My friend owes the IRS $3,500. What is the most intelligent way of handling this?

Question

According to my buddy, he owes because his stupid tax guy wrote off $16k in travel expenses and milage for his job. He can't prove any of it nor does he have any receipts.

Assuming he has the money, should he just pay it off? Accept an IRS payment plan? or should he call one of those "IRS bugging you" phone numbers and get help?

I used to work at this company with him, the man who handled his taxes is known to do this and has done it with many other employees in the past, can he be penalized?

Any help is appreciated. Thanks!

Answer 1

If he has the money or can pay the bill over five years tell him to get out his checkbook.  Lack of documentation means lack of deduction.  If he can't pay, help from "one of those "IRS bugging you" phone numbers" is going to cost more than he owes.

Answer 2

first of all, as you probably already know... there arent any free rides. y ou cant deduct what you cant prove. peroid. Id pay it off as soon as possible. theres no way of making it go away. if you pay with a payment program, you will pay more in the long run, just like if it was on a credit card.  I think those phone numbers you see on tv are shady, I think most of them charge a huge "fee" for "helping" you. be careful.

just pay asap. theres no other way.

good luck.

Answer 3

Your friend should see an accountant. Look around, ask for references, and find an inexpensive, honest C.P.A. They do exist, but it may take some research. The CPA can not only negotiate an Offer In Compromise for you, but can also try to argue down the penalties and interest that have accrued. If the man who did your friends taxes has done the same to others, you may be able to get him audited. This will, however, most likely result in all of his clients being audited as well. Good luck!

Answer 4

The smartest thing he should do is try to full pay the amount owed.  If he can't then complete Form 9465 Installment Agreement Request.  And proposed the as much as he can per month.  Because interest and penalties continue to accrue until he has full paid the amount owed.

Don't contact anyone, just fill out F9465.

If the company is doing something wrong then go to the payroll office every pay day until the issue is correct.

Answer 5

pay it off as fast as he can

those IRS BUgging you" are scams and rip-offs

He (not his tax person) is responsible for the accuracy of his taxes.  Do you own is my motto.

Answer 6

His stupid tax guy did what he told him!  Boy some tax guys are sure stupid!!!  Tax guys only do what taxpayers tell them.  It is up to the taxpayer to tell the truth and be able to prove it - as your friend found out.  Time to start accepting fault and stop blaming everybody else.

Anyway, he needs to work out installment payments with the IRS.  It is not a big deal, they do this every day and it is more common than you can imagine.  The sooner the better since interest and penalty are adding up by the month!

Answer 7

There are several things your friend can do.  First, if he has the money he can pay the amount of the liability in full.  Paying in full will stop any further penalties and interest from accruing.  Second, he can telephone the IRS at [phone] and request an Installment Agreement.  This will allow your friend to make monthly payment without the worry of the IRS starting collection enforcement.  Third, visit the IRS web site at www.irs.gov and download Form 656.  This is the form for Offer in Compromise.  This program allow a person to pay less than the full amount of the tax liability, if the IRS accepts the offer.

Please do not let your friend go to one of the IRS bugging you places.  They will charge your friend several hundreds if not thousands of dollars to do what I just gave you for free above.

Hope this helps.

Answer 8

If your friend can't write out a check for the entire balance right now, tell him to call the number on the IRS collection notice to discuss payment options. I always suggest calling rather than corresponding because it's much faster and less hassle.

Answer 9

I would recommend that your buddy just follow the state rules and pay the fine and in doing so you may be able to report this guy and as a result of doing that his actions may even cause him to lose his job as a tax preparer, I feel that this guy is doing fraud because of him claiming or putting down expenses that your friend maybe did not want to claim due to no proof .... and just as an insight let your friend know for the future he can only claim on items he has proof of or shall I say receipt's because if not and this keeps on happening he can get in trouble even though his tax guy did it ...... hope this helps .....

Answer 10

let him handel it. why should you worry about it??

Answer 11

He should just pay it if he can – otherwise interest and penalties will continue to accumulate every month until he does.

Calling one of those TV charlatans will just cost him MORE money for their fee.  The IRS isn’t going to negotiate with him, OR with them, over an amount they feel he can pay off in five years or less, or if he has assets that could be sold to pay it.

He  can report the idiot preparer to the IRS, and they’ll probably shut him down so he can’t mess up other people.  It won’t change what your friend owes, though.