My dad had a massive stroke and owe over 10,000 in taxes. Only income is social security, need payment options

Question

He is unable to ever work again. The only assest he has is a house that still has a monthly mortgage.

Answer 1

If your Dad owes that much in taxes, he must have had earnings that the owed taxes resulted from; if he didn't plan well (and set aside assets for the taxes), you may have to sell some of his assets to raise the money.

If he DOESN'T pay, a court will decide which of his assets to sell to raise the money, so it's in his (or your) best interests to raise the cash  BEFORE the IRS decide to come for the money! My sympathy to your Dad for his misfortune, but illness is not a valid excuse for poor planning before that happened!

Do your best to raise the funds the way he/you want to, before the IRS decide for you!

Best wishes.

Answer 2

Talk to your tax office. They should be able to work something out for you. They know that if you have no income then you can't pay debts.

Answer 3

I would have him contact the Taxpayer Advocate Service of the IRS.  They are a division of the IRS created by the Taxpayer Rights laws and whose job it is to represent people in hardship.  They can work within the IRS to come up with alternatives to what will happen if you do nothing: such as a lien against that house that would prevent him (or any heirs) from selling it without satisfying the IRS debt.

You can get hold of the TAS several ways which are discussed on: http://www.irs.gov/advocate/article/0,,i...

You can find more about who they are and how they work and what they can do by the links on this page: http://www.irs.gov/advocate/

Answer 4

More than likely the IRS will place his account in uncollectable status.  Unfortunately when he does pass on, any equity in the house will go to the IRS first to satisfy any lingering debts before the remainder of his estate (if any) can be divided up amongst the heirs.

Answer 5

Bob F's advice is premature. The Taxpayer Advocate will not get involved until all other options have been exhausted, or if an inordinate amount of time has transpired in resolving a situation. That's hardly the case here!

Can he communicate? If not, you should have him sign Form 2848 giving you power of attorney for the IRS. This will allow you to call them and resolve the account. Otherwise, he can call himself, but if he wants you to speak to them he can give consent and put you on the line.

If he is not able to pay the minimum amount per month for an installment agreement (which is at least $170, but possibly more if the debt is old), then they will take a financial statement. If he has sufficient equity in the house they may ask him to borrow from it--although this may not be feasible for someone on a fixed income, especially in this economy. The financial statement will list all of his income and expenses and provide a basis for either establishing a payment amount or determing that he fits the hardship criteria for a deferral of collection. As someone noted, this will involve filing a federal tax lien which will impact his credit rating. The only way to avoid a lien is to agree to the minimum payment amount for an installment agreement as mentioned ealier in this post.