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2004 Fed, $36K owed (pen/int inc) - Questions

State Filed Taxes in Question? ILLINOIS Year in Question? 2004 Type of Taxes In Question? FEDERAL

--------------- Background:

(1) Filed 2004 Federal returns on 12/31/06 (20 months late) (2) I calculated $29,029 due (3) They calculated $35,047 due (4) I was a contractor and self-employed in 2004 (unlike all other years) due to loss of job (5) I was not aware of the tax laws regarding self-employment (6) I cannot pay $29,029 or $35,047 today nor in the immediate foreseeable future (7) I do have disposable income of $750-$1000 a month that I couldapply to the IRS (8) I wish to AVOID Tax Liens, Garnishments, and Wage Deductions and/or asset (Bank Account) freezes

Questions:

(1) Is the $6,018 difference between what I figured and what they claim I owe interest, penalties and fines a reasonable one? In other words, I never received an adjustment letter saying that they refiled my taxes differently, so I should assume this $6K figure is the penalties and interest? (2) Would it be worth finding a tax professional to review my return, make adjustments, and somehow get it under the magic number of $25,000 to quality for a streamlined IA? (3) How can I best avoid a Tax Lien in any situation -- and is the lien easily removeable once the debt is settled? I just went through bankruptcy (Chapter 7) last year and I don't want to ding my credit any further? (4) Are companies like American Tax Relief any good? They want $2850 to (a) represent me, (b) try to get a penalty abatement from the IRS, (c) negotiate a payment plan -- they already said because of my disposable income I do not quality for a "offer in compromise" (5) What are my options for representing myself and trying to get a payment plan without disclosing all of my detailed financial information?

Thanks all in advance.

Reply to
ecombatant
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I am not familiar with the company you have mentioned. Over the past 11 years of moderating this newsgroup, I have seen similar companies asked about and complained about.

My recommendation has always been to find a local CPA, Enrolled Agent, or Tax Attorney with experience in IRS negotiation.

In my rarely humble opinion, self-representation before the IRS is financial suicide. Always send someone to represent you and never go to their offices unless they sent you a supeona - even then do not go alone.

Dick

Reply to
Dick Adams

Late filing penalties & interest are applicable. You may want to review the calculations.

You know what they say about one representing him/her self

If you've already got an IRS lien - call your CPA today

No idea - but I'm not keen on those types of folks My specualtion is that they're not CPA's or lawyers

see my comment #2

___________________________________

-----> real address on hobokeni or hobokenx

Reply to
Benjamin Yazersky CPA

You should have gotten a letter telling you how they arrived at the balance due.

The time for that was February, 2005. "Please find me enough deductions to reduce my tax by $10,000. By the way, you'd be amending a return I originally filed delinquently" doesn't make you a very good client in mid-March. ;) That said, if you think the return was done wrong, and you have documentation for expenses not deducted on that return, by all means, get it amended so you're working with the correct tax liability.

Pay your taxes.

In theory, yes.

That's consistent with what I recently heard from a local attorney who does a lot of OIC work.

I've had enough trouble dealing with some people in the collections department that IMHO if you don't know where to begin, you probably won't get a good answer. (I've also dealt with some people who are great, but it's luck of the draw.) If you can scrape together enough money to get your balance below $25,000, the form to request an installment agreement is pretty simple. Phoebe :)

Reply to
Phoebe Roberts, EA

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