IRS Owed taxes that i can not in no way afford, what do i do?

Question

Hi, i worked for a small company for 2 years and apparently they never submitted no money to the IRS (illegal i know) now the company has disappeared looked high and low they are gone, some say out of state (was a real estate company)

anyhow long story short, i got a letter from the irs, saying i owe somewhere around $15,000 in taxes, I DON'T HAVE $15,000 i barley make $35,000 a year - im scared i don't know what to do im afraid they will garnish my wages and i will end up homeless.. what do i do? will they accept some kind of payment plan i dont own any property, my car is in an upside down loan and frankly my net worth is in the negative.. can i declare bankruptcy?

My friend said to move out of the country?

Answer 1

Okay Brother this is what you do.

You call the IRS and tell them your situation.  They probably will put a levy on your pay-check as this is their practice to do so.  Now, Remember, You are the one that is at fault for not filing or paying your taxes properly.  So, with that in mind they will send you a bulk of paperwork to fill out.  Once you have collected your pay-check stubs and the like; filled out all the paperwork and mailed it back to them, they will tell you how much they are going to take from your check each week.  

There is a national standard for everything.  The housing computed by the number of people that are dependant on you the clothing, utilities, food, gasoline, etc.  

Everything you do has a value and that is what they will use to compute the amount you will pay.  But remember once you get them paid, then it is over.  GOOD Luck until then.

Answer 2

Did you file your tax return for the year you state you owe or did IRS file the return for you.  IF IRS filed for you you still have a chance to file your own return.  

It is hard to tell since there is some thing missing here.

But IRS does grant Installment Agreement.(use Form 9465 Installment Agreement)  Divide the amount you owe by 60 months and that is hte minumum payment IRS will accept. $100.00 will not work for the amount you owe.

If you can't pay $250 or more per month then submit Form 433-FCollection Information Statement  with your installment Agreement request.  You will need to provide 3 months current pay stubs, bank statement  etc.

Good luck just don't ignore IRS, and with the Form 433-F IRS will let you know the payment amount they will accept, which could be the $100.00 if you meet certain IRS criteria.

Answer 3

You need to hire a tax attorney or accountant. You may get out of it with no debt or little and/or can be paid in monthly payments.

I believe your tax attorney will make you fill out a Form 982 "insolvent"  to show your liabilities are high and make IRS go away.

This is very serious since even bankruptcy wont remove tax. IRS will penalize you and put interest on it to make it even more and at some point they will put you in jail. You must hire a tax attorney to deal with this.

Hope everything works out for you. Good luck

Answer 4

you have several options.  The first I would choose is consulting a tax lawyer.  Most offer free or low cost consultations.  

You can call the IRS and see if you can work out a payment plan with them www.irs.gov can give you more information.

If you choose to file bankruptcy, again, consult a lawyer.   Be aware that bankruptcy lawyers require payment in advance of services (so that you can't claim them in your bankruptcy as a creditor) and a simple case will run you around $1500.  Chapter 7 bankruptcy is more difficult to file these days as bankruptcy laws have changed.  Please take a few hours to do a little research.  It will take you at least 20 minutes just to get someone on the phone at the IRS, so don't call from your cell phone unless you have LOTS of available minutes.

Good luck!  

Moving out of the country is not the way to go.  The IRS doesn't play around.  Yes, they can garnish your wages, put a lien on your house or car and seize your bank accounts.

Answer 5

Your story doesn't make sense.  The amount owed seems unusually large.

Paying $100 a month isn't even going to pay the interest and penalties.  Bankruptcy will not eliminate the tax bill.  You need a better plan.  Your first priority is to make sure the tax bill is a small as legally possible.

Take the tax returns in question, all correspondence received from the IRS, and your records of income during those years, to a tax specialist for review.  It is possible the real estate company inflated what they paid you.

Answer 6

You cannot discharge back taxes through bankruptcy, so forget that.  Contact IRS to set up a repayment plan.

