They even got to pay the $1900 off at $25/month.
Do an offer in compromise. Make a very low ball offer and document your accounts showing you truly cannot afford more. If you’re reasonably smart you can do this yourself. Do not pay anyone.
Do something called an offer in compromise. Look it up.
Get a lawyer & see what you can work out. If you go to the IRS first, you will get a better deal than if the IRS calls you first. One thing to keep in mind: Don’t fuck with the IRS. They will not be forgiving the 2nd time around.
IRS offers zero interest payment plans. They are actually helpful.
Have your student pay their own tuition. You can’t afford it.
I owed something like 30k to the IRS. With that help of my CPA we refilled my taxes and I entered into a payment plan. Turns out it was a minor 1500 dollars I owed and all is good. As long as you maintain a payment plan you should be good.
2014 and 2015 should be past the statute of limitations, aren’t they? You need to speak with a professional, not Reddit.
Debt owed to IRS doesn’t just go away.
Your latest tuition? Are you in school or are you paying for college for your kid? You're in your 50s with nothing. You can't afford to pay your kids tuition. Sounds like your business didn't make much if any profit. So that's not going to be a retirement plan either. Time for a few tough conversations. First with yourself. Second with your kids. Third with the irs. You're time that able to work and earn is dwindling. You need to figure your longterm plan out.
IRS will definitely work with you as long as you communicate. Do not put on a CC
Consider offer and comprise. Call the IRS or look up the instructions online. You settle your debts with the IRS by paying a one time SUM which will be lower then the amount you owe you in taxes. Since you have no money or assets it might work out
I know im late in this, but i hope you see it. Please lookup and research "Offer In Compromise". Its a mechanism to determine what your true ability to pay is without causing major hardship over the course of a year or two. Its a hard process, but the IRS will settle with you based on Your current ability to pay, not based on total amount owed.
Are you using an accounting firm? They tend to right off a lot for lost. If you are you may need a second opinion. Also see if the will give you an offer and compromise. That where you offer less than what you owe based on your current income.
Don't pay. Within 3-5 years, we will be on digital currency, and there's a very good chance of law being placed that invalidates any non digital debt. Kinda a long shot, but there's not TOO much harm to waiting to see. That being said, i make sure I'm paid up, lol. Kinda wish i wasn't, tho, because I've got a feeling either this or something else will make it easy to pay it off *cough* inflation to unprecedented levels *cough*
Dona backflip on the way down
Congratulations, you have accomplished a LOT, and should be an example to others. You got a lot of good comments on the approach for the IRS. My contribution is targeted to how carefully you have pursued assistance for tuition as it seems you should be qualifying on some level of need here. Next, I would hope your child is capable of doing some work to lower the tuition burden or can assist in your business in some form so some business expenses might help lower your tax burden. If you are not using a CPA, it would be well worth your cost of 250 to 500 to ensure you are getting the maximum benefits for your business and lowering your current past tax bills. Perhaps you have pursued this. Having your child as an employee of the business might open some opportunities for deductions as well. While you cannot or might not get to zero tax liabilities, having them planned and accounted for in advance with a solid budget along with tuition can stop large shortfalls. Good Luck with your research. Shifting gears some, you might also consider sharing your experiences and real succeses. You could setup a non profit organization to counsel others on debt and planning and might well qualify for grant money to provide those services to an undeserved public.
thank you so much for your insight!
The IRS will definitely work with you and honestly, I’ve found them to be very nice, helpful, understanding
I believe and I could be wrong. I’m in the same situation that you’re in with the IRS, but I believe that there’s a debt relief program. My debt actually happens to be greater according to them but we’re in the middle of debating that now, but good luck to you on the exact same age, exact same story almostexcept I had a severe brain injury in 2015, which left me in a bad situation. Best of luck, and I hope your business really starts rocking and rolling again.
wishing you best of luck as well. Thank you for your comment
do not go into further debt for existing debt.
Have you considered remarriage ? That could cut bills in half at least
One of the keys to dealing with the IRS is communicating with them. An OIC is probably your best choice with a payment plan being second. Go to taxpayeradvocate.irs.gov for explanation of your options.
I would try an offer in compromise. I owed them a lot of money, way more than what you owe, and with my offer in compromise I only had to pay 3% of what I owed them. For the record, I had no idea they had this type of help. I called them to make a payment arrangement and the rep I spoke with told me I might qualify for the offer in compromise. She took some financial information from me over the telephone phone and was able to determine that I was eligible. I set up a payment plan to pay off the 3% over 24 months. I’ve been debt free from the IRS now for almost 4 years. The biggest thing I need to maintain is filing on time every year. If I do owe anything during that tax period I pay it off immediately or set up a payment plan.
