IRS wants $36K for 2004 - Lots of Good Questions

[JeffL]

What is the name of your state? NORTH CAROLINA
State Filed Taxes in Question? ILLINOIS
Type of Taxes In Question? FEDERAL

---------------
Background:

(1) Filed 2004 Federal returns on 12/31/06 (20 months late)
(2) I calculated $29,029 due
(3) They calculated $35,047 due
(4) I was a contractor and self-employed that year (unlike all other years)
(5) I was not aware of the tax laws regarding self-employment
(6) I cannot pay $29,029 or $35,047 today nor in the immediate/foreseeable future
(7) I do have disposeable income of $750-$1000 a month that I could apply to the IRS
(8) I wish to AVOID Tax Liens, Garnishments, and Wage Deductions and/or asset (Bank Account) freezes

Questions:

(1) Is the $6,018 difference between what I figured and what they claim I owe interest, penalties and fines a reasonable one? In other words, I never received an adjustment letter saying that they refiled my taxes differently, so I should assume this $6K figure is the penalties and interest?

(2) Would it be worth finding a tax professional to review my return, make adjustments, and somehow get it under the magic number of $25,000 to quality for a streamlined IA?

(3) How can I best avoid a Tax Lien in any situation -- and is the lien easily removeable once the debt is settled? I just went through bankruptcy (Chapter 7) last year and I don't want to ding my credit any further?

(4) Are companies like American Tax Relief any good? They want $2850 to (a) represent me, (b) try to get a penalty abatement from the IRS, (c) negotiate a payment plan -- they already said because of my disposable income I do not quality for a "offer in compromise"

(5) What are my options for representing myself and trying to get a payment plan without disclosing all of my detailed financial information?

(6) Are there outfits out there that will let you take a loan out to repay the IRS?


Thanks all in advance.

Jeff

[xylene]

(1) Is the $6,018 difference between what I figured and what they claim I owe interest, penalties and fines a reasonable one? In other words, I never received an adjustment letter saying that they refiled my taxes differently, so I should assume this $6K figure is the penalties and interest?

(2) Would it be worth finding a tax professional to review my return, make adjustments, and somehow get it under the magic number of $25,000 to quality for a streamlined IA?

(3) How can I best avoid a Tax Lien in any situation -- and is the lien easily removeable once the debt is settled? I just went through bankruptcy (Chapter 7) last year and I don't want to ding my credit any further?

(4) Are companies like American Tax Relief any good? They want $2850 to (a) represent me, (b) try to get a penalty abatement from the IRS, (c) negotiate a payment plan -- they already said because of my disposable income I do not quality for a "offer in compromise"

(5) What are my options for representing myself and trying to get a payment plan without disclosing all of my detailed financial information?

(6) Are there outfits out there that will let you take a loan out to repay the IRS?


Thanks all in advance.

Jeff

1) Don't assume. Find out from the IRS. Your ignorance served you poorly before.
2) Given your LARGE tax bill and past due liability and significant income - I do not seen why anyone would not.
3) Dude. Your credit is toast currently. Good plan to avoid a lein - but don't feel suckered into a plan you can't afford to 'preserve' your already shattered credit history.
4) I wouldn't go with a TV lawyer. If you feel the offer is good do it. Beyond that you'd need to ask some of their clients who aren't testimonials
5) Rep or not - you will not be able to perjure yourself.
6) Do you have any assets? I mean otherwise you are talking about a 34K personal loan to someone less than 12 month out of BK... If you could get it would the terms be better than the IRS? I doubt it.

[LdiJ]

Originally Posted by JeffL

Questions:

(1) Is the $6,018 difference between what I figured and what they claim I owe interest, penalties and fines a reasonable one? In other words, I never received an adjustment letter saying that they refiled my taxes differently, so I should assume this $6K figure is the penalties and interest?

It sounds about right to me for interest and penalties.

(2) Would it be worth finding a tax professional to review my return, make adjustments, and somehow get it under the magic number of $25,000 to quality for a streamlined IA?

It wouldn't hurt to have a professional review it. However no professional is going to "cook" your books for you.

(3) How can I best avoid a Tax Lien in any situation -- and is the lien easily removeable once the debt is settled? I just went through bankruptcy (Chapter 7) last year and I don't want to ding my credit any further?

With that kind of balance due, its going to be difficult to avoid a tax lien. The bigger the monthly payment you are willing to make, the more cooperative the IRS is going to be. Particularly if you keep current for future years taxes.

(4) Are companies like American Tax Relief any good? They want $2850 to (a) represent me, (b) try to get a penalty abatement from the IRS, (c) negotiate a payment plan -- they already said because of my disposable income I do not quality for a "offer in compromise"

I think you would be spending alot of unnecessary money. You can do all of that yourself, or with a tax professional who would not ask you for that much money.

(5) What are my options for representing myself and trying to get a payment plan without disclosing all of my detailed financial information?

If you are willing and able to pay 1000.00 a month you probably won't have to disclose much. The IRS is happier about payment plans that can be paid off within 3-4 years.

(6) Are there outfits out there that will let you take a loan out to repay the IRS?

If there are, they probably would charge you a higher rate of interest than the IRS will....because of your recent bankruptcy.

[JeffL]

Originally Posted by xylene

1) Don't assume. Find out from the IRS. Your ignorance served you poorly before.

Ouchies! You've hurt my feewings there senior member of Free Advice Forums. While I appreciate the REST of your information and advice, this is something I really could have done without.

You, sir, know exactly JACK SQUAT about my previous years history, and so I recommend if you don't want people lashing out back at you for being a smart ass -- stop being a smart ass.

What if my wife died? What if my kids had cancer? What if I was an enemy combatant? I mean, for christs sake, get the hell off my case. Cool? Thx.

[xylene]

Originally Posted by JeffL

Ouchies! You've hurt my feewings there senior member of Free Advice Forums. While I appreciate the REST of your information and advice, this is something I really could have done without.

You, sir, know exactly JACK SQUAT about my previous years history, and so I recommend if you don't want people lashing out back at you for being a smart ass -- stop being a smart ass.

What if my wife died? What if my kids had cancer? What if I was an enemy combatant? I mean, for christs sake, get the hell off my case. Cool? Thx.

Whoa.

Back up. I am only basing my replies on what you have typed.

You were asking if you should assume the difference is the interest and penalties. I adived to make NO ASSUMPTIONS.

I don't know about your backstory, except -

Originally Posted by JeffL

(4) I was a contractor and self-employed that year (unlike all other years)
(5) I was not aware of the tax laws regarding self-employment

A definition of ignorance (american heritage) The condition of being uneducated, unaware, or uninformed.

I stand by my statement that your not being aware (aka IGNORANT) of the tax system resulted in you having a sizable tax debt ('served you poorly') and that you should validate your assumptions with an expert, particularly given the salary range one might extrapolate from your tax liability.

Thx.