Back taxes...

What is the name of your state?

Im currently living in Arizona, im wondering if there is a statute of limitations on federal income tax. I am living on Social Security disability which is around 750.00 per month the taxes owed are from some unemployment befefits I collected in 1996 & was not aware that I had to pay taxes on that income at the time. In the beginning it was about 3 to 4 hundred dollar owed but over the years with interest it is closer to 2,000.00 dollars now. I have talked to the IRS regarding this & they are aware of my financial situation & know that I cannot pay the money owed & they are not pressuring me to pay or anything but I still receive a gentle reminder from them every year letting me know & owe this money & how much it has gone up due to interest. It has been eight years now & I would like to know if im still liable to pay this, any advice would be appreciated, thanks in advance. bjinaz

[gobonas99]

Originally posted by bjinaz
Im currently living in Arizona, im wondering if there is a statute of limitations on federal income tax. I am living on Social Security disability which is around 750.00 per month the taxes owed are from some unemployment befefits I collected in 1996 & was not aware that I had to pay taxes on that income at the time. In the beginning it was about 3 to 4 hundred dollar owed but over the years with interest it is closer to 2,000.00 dollars now. I have talked to the IRS regarding this & they are aware of my financial situation & know that I cannot pay the money owed & they are not pressuring me to pay or anything but I still receive a gentle reminder from them every year letting me know & owe this money & how much it has gone up due to interest. It has been eight years now & I would like to know if im still liable to pay this, any advice would be appreciated, thanks in advance. bjinaz

You are liable for back taxes assessed for 10 years. Since you state that the tax is in relation to unemployment benefits from 1996 which you should have reported on your 1996 tax return (filed in 1997), the statute of limitations will not expire until the end of 2006/beginning of 2007, depending on when/if you filed that year. So you have another 3 years before they will be time barred. These taxes will not just go away. If the IRS gets a judgement on you for these taxes before the 10 SOL is up, the SOL can be extended for 10 more years. (edit: depending on what state you were living in in 1996, you may also owe state taxes, as well, and each state has different SOL's for collection of taxes - for example, California has NO statute of limitation for collecting back taxes.)

So set up a payment plan with the IRS - like $50 a month or something and start paying them. The longer you wait to get the ball rolling, the more you will owe, and the more likely that the IRS will file for a judgement.

-Christina

hmmmmmmm... i thought that there was a ten year collection period that the irs was limited to collect for.

in my opinion, before you file any forms, or agree to pay the irs a cent, consult with a knowledgeable expert that will give you the best advice, that will be an advocate for you!
but first, call your congressman and senators and see what they can do for you.

because you are a senior citizen, perhaps there is a program in your community that can help you with the information you need or working a deal with the irs, perhaps you might only have to pay 10 cents on the dollar or none at all...but don't do a thing until you are better informed!

[gobonas99]

Originally posted by elvapet
because you are a senior citizen...

Where does the poster state that they are a senior citizen? The OP says that they collect Social Security DISABILITY. You can collect SSD before you are a senior citizen.

Originally posted by gobonas99
So set up a payment plan with the IRS - like $50 a month or something and start paying them. The longer you wait to get the ball rolling, the more you will owe, and the more likely that the IRS will file for a judgement.-Christina

I guess my point is that I cannot afford to make them any type of payment, by the time all my monthly bills are paid I usually have less than 100 dollars left for food, medication & other living expenses. Have you tried living on 750.00 a month? bjinaz

PS are you an IRS employee?

[gobonas99]

Originally posted by bjinaz
I guess my point is that I cannot afford to make them any type of payment, by the time all my monthly bills are paid I usually have less than 100 dollars left for food, medication & other living expenses. Have you tried living on 750.00 a month? bjinaz

PS are you an IRS employee?

First of all, no, I am not an IRS employee. I am a CPA.

Secondly, no, I have not tried living on $750 a month. I would not tolerate myself if I had to live on $750 a month - that is only $9,000 a year. I would do everything in my power to make enough to live on and pay my bills - even if it meant flipping burgers.

