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Posted: Fri Nov 09, 2007 7:27 pm Subject: IRS back taxes, need advice

I have a question and need advice...
I have a family member who owes 25,000 in back taxes to the IRS. Ok, I don't know how long he's owed the IRS, but he did find a company who negotiated with the IRS and has it down to $7500 which is pretty darn good. however, he does not have the money to pay the $550 a month for 15 months and has told the company who negotiated this deal that he can't afford that kind of money. well that company said he's refusing to cooperate when all he's saying is that i just can't afford that much but will pay what he can. this family member is in sales and so his income is unpredictable to say the least. I believe the company wants to see a couple of paystubs and it just so happens that the couple of months they want he did ok financially on.
I think he's going to see if they can get a 'year to date' figure rather than some monthly figures. anyway, my question is this:
What can he do now? Like i said he's dealing with a company on this but I think he needs legal counsel. I'm assuming that his back debt has accumulated over the course of a couple of years at least. but that's just speculation.
Additionally, they threatened him with jail time (IRS) if he doesn't pay.
He has no assets for equity for a loan, and no one will cosign for him. Another family member offered to give him maybe $3000 to help towards the cost maybe lowering the monthly payments? do you guys see any repercussions to this plan?
I was confused as to what category to put this under, i'm guessing that this is a collection agency as i've read in this forum that the IRS does hire third parties to get back the money owed from people.
my husband and i disagree on this, i say he can go to jail, hubby says there's no debtors prisons. I fully believe you can go to jail for not paying taxes...

Guest · Posted: Fri Nov 09, 2007 8:20 pm Subject:

yikes....I've seen those ads on TV and was wondering how they do those settlements.

Can he work out a payment plan with the IRS? I am on one and I know others that are.

Posted: Fri Nov 09, 2007 9:45 pm Subject:

No, there aren't any debtor's prisons..But we've all heard about people who went to jail for not paying the IRS!

The IRS is scary..But they will work out plans. I've seen those commercials on tv also..And they look kind of shady to me. Please tell your relative to attempt to work out a payment plan with the IRS directly..If he can get the $3000 offered to him, I would think it would be a nice gesture of good faith toward repayment. The debt is significant, but with an initial payment of that size I would think the IRS would be willing to listen.

Posted: Fri Nov 09, 2007 10:02 pm Subject:

I agree with Fins. Have your family member call them and talk to the IRS. I had back taxes that I needed to pay and went into an agreement with them, I told them how much I could pay a month and had them take the payment right out of my checking account (that way I didn't forget) They sent me a letter accepting the agreement, but that if I owe on my taxes next year that the payment will be put towards the oldest taxes owed first. They will tack on interest though. But I am making my last payment to them this month. It doesn't hurt to try and work with the IRS first, because you know that company has a nice fee tacked onto that amount.

Posted: Sat Nov 10, 2007 5:16 am Subject:

First of all thank you, all three of you for your help. I know that the answer would have to be from someone who either owes/owed back taxes or have some knowledge of the IRS, knowledge that I do not have. Additionally, you're helping me with a family member and not myself, that means a whole lot to me!
Secondly, to clarify before I go tell him the answers, he should by pass the company that made the settlement and go directly to the IRS? sounds like going that avenue would be the most productive because unlike creditors, the irs does hire third party companies to collect their debt, but they still can be approached?
Fins...I agree with you..i think he should take the money my in laws so generously offer and put it towards his debt. hopefully that will be a good gesture in the irs's eyes.
Puddle...thank you for sharing your situation...sounds like the irs is agreeable to work with! you gave me some hope this morning. i hope that this situation is resolved...it looks to me like he just avoided the situation until it got so bad that his back is now in a corner. i'm hoping he'll take my advice and deal directly with the irs. thanks again!!!

Posted: Sat Nov 10, 2007 8:01 am Subject:

Debt..it is in his best interest that he either makes a deal with the third party...or go directly to the IRS. They will make a settlement with you...they did with me...I'm like puddlejmpr..and they take out money each month. I could not pay originally what they wanted but I kept in touch and eventually the IRS and I agreed on an amount that fits my budget.

Posted: Sat Nov 10, 2007 8:56 am Subject:

debtstinker-I echo the others!! We owed several diferent times to the IRS.

I spoke with them on the phone and they worked out payments with us. I though I would never get them paid off, but finally did last year. If you call them and tell them the situation and that you want to get it paid off, but can't afford the amount, they will work with you. Just be sure it is an amount that you can live with, and pay.

If you -or they- can get extra money to put down as a good faith payment and go from there, I think they will be fine- but don't ignore them!!

Best of luck to your relatives!!..karen Very Happy

Posted: Sat Nov 10, 2007 9:07 am Subject:

I agree! Definitely don't ignore them!

Also, make sure he is prepared..If he gets any sort of refund from the IRS they will take it until the debt is paid, regardless of any payment arrangements.

Posted: Sat Nov 10, 2007 9:10 am Subject:

I know- one year we were going to get a big refund-after years of paying-but they took it to pay off our taxes Laughing

which ended up being ok- got it paid off sooner!!..karen

Posted: Sat Nov 10, 2007 10:19 am Subject:

I cannot add to this great advice.Do not ignore them as they can seize and levy to their heart's content without needing any court.

Posted: Sat Nov 10, 2007 10:30 am Subject:

AMEN!!

Posted: Sat Nov 10, 2007 11:59 am Subject:

Debt, something doesn't seem quite right with this story.

First, the IRS will not consider what they call an "offer in compromise" unless the taxpaper has a low collection potential.

Also,Under a repayment plan, a tax-payer has 60 months to repay the taxes.

How does this Company your relative is dealing with think he can make 550.00 a month payments, if his financial situation is such he qualifies for an "offer in compromise" with the IRS.

I agree with the other opinions here.
Idea

Advise your relative to deal directly with IRS. Idea

The IRS has an excellent web-site full of information that answers most taxpayer questions.
http://www.irs.gov/taxtopics/index.html

Posted: Sat Nov 10, 2007 12:12 pm Subject:

I echo all of this great advice and would also suggest even working with someone who is an "enrolled agent", a licensed tax preparer who has the qualifications to deal with the IRS on your behalf. I also owe back taxes and can tell you from painful personal experience that it does not pay to ignore them. It doesn't go away and it's best to file the returns and deal with it.

Posted: Sat Nov 10, 2007 5:42 pm Subject:

I know someone who owes back taxes to the IRS. She had unfortunatly hit a rough patch in her life with an old employer and she hasn't ever been able to get back to the financial standing she had. She bought a cash car and put it in her name and before you know it the IRS has now a lein on the vehicle. She had a checking account at one time and they were withdrawing funds from the account.

You don't mess around with the IRS. They are very serious. Work something out as soon as you can.