If I owe the IRS and can't pay, what to do?

Question

I received a second notice from the IRS stating I owe them $. Friends tell me I need to get a lawyer but if had the money for a lawyer then I would have money for the IRS. I barely make enough to live on month to month so there is nothing extra to give the IRS. I have to do something or else they'll garnish my wages and try to take lord knows what else I have. Any thoughts or direction?

Answer 1

You can set up a payment plan.  There is a fee for setup and of course interest on the amount you still owe.  Contact the IRS to set it up.  

From IRS website:

Can I make installment payments on the amount I owe?

Yes. If you cannot pay the full amount due as shown on your return, you can ask to make monthly installment payments. However, you will be charged a one time user fee of $105.00, as well as interest on any tax not paid by its due date, and you can be charged a late payment penalty unless you can show reasonable cause for not paying the tax by the due date (April 15, 2008 for individual income tax returns) even if your request to pay in installments is granted. Penalty will be charged until it reaches 25% of the original balance due and interest will be charged until the account is fully paid. Before requesting an installment agreement, you should consider less costly alternatives such as a bank loan.

To request an installment agreement send Form 9465 (PDF), Installment Agreement Request, with your return or call [phone]. If you call you can also request a direct debit agreement or a payroll deduction agreement. You should receive a response within 30 days if you submit the form with your return. For more details on installment payments, refer to Tax Topic 202, What to do if You Can't Pay Your Tax, or Publication 594 (PDF), Understanding the Collection Process.

Answer 2

dont drop the soap in the big house.

apply for a form of legal aid. get a free consultance with a lawyer and ask if they know anybody willing to do pro bono work- you are in trouble if you try to face the irs on your own. or you can try declaring bankruptcy which is a last resort.

Answer 3

I am presuming there is no question that the money is due, just that you can't pay.

If the balance due is $25,000 and you have the ability to pay if full over five years, IRS will grant you an installment agreement with no hassles.

If you can't pay anything now and IRS agrees that paying now would cause a hardship, the account can be reported currently not collectible.

If you can't pay anything now and IRS agrees that it is unlikely you will ever be able to pay in full, you can submit an offer in compromise to settle the account for less than 100 cents on the dollar.  This will not be feasible unless you can get your hands on money that IRS can't, a family loan for example.

I handle these kinds of problems professionally.  If you need additional information, you can email me through my profile.

Answer 4

Call them and ask if you can make payments on it.

Answer 5

For some of available options, read

http://taxipay.blogspot.com/2008/04/irs-...

Answer 6

set up a payment plan with them or they will garnish your wages and they can take like half of your net paycheck

Answer 7

You do need to follow up with this.  The biggest mistake taxpayers make is to ignore IRS requests for payment.  In most cases, it is best to hire a tax lawyer to get professional advice and to act on your behalf.  

If you have very little income, you probably qualify for free legal assistance.  Nearly every state, city and/or geographic region in the U.S. has one or more organizations that provide pro bono or reduced fee legal representation for people who have low income.  

For example, in my area, the Boulder Colorado Bar Association and the State of Colorado Bar Association have pro bono programs.  These organizations may have attorneys on staff or they may refer you out to a private attorney for free or reduced rate representation.  I have taken on several clients who have unpaid tax debts from the Boulder Colorado Bar Association.  

Several areas have low income taxpayer tax clinics.  These are (partially) federally funded organizations that help taxpayers with tax troubles.  They are usually operated by a local law school or non-profit, as they allow law students to work the cases (with supervision of a licensed attorney).  I worked for a clinic like this for about 6 months when I attended the Texas Tech University School of Law.  

You should inquire about this with your local or state bar association and possibly a law school that is in your area.  

Best of luck,

Kreig Mitchell

http://www.irstaxtrouble.com

Answer 8

Before blindly taking the IRS word that you owe them money, give them a call to see EXACTLY why you owe them money if you don't know.  They will tell you the reason why and give you an opportunity to prove why you don't owe them money.  It could be something simple like you didn't write your social security number correctly on your tax return.

It is a toll free call, so it won't cost you anything to find out.  Just be sure to get the name of all of the people that you speak with.  Have a pen and paper ready to take notes.  Have them repeat everything so you know that you understand the problem.

Since you are on the IRS radar, if you still owe, they are going to get their money one way or another.  You may need to get a part time job to pay off the debt.

I hope that you didn't claim any deductions without proof or under report your income.