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 Posted: Thu Dec 04, 2008 7:15 pm Subject: IRS Garnishing 75% for Back-Taxes |
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One of my friends pulled me aside yesterday and asked me what I knew about tax law... "Why," I asked.
It seems his dad hasn't paid the IRS in about five years, and now they've started garnishing 75% of his paycheck. (Now he's only taking home $200/bi-week).
Now I didn't think that was possible. I thought the Fed cap was 25%, and further restricted by our state cap of 15%. So I came home, googled, and found out the caps don't apply to Fed/State taxes. Rather the IRS has some table, and they let you keep $X amount of your pay, based on your filing status and # of exemptions you can claim.
Anyway I found some info on th IRS Collection Appeals Program (CAP), which states something about an Offer in Compromise, which may let you setup installment payment arragements to stop the garnishment ....
Has anyone done that, or know how to go about doing it? Is it just a matter of calling the IRS and asking them to setup a payment plan? Are they usually good about stopping the garnishment, or is that rare?
Any help is appreciated.
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DebtCruncher
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Shazzers
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| Posted: Thu Dec 04, 2008 8:29 pm Subject: |
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It depends on a lot of things. First off, what is his balance? If it's over a certain amount, it would automatically go to the IRS's ACS (Automated Collection Systems) department and they can be sticky to deal with.
He would need to do a financial statement listing his assets/liabilities and he can download that off the IRS.gov website. If the IRS is not leaving enough for him to live on, then he needs to either call the Taxpayer Advocate or get in the PRP (Problem Resolution Program). He can state that paying this money is a financial hardship and propose a payment plan that he can live with--but the IRS does have the option to either reject or accept it.
If he does an Offer in Compromise, he still needs to download the forms off the website. This is where he proposes a lump settlement of his debt. If the IRS accepts his offer, it promises to wipe the slate clean--and in return he agrees to file and pay all liabilities on time. If he doesn't then the deal's off. Hope that helps!
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kscornell
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| Posted: Thu Dec 04, 2008 10:26 pm Subject: debt |
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They are taking 75%? Is that legal? That's like having a loan with 75% rate..isn't it?
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sdchargers_63
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| Posted: Fri Jan 02, 2009 7:10 am Subject: A little steep |
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They seem to be wanting him to take them to court to settle. The bad thing about the IRS is if you owe $10,000
they will declare you owe 10 times that amount and it becomes $100,000.
In this case the question is did the man file an extension each time it was due? There was no time limit on extensions unless they have revised it. And if so it looks like they would have taken the subject to court for income tax evasion. He needs a lawyer and go to court to keep from paying 10 times what he really owes. The penalities and interest amount to so much he would never get it paid off. When a Federal Judge makes a ruling the IRS have their hands tied. Otherwise the person will pay the rest of your life on money he does not really owe. This is worse than a slow death when one is starved out. Some people have to find a job and take a money as they say under the table where it is not on the books, to survive. Some people would just leave the country and go to Canada and take up a new residence. Bill Clinton did to get out of a war. Anything to survive. The man couldn't kill himself for they would come after the spouse. So get a lawyer and settle it in a federal court. This way if you have to make payments the judge will set the amount you pay on. Sure you will have a lawyer fee but is it worth is?
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Sgtar1
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| Posted: Fri Jan 02, 2009 8:52 pm Subject: We Need a Flat Tax |
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The following is my opinion...
An Offer in Compromise will stop all garnishments. The office of Roni Lynn Deutsch is a decent law firm to employ for this service, but like many of the firms that will represent you they will set you on a payment plan and then make the process last as long as it takes to get your last payment. Even though that sucks, unfortunately if you try to file an offer in compromise on your own the IRS agent will stick it to you.
As long as you did not lie on your tax filings, there is no threat of jail time. That is not tax evasion, that's failing to PAY the tax.
Taxes become uncollectable after 10 years. The time you are in an Offer period adds to the 10 year statute.
I settled a $40,000 claim once for $1100. But the statute has changed since then. The IRS rules are now incredibly stupid. First they want to know how much you can pay each month according to their standard list of allowable expenses (which you can find by searching for Offer In Compromise on irs.gov) and THEN they tell you you have to pay double that amount. It's completely idiotic, but that's the system now and it's stated very clearly in the free downloadable forms.
You are also penalized for not spending money. People who try to save money by paying cash for a cheap used car, for instance, no longer have the allowance for vehicle expenditure. So the more you SPEND monthly on allowable expenses such as Life Insurance, Car, Rent, etc the more you can deduct. Basically, if you're too poor to afford a life insurance premium you can end up on the hook for more money than someone who CAN afford it. It's a completely messed up system. I hope Obama fixes it.
That's the end of my opinion.
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JustANumba
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