IRS Revenue Officer Visit

[MikeMountain]

What is the name of your state (only U.S. law)? NY

I've been self-employed for about 10 years and filed all my taxes but haven't paid them. I did have a payment agreement years ago but couldn't keep up on the payments. I got a visit from a revenue officer but I wasn't home. He sent me a form 433 to fill out, and I have a meeting with him at my home next week. I just talked to him and he gave me a lecture about paying taxes, which I deserved, and said I need to get current on this years taxes before he could do anything. He wants $8000 which I don't have. And he says I need to try and get a loan against my house.

First - can I go to jail for any of this? And there's no way a bank will give me any kind of loan with my credit, and from what I owe to what the house is worth may not even cover the $8000. Not too mention I'm divorced but the house is still in my and my ex's name. I really don't want to go more into debt by trying to get a home equity loan.

What options do I have? Why didn't he just give me an offer in compromise or payment agreement? Should I get some kind of attorney? We're supposed to meet next week so I don't know if I have time.

 

[LdiJ]

What is the name of your state (only U.S. law)? NY

I've been self-employed for about 10 years and filed all my taxes but haven't paid them. I did have a payment agreement years ago but couldn't keep up on the payments. I got a visit from a revenue officer but I wasn't home. He sent me a form 433 to fill out, and I have a meeting with him at my home next week. I just talked to him and he gave me a lecture about paying taxes, which I deserved, and said I need to get current on this years taxes before he could do anything. He wants $8000 which I don't have. And he says I need to try and get a loan against my house.

First - can I go to jail for any of this? And there's no way a bank will give me any kind of loan with my credit, and from what I owe to what the house is worth may not even cover the $8000. Not too mention I'm divorced but the house is still in my and my ex's name. I really don't want to go more into debt by trying to get a home equity loan.

What options do I have? Why didn't he just give me an offer in compromise or payment agreement? Should I get some kind of attorney? We're supposed to meet next week so I don't know if I have time.

Do you know how much you owe altogether? I will not sugar coat this for you, you are in a world of hurt. However, as long as you are cooperative and try your best to pay your taxes, you are not going to go to jail. However, they will put liens and levies on everything you own, including customer receivables if you are not.

He is not going to give you an offer in compromise unless you have a decent chunk of cash to negotiate with. A payment plan is still an option but it depends on how much you actually owe.

 

[MikeMountain]

Do you know how much you owe altogether? I will not sugar coat this for you, you are in a world of hurt. However, as long as you are cooperative and try your best to pay your taxes, you are not going to go to jail. However, they will put liens and levies on everything you own, including customer receivables if you are not.

He is not going to give you an offer in compromise unless you have a decent chunk of cash to negotiate with. A payment plan is still an option but it depends on how much you actually owe.

I probably owe around 50k. I just don't have the money to repay; I barley make it through the month now. So if there is no OIC and they don't offer a payment plan, then what? I already have liens and levies from state taxes and credit card companies. The IRS already has a lien on my house I think. I had a car repossessed a few years ago, I managed to work out a deal a couple years ago so my house didn't go into foreclosure. I really have nothing in assets to give them, except about $500 cash on hand and a vehicle worth about $2,000. They can take the house if they want; it's in pretty poor shape so it would probably sell for what I owe on it. I'm selling things I own just to pay utilities before they get shut off and to buy groceries.

I'm trying to be totally honest with them, and I do want to pay it back. Hopefully my situation changes in the future and I can pay more, but right now I really don't have anything.

Should I try to find an attorney I can afford to deal with this for me?

 

[Zigner]

For 10 years you've been running a losing business...it might be time to find outside employment.

 

[MikeMountain]

For 10 years you've been running a losing business...it might be time to find outside employment.

There have been good times and bad, as in all businesses. Things will look up again, as they have in the past.

Thanks for the advice however. Did you have any advice on my current situation though?

 

[Zigner]

There have been good times and bad, as in all businesses. Things will look up again, as they have in the past.

Thanks for the advice however. Did you have any advice on my current situation though?

You haven't paid taxes in 10 years. That's a losing business. Find other employment so that you can pay your debt and not leave it on the shoulders of other taxpayers.

