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settling old tax debt

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texcess

Guest
What is the name of your state? TX
I have alot of questions here so please help with any part of this you may be able to provide answers to.

My fiancee was self-employed for the last 8 years. 5 yrs ago he had an accountant do his tax return and owed 6k. Business slowed down and he did not have the money to pay so he didnt do anything with it. He struggled the last 4 years, finally gave up and went to work for another company. He did something very foolish though. He never filed after that and has now been contacted by the IRS for returns for the last 4 years. He recieved 1099's from some of his customers but paid cash to his workers. He did not keep any reciepts either. He went back to the accountant and they decided to claim 25% of the amount the IRS said he made each year as income. The other 75% went to business expenses.
Here is my questions:

1)Will the IRS most likely audit those late returns and what will happen when he cannot provide reciepts?

2)I also have heard that the IRS sometimes will "forgive" part of a tax debt. With his circumstances (being a fool for not filing) or the fact he has no assets (except an old truck and a home he owes more on then what it is appraised for) play any part of him being eligable for him applying for this tax debt relief?

3) Now that he is on the payroll of another company I know they can garnish a portion of his wages to pay. Will the fact that his wages are already being garnished 33% for child support be considered if they try to do that. Is there any formula on a minimum amount of pay that he at least will be able to bring home to survive on?
 


J

jez51

Guest
If IRS decides to do an audit, then yes, he will need a receipt to back up every business expense he is claiming. He can setup payment arrangements, and he better stick to it if he does. Sometimes IRS will settle for less than the original amount owed, it might help to consult with a Tax Attorney.
And no, they won't care if he's paying child support, and yes they can take any bank accounts or assets he has to take care of the debt.
 
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JETX

Senior Member
Oh, and he better hope that the IRS doesn't do a COMPLETE audit (not uncommon for this type of fraud). They could ask for ALL of his financial records (bank statements, checks, etc.).
They are always fun!!!
 
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IgnorantGuru

Guest
Child support is a priority debt. It will be paid before any garnishments. All states have a max amount (%) that creditors can take from payroll checks.
 

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