Author Topic: Some advice please! Federal & State tax issues  (Read 649 times)

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Raindrop

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Some advice please! Federal & State tax issues
« on: January 28, 2017 08:09:50 PM »
I would appreciate any feedback or thoughts on my situation. After being out of work for several years I had to liquidate my 401k & did not pay taxes on the withdrawal. Consequently I now have a high Federal & State tax bill. The IRS proposed A $10 month payment, which will never ever get paid back. I can't do an OIC. The state is taking $300/month from my paycheck which is making it very difficult to meet monthly living expenses. I have thought about those tax settlement companies that advertise but can't afford their fee right now. Has anyone had any experience with them?
How can I make all this go away? I need to address this but don't know what to do. Help!

fisthardcheese

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Re: Some advice please! Federal & State tax issues
« Reply #1 on: January 29, 2017 11:53:05 AM »
I'm no tax expert by any means, but my thought was that if the IRS is offering $10 monthly payments, what would be the downside in accepting that offer and then in the future if there are months you have extra money, paying more than the minimum. And if you happen to come into money later on where you can pay it off or make significant dents in the amount, you can get it taken care of.  But at least the $10 per month keeps the IRS satisfied and prevents further action on their part and buys you time to hopefully come up with a better plan?
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CleaningUp

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Re: Some advice please! Federal & State tax issues
« Reply #2 on: January 29, 2017 01:16:14 PM »
^ +1

Flyingifr

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Re: Some advice please! Federal & State tax issues
« Reply #3 on: January 29, 2017 04:14:57 PM »
I would appreciate any feedback or thoughts on my situation. After being out of work for several years I had to liquidate my 401k & did not pay taxes on the withdrawal. Consequently I now have a high Federal & State tax bill. The IRS proposed A $10 month payment, which will never ever get paid back. I can't do an OIC. The state is taking $300/month from my paycheck which is making it very difficult to meet monthly living expenses. I have thought about those tax settlement companies that advertise but can't afford their fee right now. Has anyone had any experience with them?
How can I make all this go away? I need to address this but don't know what to do. Help!

If you were sitting in front of me right now I (being an IRS licensed Enrolled Agent who specializes in IRS Audit and Collection issues) would be asking the following questions:

1: Do you have a copy of the Tax Lien? If so, what is the CSED (Collection Statute Expiration Date) found in column "e" of the Assessment Line? That is as far as the payments can go. Unlike other creditors, payments to the IRS do NOT re-set the CSED so no payment plan can go "forever".

2: If the IRS is willing to accept a $10 monthly payment for the remainder of the CSED, then why (a) have they not classified the account "Currently Not Collectable" and (b) why is an Offer in Compromise out of the question? The $10 a month offer is a tacit admission there is no collection possibility, so why not call it that and "53" it?

3: How long is the State $300 a month to go? How much do you owe the State and why are they getting such a preference over the IRS? The IRS collection tool chest is much more powerful than the State Collection tool chest.

4: Why are you more comfortable with a payment plan that can go as long as ten years per tax year on the Lien (and proposes to pay them $X per month for those ten years) over one that goes 6 months and proposes to pay them 12 times the same $X?

5: Maybe you are talking to the wrong Tax Settlement people (hint, hint).
« Last Edit: January 29, 2017 04:24:50 PM by Flyingifr »
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