 

[LdiJ]

I probably owe around 50k. I just don't have the money to repay; I barley make it through the month now. So if there is no OIC and they don't offer a payment plan, then what? I already have liens and levies from state taxes and credit card companies. The IRS already has a lien on my house I think. I had a car repossessed a few years ago, I managed to work out a deal a couple years ago so my house didn't go into foreclosure. I really have nothing in assets to give them, except about $500 cash on hand and a vehicle worth about $2,000. They can take the house if they want; it's in pretty poor shape so it would probably sell for what I owe on it. I'm selling things I own just to pay utilities before they get shut off and to buy groceries.

I'm trying to be totally honest with them, and I do want to pay it back. Hopefully my situation changes in the future and I can pay more, but right now I really don't have anything.

Should I try to find an attorney I can afford to deal with this for me?

What you need to do between now and the next meeting is pull together a complete and comprehensive list of all of your assets and all of your debts, and your current monthly payments on your debts. You need to demonstrate to the IRS your full financial circumstances. As I said, a payment plan is still a possibility, but they need to fully understand your circumstances. Be thorough.

 

[MikeMountain]

You haven't paid taxes in 10 years. That's a losing business. Find other employment so that you can pay your debt and not leave it on the shoulders of other taxpayers.

Thanks again. I'm not going to debate business with you in a forum as I have another pressing issue right now. Even though I appreciate your input, can you please stop responding to my posts.

 

[Zigner]

Thanks again. I'm not going to debate business with you in a forum as I have another pressing issue right now. Even though I appreciate your input, can you please stop responding to my posts.

That's not the nature of this forum.

The fact of the matter is that you have the ability to do more to repaying your debt, but you choose not to. Honestly, I wouldn't be surprised if the IRS classifies your "business" as a hobby, which will put you in even more of a world of hurt.

 

[MikeMountain]

What you need to do between now and the next meeting is pull together a complete and comprehensive list of all of your assets and all of your debts, and your current monthly payments on your debts. You need to demonstrate to the IRS your full financial circumstances. As I said, a payment plan is still a possibility, but they need to fully understand your circumstances. Be thorough.

That's what I'm doing. I'm completing the form 433-A, and I do keep track of everything I spend through software, so I can generate reports by category, payee or whatever for the last 12 years. I don't have anything to hide. I've made some mistakes along the way but my intention was to always pay what I owe. Between some hard time and health issues though it hasn't always been an option.

 

[MikeMountain]

That's not the nature of this forum.

The fact of the matter is that you have the ability to do more to repaying your debt, but you choose not to. Honestly, I wouldn't be surprised if the IRS classifies your "business" as a hobby, which will put you in even more of a world of hurt.

I'll just chose to ignore you, or block you if this forum allows. Thanks again for the advice.

 

[Zigner]

I'll just chose to ignore you, or block you if this forum allows. Thanks again for the advice.

Fair enough - you've got plenty of practice ignoring things that don't appeal to you.

 

[LdiJ]

That's not the nature of this forum.

The fact of the matter is that you have the ability to do more to repaying your debt, but you choose not to. Honestly, I wouldn't be surprised if the IRS classifies your "business" as a hobby, which will put you in even more of a world of hurt.

Zig...you are way off the mark there. If the business was not generating profits, then he would owe no taxes. Classifying a business as a hobby is only done in circumstances where the business never has a profit, but only losses that are taken against other income. For example, if someone had a regular full time job, but raced cars on the side and sometimes won, and therefore sometimes had income, but showed a significant loss every year on their Schedule C, which reduced the taxability of their regular income, then THAT is something that the IRS might declare a hobby.

No way is this guy's business going to be declared as a hobby, because he clearly has income in excess of his expenses, since he OWES taxes.

 

[Zigner]

Zig...you are way off the mark there. If the business was not generating profits, then he would owe no taxes. Classifying a business as a hobby is only done in circumstances where the business never has a profit, but only losses that are taken against other income. For example, if someone had a regular full time job, but raced cars on the side and sometimes won, and therefore sometimes had income, but showed a significant loss every year on their Schedule C, which reduced the taxability of their regular income, then THAT is something that the IRS might declare a hobby.

No way is this guy's business going to be declared as a hobby, because he clearly has income in excess of his expenses, since he OWES taxes.

Fair enough.

 

[adjusterjack]

Zig...you are way off the mark there. If the business was not generating profits, then he would owe no taxes.

Exactly. He's owes $50,000 in taxes. Average that to a $5000 per year tax bill and you're probably looking at $30,000 to $40,000 a year in net taxable income on which he should have been paying quarterly estimated taxes, but didn't.