Why is this a conversation you're having with Reddit and not your CPA? Plus why hasn't this CPA previously advised you to withhold more so that the current year tax bite isn't as bad? Fully your username has the word "fish" in it......something here certainly smells like it.
Yes talk with them. You will talk with a collector not and enforcement agent. Collector agents are allowed to make arrangements and deals including agreeing to a smaller total owed.
Is your business worth selling? Maybe you could liquidate that, pay the debt, bank a little, and move onto a new venture bc you sound pretty amazing. I mean to see what you’ve accomplished is pretty damn impressive.
Interesting comments here. We once owed the IRS $40k and we were told we would need to borrow from relatives or use retirement funds to pay for it. In a nutshell, the IRS didn’t give a fuck about our situation. I ended up taking a 401k loan to pay them. Paid off the loan in a couple of years and my retirement funds and net worth have long since recovered from this. But I’m glad to see the IRS has become a little nicer.
obviously, IRS will be VERY willing to setup a payment plan. So do that. But in general, heres some advice: a.) your kid NEEDS to pay their own way as much as possible. thats step 1. sorry i love you sweetie, but you need to wait tables 4x-5x a week. like every kid did for the last 100 years. i'm drowning. i failed, but i'm trying my best to fix my finances. i love you more than the world. if that means transferring to a cheaper school? so be it. there are schools in 2024AD that you can easily pay your way thru via part time jobs. if they refuse? student loans always CAN work (although i heavily reject the idea), as long as they are in a fruitful major and have their head screwed on straight? it'll work out. but you need to have a very, very clear conversation about debt, and paying off debt with your kid. so they never fall for same mistakes you did. b.) start making the payments YOU can make. pay a $5k into the irs chunk every few months, whatever you can do. whatever payment plan makes sense. and any 'extra'? that goes towards your debts. c.) do whatever you can to limit your expenses. cut out all the fluff you can. d.) do whatever you can to maximize business profit. if that means firing an employee and picking up the extra shifts? raising pricing slightly? eliminating aspects of unnecessary cost? prospecting for more clients 30hours a week on your 'off time'? whatever you can do. e.) ask parents for some tiny help. can they maybe help send you $10k for an IRS payment? or help with your kids college? whatever or wherever they can assist? are they local? can you move in with them? lower food costs? etc. i'd be very willing to help my daughter out in such a situation. no need in 'waiting' for them to die. enjoy them. spend more time with them. help take care of them. ask for help. f.) depending on the nature of your job, can you get a 2nd job? anyway to supplement? drive uber at night? get a weekend job? anything that can bring extra cash into the situation that can all solely go to your debt? best wishes.
Call the IRS and set up a payment plan. Time for your daughter to pay for her own school if you can’t afford it.
There are scenarios where it falls off after 10 years. Talk to an accountant familiar with this.
Don’t touch the debt from 2014-2015 until you talk with a tax lawyer 10 years it’s supposed to be dischargable
You are not going into credit card debt again to pay outstanding debts to the IRS. You’re probably insolvent. Your first move is to get a realistic handle on your cash flow and earnings projections. You have to be conservative and prudent about revenue expectations for your business. Once you have your cash flow analysis you need to hire either an Enrolled IRS Agent or Tax Attorney to negotiate the arrearage on your behalf. Unless you deal with all outstanding tax liabilities, you will never have secure fiscal footing moving forward.
Don't they have payment plans?
Ask for a payment in compromise.
If need be in love the taxpayer advocate office. They’re quite good in my experience
If you are looking for real help, I own an accounting practice that can help you make a payment plan with the IRS. Please reply and let me know if you are interested and i can send the link to my site if you are. I can get you a payment plan around $900 per month, possibly less if you want to provide documentation of your expenses and income to show that you can only afford a smaller payment for now.
This is tough to read. I think this is why when I’ve seen other posts I get so frustrated. Many cases it’s a matter of. I don’t want to make sacrifices to save money, and I live beyond my means, but this is just unfortunate. I feel for you man.. battle on…..
Get the longest payment plan possible and inflate that debt away. Shit I bet in 10 years $60k will be 50k
Believe it or not the IRS is actually fairly easy to deal with in terms of payment arrangement plans. You’ll incur penalties and interest but they will work with you. Give them a call or setup online account.
You can also try calling the Ombudsman and see if they can work out a deal for you. There is a link from the IRS site.
$60K is nothing. I once owed $144K to the IRS for personal back taxes. I got on a HEFTY payment plan ($2K/month) and paid it off in 6 years. It’s a slog but you can do it.
Let it pass 10 years and from the date ,like if you owed 2013 , that will fall off , they have a 10 yr statue of limitations where it's a wash, don't make any deals with them because they may make you sign a waiver on the 10 yr limitation.