What is the nature of your expenses? Are you just paying rent/utilities/insurance? Or do you have a car payment, credit cards, etc?

Not to be intrusive...but what is the nature of your disability? Are you truly disabled? Or could you at least sit at a desk and answer phones? Or perhaps do some kind of work from home? When you are on SSD, you are permitted to earn up $X a month in income - I will have to check the income limits and post back.

-Christina

[gobonas99]

I did a little bit of research on the SSA website, and found the income limit that you can earn and still collect disability - beginning 1/1/04, you can earn up to $810 a month and remain eligible for SSD. So that, in addition to your $750 in SSD is $1,560 a month. The SSA has Work Incentive programs in all 50 states.

I copy-and-pasted the FAQ from the website below. You can find it at [URL]http://www.ssa.gov/disability[/URL], then under "Frequently Asked Questions", click on disability. Then under "search text" type "income limit". This is what comes up:

"Question - How much can I earn and still receive Disability benefits?"

"Answer -
"We evaluate the work activity of persons claiming or receiving disability benefits under Social Security Disability Insurance. Beginning January 1, 2004 a Social Security Disability beneficiary can earn $810 a month and remain eligible for benefits. The amount for 2003 was $800. The Social Security Administration uses the term "substantial gainful activity" (SGA) to determine if work is substantial enough to make a person ineligible for benefits. Under the new rule monthly SGA earnings limits will be automatically adjusted annually based on increases in the national average wage index. This amount applies to people with disabilities other than blindness.

"If you are blind, effective January 2003, earnings averaging over $1,330 a month generally demonstrate SGA. For January 2004, the blind SGA amount was increased to $1,350.

"There are other provisions and work exclusions that you should know about and we recommend that you read The Redbook on Work Incentives which can be found at [url]http://www.socialsecurity.gov/work/ResourcesToolkit/redbook_page.html[/url] "


Hope that helps.
-Christina

Thanks Cristina but I have physical & mental disabilitys which make me unable to hold gainful employment I dont want to elaborate any further than that. I do have a friend who at one time owed the IRS around $20,000.00 in back taxes, he was unable to work for almost ten years due to an accident he was involved in. The IRS dropped the back taxes he owed & he is gainfully working, filing his taxes, & getting refunds every year. I believe it was about seven years & they stopped coming after him for the back taxes. bjinaz

[gobonas99]

Originally posted by bjinaz
Thanks Cristina but I have physical & mental disabilitys which make me unable to hold gainful employment I dont want to elaborate any further than that. I do have a friend who at one time owed the IRS around $20,000.00 in back taxes, he was unable to work for almost ten years due to an accident he was involved in. The IRS dropped the back taxes he owed & he is gainfully working, filing his taxes, & getting refunds every year. I believe it was about seven years & they stopped coming after him for the back taxes. bjinaz

I find it difficult to believe that there is no available job that you could do. Very few people are so severely disabled to the extent that they cannot obtain ANY job. Since you won't share your disabilities, I must infer that you are NOT one of those people.

We're not talking 40 hours a week here...we're talking part-time - 10-15 hrs a week (at most), for minimum wage would TOTALLY help you out. When I was in college, I worked in a church as a receptionist for 20 hrs a week. I answered the phone, made copies and...did my homework. I did not belong to that church, nor am I even a member of that religious denomination. It was truly mindless work, but I got $105 a week for it (and I got A's in all my classes that year). It was a job that a monkey could do.

You don't need "gainful" employment. You need something for a few hours a week to help you pay off your debts. It is a matter of wanting to better your position in life. Wouldn't you like to be able to have a little bit of money in savings?

As for your friend, if this was prior to 1990, then it would make sense that after 7 years, they stopped coming after him be cause the SOL used to be 6 years. Beginning in 1990, however, the SOl was changed to 10 years. And if they file a judgement (which depending on who is working on your file, they coudl very well do so), then the SOL is extended by 10 years....and that judgement could be renewed for ANOTHER 10 years.

-Christina

[abezon]

Yes, it could be renewed. However, the IRS might just let the taxes drop if they think they will never collect.