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HELP...I am Disabled and IRS placed Levie on my bank account without any notice ...?

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Kathy Owen

Junior Member
Missouri Resident

I am a 52-year-old disabled female. I have had Cerebral Palsy since birth and have been an insulin dependant diabetic for the past fifteen years.

My last year of employment was 2004. I did not file income tax in this year or any subsequent years because I was of the understanding that my minimal income fell below the threshold to pay income tax.

In 2005 I was given 100% disability and have been on disability since then.

On August 18th, of 2007 I received notice from my bank that the IRS had placed a lien on my bank account and was attempting to collect $1807.49 in “back taxes and penalties” for the 2004 tax year. Until this bank notice arrived in my mail, I had not received any notification or correspondence of any kind from the IRS that back taxes were owed.

I called the IRS office to find out why this lien was placed on my bank account, I was told this was a penalty for non-payment of taxes on approximately $5,000 from my 401K that had been cashed and used to live on when I lost my job. I was never made aware that any taxes or penalty was due from this 401K or from any past tax year.

What is most upsetting is that the IRS did not attempt to contact me at any time prior to placing a lien on my bank account in August of 2007; three years after the taxes were apparently assessed! When I asked the person on the phone why I had not been contacted, she indicated that notices were sent to an old address where I have not lived for over two years. None of this correspondence was ever forwarded and the IRS did not make a due diligence attempt to locate me.

I have very little money in my bank account, yet they were able take everything in my account…$165.83. Leaving me a balance of $0 to live on until my next disability check of $750.00. The IRS is telling me I must pay them the $1641.66 remaining or face further penalties and charges.

When I contacted local legal services for my county I was told I no longer qualify for assistance because in June of this year I was married to a man who is also retired and living on a pension.

What can I do???

I don’t understand how the IRS can take what little income I have from disability when they never informed me that any back taxes were owed…

I am willing to pay any back taxes I rightfully owe, but I do not think paying penalties on these back taxes is appropriate when the IRS never contacted me.

I cannot afford to pay this large sum at one time. I could pay a portion over time, but the IRS will continue to take any money deposited from my disability check until their entire claim is satisfied, leaving me nothing to live on.

Can anyone please help me?

Kathy
 


LdiJ

Senior Member
Missouri Resident

I am a 52-year-old disabled female. I have had Cerebral Palsy since birth and have been an insulin dependant diabetic for the past fifteen years.

My last year of employment was 2004. I did not file income tax in this year or any subsequent years because I was of the understanding that my minimal income fell below the threshold to pay income tax.

In 2005 I was given 100% disability and have been on disability since then.

On August 18th, of 2007 I received notice from my bank that the IRS had placed a lien on my bank account and was attempting to collect $1807.49 in “back taxes and penalties” for the 2004 tax year. Until this bank notice arrived in my mail, I had not received any notification or correspondence of any kind from the IRS that back taxes were owed.

I called the IRS office to find out why this lien was placed on my bank account, I was told this was a penalty for non-payment of taxes on approximately $5,000 from my 401K that had been cashed and used to live on when I lost my job. I was never made aware that any taxes or penalty was due from this 401K or from any past tax year.

What is most upsetting is that the IRS did not attempt to contact me at any time prior to placing a lien on my bank account in August of 2007; three years after the taxes were apparently assessed! When I asked the person on the phone why I had not been contacted, she indicated that notices were sent to an old address where I have not lived for over two years. None of this correspondence was ever forwarded and the IRS did not make a due diligence attempt to locate me.

I have very little money in my bank account, yet they were able take everything in my account…$165.83. Leaving me a balance of $0 to live on until my next disability check of $750.00. The IRS is telling me I must pay them the $1641.66 remaining or face further penalties and charges.

When I contacted local legal services for my county I was told I no longer qualify for assistance because in June of this year I was married to a man who is also retired and living on a pension.

What can I do???

I don’t understand how the IRS can take what little income I have from disability when they never informed me that any back taxes were owed…

I am willing to pay any back taxes I rightfully owe, but I do not think paying penalties on these back taxes is appropriate when the IRS never contacted me.

I cannot afford to pay this large sum at one time. I could pay a portion over time, but the IRS will continue to take any money deposited from my disability check until their entire claim is satisfied, leaving me nothing to live on.

Can anyone please help me?

Kathy
Actually, it is not the fault of the IRS that you did not update your address with them. Nor that you did not properly file a tax return for 2004 and include all of your income sources.

Since you are disabled, at least the penalty portion on the early withdrawal from the 401k could have been excluded. So, the first thing that you need to do is borrow some money from someone, so that you can file an actual tax return (using a tax professional) for 2004.
You will probably need to get income transcripts from the IRS for that year, since you probably no longer have all of your income documents (W2s and 1099's). That may reduce some of your tax, and therefore some of the penalty and interest.

You need to call the IRS back and tell them that you are doing that, explain about your disabilities and that you need time to file the return and send in a request for an installment agreement. As them to please release the levy temporarily so that you can submit the appropriate documents. You also need to explain to them that your only income is disability income, and therefore they have levied disability income. During that conversation ask them to send you income transcripts for 2004.
 

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