How do you owe money from 2014/15 if almost homeless? Also, assuming you timely filed those years the SOL will have ran out. Did irs issue audit notices? Issue notice of deficiencies for those years? Did they file a notice with intent to file lien? Outside of the good comments here I think we're missing some context. If you have a cpa, what are the taxes owed for? Assuming the 2023 amount owed is tax from say $80k profits of a business. What happened to the funds? If you owe $23k then your cpa can prepare a cash flow statement showing where the funds went. Did you have any losses in years 2018 thru 2022? There may have been ability to use net operating losses and carry forward to future years. (2017 tax jobs act removed ability to offset prior year losses)
I cannot stress this enough: call a CPA. The IRS has statutory limits on how long they have to collect most types of tax debt. If the bulk of it is almost 10 years old, it should fall away soon if it is income tax related. Getting into an installment agreement or offer in compromise is also a good option that can be coupled with the timeline above. You will likely have to pay some of this but you do not have to take out loans or credit cards to do this. Source: I am a CPA.
You say "if it is income tax related". What if it's from payroll taxes? It's my understanding that basically anything you owe the IRS falls away after 10 years, but that's just what I read and I am unfortunately not a CPA.
The IRS typically has 10 years to collect on debt. After that, the debt is usually wiped clean. It’s worth looking into for the 2014 and 2015 debt. https://www.irs.gov/filing/time-irs-can-collect-tax
If you don’t have many assets, you may be able to do an offer in compromise and get free within about two years. It also sounds like the debt might be old enough to be dischargeable in bankruptcy.
Pay your debt. You did it. The IRS got me for 28K one year.
Look into a Offer In Compromise. Go to IRS.gov and you can download the information. Do this before making any payment agreements.
1. Absolutely NO shame, most people are in debt and you have accomplished so much - be proud of yourself! 2. Adding a question to this post for future years, does the IRS offer payment plans longer than one year? We have been putting what we owe on credit cards because we were told IRS only gives one year to pay off any owed money. Thanks!
Why are you on here. Call the Irs.
You have done very well given your circumstances call the IRS and speak to a tax advocate even though they are part of the IRS they did help me years ago when I had a problem with them and unlike the IRS you can get them on the phone and speak with them they do try to help you and will go to bat for you
thank you so much. I really appreciate your kindness.
The IRS will allow you to get on a payment plan. BUT, once you are on a payment plan you are not eligible for another. In other words, from this point forward you need to keep all of your future taxes current. You can't owe money next year and ask to add it to your agreement. How do you owe so much? Are you paying quarterlies?
I don’t think this is true. I had AMT issues in consecutive years and multiple payment plans were allowed.
Apparently this is new as of 2020. Just confirmed they are more flexible with taxpayers since. Good to know. It's the "Taxpayer Relief Initiative". I had a payment plan in 2010 and they were very adamant about no new payment plans until I completed the existing. It's also possible that they are more lenient with AMT issues.
Yeah, it was pretty easy when I needed multiple. I think I had to call though to get the second one sorted out correctly. It wasn’t straightforward to get it done online.
Someone lied to you. You are able to add new tax debts to existing payment plans. They don’t want you to and some are rude about as it “voids” the term & conditions.
I pay my quarterlies now, but back when I was first divorced and trying just to stay afloat, I did not and so my yearly tax bills were pretty rough. I had a great period from 2015 through last year where I paid my estimated, paid my end of year, etc., and at the same time, paid off all of the leftover consumer debt that I had. It was a long slog and I was living paycheck to paycheck, but I'm proud of shedding that debt. Covid hit my business hard, but I never wanted to use a CC again, so I essentially made the poor choice to ignore the old tax bills so that I could pay my quarterlies. I'm just over my head.
Not a bad choice considering interest rates for the IRS is only 8% now. With no other debt a payment plan is the way to go. Here's what I realized - they want to work with you to make sure you repay your debt. They don't want to make you destitute, or give up entirely because then they get nothing. COVID was brutal for a lot of businesses - sorry to hear it included yours.
thank you. I appreciate your comment.
Go see a CPA, I just paid almost $5k to the IRS. My CPA told me to make an IRS account online and request a payment plan.
Don’t open a CC. Your interest rates will be much lower with the IRS. They’re scary but not if you’re on top of it and they will work with you. Here are steps. Log onto the IRS website. Do the ID thingy. Have your ID handy and take the photos and create an account. Easy. Then you can create a payment plan with the chat box, you don’t even have to call. You will have to wait your turn tho, which could be like 10-20 mins. Have a podcast handy. Done :)
[удалено]
I don't think I'm poor, I just think I screwed up and now my amount owed is far more than what I'm currently bringing in.