Answer 7

My ever opaque crystal ball says you have not provided the whole story and probably don't know it yourself.   You may not owe anything like $15,000 but it would take some analysis to figure out what you really do owe.  If you can pay it in full within five years, IRS will let you do that with not hassle.  If you can't pay at all, your account can be reclassified as currently not collectible.

I handle these kinds of problems routinely, If you want some off forum information, you can email me through my profile.

Answer 8

we cant answer you question with any real accuracy.  it sounds like you are not telling the whole story.

im not saying you are shady, its just too incomplete of a story. thats all.

Answer 9

Let me be clear:  the small company WITHHELD taxes from your paycheck but didn't pay them to the IRS?

That is a very different thing than you not paying your taxes.

If this is the case THE COMPANY owes the IRS not you (you filed taxes each year, yes?).

You need a lawyer NOW who specializes in employee law and the IRS.

Answer 10

There must be more to this story than you are sharing.  You should have known (at least vaguely) how much money you owed the IRS.  Did you file tax returns for these years?  Were you a W2 employeee or a subcontractor?

If your employer withheld taxes from your paychecks, and then reported the withholding on Forms 941 and W2, then you are not liable for those taxes.  You get credit for them even if they failed to pay them in.  Of course you are responsible for the taxes you still had over and beyond the withholding.

Now, if you were a subcontractor and they didn't withhold any taxes at all, you were responsible for taking care of your tax liability all along.

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You don't owe the IRS $15,000 because of $900 that was paid to you in 2007.  Was the income from the prior years on a W2 or not?  And did you file that income (you didn't say what 2 years) on tax returns?

If you want an installment agreement, I don't think they will accept $100 per month on a $15,000 debt.  You need to get with an enrolled agent, or a CPA who specializes in taxes.

Answer 11

I have been there about a year ago.  I had business taxes that I witheld from my employees paychecks (like all employers do) then I used that money to pay business bills and thought I will pay it back next month when we have a better month.  How this pertains to you is that the IRS is much more stern about these type of taxes than your situation.  But even still I sat around all nervous about talking to them and worried they were gonna ruin my life and take everything from me.  Then when I actually went down to their office and talked with the revenue officer, He was so much nicer than I had been led to believe they would be.   I was like wow I can't believe how easy they are to work with you as long as you are in constant contact with them.  If you try to skirt them or hide from them or something like that they will come at you with both barrels.  DONT BE AFRAID TO CALL THEM!!  Not calling them is the absolute worst thing you can do.  I know its hard but its so much better to work them than try to work against them.  And they will generally set up an arrangement with you prior to garnishing your wages but if you don't keep your arrangement (ie missing a payment) then they will definatly take action like levy accounts and garnish paychecks.  Just call them if you can't make this months payment and they will work with you.  Good Luck.

Answer 12

Look for a tax attorney or a tax preparer who is an enrolled agent and talk to them before you do anything!!! (An enrolled agent is someone who has been tested and certified by the IRS that they know tax law.)

How small was this company?  What did you do for the company?  Depending on your position in the company YOU may be held liable for some or all of the back taxes.  Is the IRS coming at you for just your uppaid withholdings?  Or for other taxes as well?

Did you get W-2's at year end?  Have you filed your tax returns based on those W-2's?  Did you do something like forget to calculate the self-employment tax for independent contractor or sub-contract payments?

Whatever you do, DO NOT INGORE THE IRS - it only makes them madder and harder to work with.

Contacting the Taxpayer Advocate Service at the IRS may not be a bad idea either.

Answer 13

You need to gather your pay stubbs and w-2 forms together. Showing that the money was with held from your pay.

The company owes the IRS. Not you.

Answer 14

#1 How does IRS know you owe them $15,000? Did you not pay in while you were working for this company? Paperwork had to come from somewhere.

#2 Contact a lawyer/tax advocate through irs.gov, before more interest and penalities get added. They will be able to set you up on a payment plan, (try to get some interest and penalities knocked off).

#3 They won't garnish unless you don't pay.

#4 Declaring bankruptcy doesn't cover IRS

#5 Leaving the country won't work,,,they will hunt you down. They have your SS#, it follows you everywhere, eventually.

#6 Good Luck and don't give up.