Without going into the gory details, I owe back taxes from 2006. Obviously I owe them the actual taxes, interest and penalty. No crime, just a combo of procrastination and confusion on how to file a employee stock sale.
What's the best way to minimize the overall $$$$? Admit I was stupid, and ask for their mercy, hire a lawyer, or one of those firms on late night TV that claim to get you off with 10-15% of the total?
Chip
I would look for a local EA (enrolled agent). You don't need a lawyer.
Was this a non qualified stock option, or employee stock purchase plan? If yes, then the profit should have already been included in your W-2 income, although you have to report the sale on Schedule D, typically with net gain equal to the negative of the commissions (i.e. a tiny net loss). If you exercised and held the shares for some time before selling, then you have additional profit or loss.
How much money are we talking about here? And was the amount in excess of 25% of your reported income?
I read somewhere that only 15% of offer-in-compromise offers are accepted. Normally you have to pretty broke.
Now I could be wrong, but I think the worst case penalty for you is:
25% of the tax due (this is the penalty for failure to pay enough tax)
Impossible to give you an answer without a lot more facts. We have no idea how much $ we're talking about; how complex your tax return is; how many years we're discussing; your net worth; your cash flow; etc.
Avoid the last option at all costs - I could forward to you the contact information of at least a dozen clients that have tried that route. NONE with any success.
My advise is work out a payment plan. The Offer in Comprimise route requires 20% down (I believe) and if you are working and making money will probably be turned down.
Regards,
Mark Rigotti
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