State tax problems!

What is the name of your state?What is the name of your state? Oklahoma

To make a long story short, I've had to deal with one of the state's collection agencies, OSI. They have refused to work with me on the payment amount I can afford. I have tried to explain that I'm self employed, but pay myself on my companies payroll. My personal insurance does not cover maternity and my wife is pregnant. They just simply do not care. Last week I sent a letter to the IRS and to my state asking for some help with lower payments and I am waiting on a response from them. I explained this to OSI and they seemed to get mad and I was passed to a supervisor. I'm not sure why this was, but it happend. The supervisor said, I see you made so much money 3rd quarter last year and you can afford this. I explained that my wife doesn't work, because she just graduated college and has an internship to complete by a certain time, so we've lost her income. He said he didn't care and said he was done with this and I had by Tuesday, July 6 to pay the total amount of $2500 or he was going to take legal action. I know we've already got a tax lein against us and have for almost a year now... I explained I wanted to pay this, but couldn't affor the payments they had set for me. He didn't care and gave me the deadline. He wouldn't hear it when I said you are forcing me to choose between paying him and putting food in my pregnant wife and 4 year old daughter.

What do I need or can I do now? Please help! We are in credit counciling and are trying to avoid bankruptcy. Thank you all in advance for your time!

[abezon]

First, take your original return (the one(s) that generated the tax bill in the first place) to a professional. S/he might be able to find some deductions you missed which would lower the base amount due.

Second, talk to a BK attorney about filing chapter 13, where you pay off your debts over 5 years. There are books at the library that cover this also. The nice thing about BK is that the BK trustee sets your monthly payment and tells the OSI how much money it gets and OSI cannot contact you again. I think your interest gets put on hold as well.

Thank you abezon for your reply. We were trying to avoid BK, because we didn't want to mess up our credit any more than it already is. I will look in to this though.

So that I know, what legal action can OSI take? I have an LLC with a partner and we pay ourselves payroll as we hope to some day be able to afford insurance. Just to be clear, my tax problem has nothing to do with this company. I did some contract work and did not pay estimated tax payments. Can they garnish my wages? If so, can I lower my pay to a minimum amount and just give myself a bonus for the rest or can they still get to that? Can they take money out of my bank account? If I just send them money, can they still take legal action? Sorry for all the questions.

Hey..Do the Chapter 13..it can't mess up your credit anymore than it's already getting messed up by your situation.

I did a Chapter 13 in 1994 and here are the benefits as I saw 'em:

You are not ordered to pay more than you can..period.

All collection activities cease..period.

It actually enhances your credit record in some respects as it shows you took a debt (the sum total of all you owe everyone) and paid it off.

Interest stops.

If your attorney is any good, and if you don't own much (I owned nothing..much) he or she should be able to have much of the interest and penalty already accrued..eliminated.

Some creditors don't even file to collect.

Some debts are simply eliminated, depending upion your current income (not on what you or your wife "might or could earn in the future"....mine was a 0% plan..where only the non-dischageable debt was included in the payment...all other debt eliminated or creditors paid $10.

I paid my five year plan in 3.5 years and was issued credit cards within 6 months following discharge.

I owed about $100,000, going in and paid about $40,000 or so, total.

Best of luck, in any case.

Thank you MarkInOhio! Quick question, does Chapter 13 also help with the IRS? We just got a certified letter explaining we are about to get a levi in 30 days because we couldn't pay our payments.

We are going to speak with a BK attorney next week. Anyone know of a good one in Tulsa, OK?

Yes, do the Chapter 13. Just so everybody knows, penalties and interest on priority one (all tax debt) is treated as unsecured and dismissed. Only the original tax owed is considered priority one. Been there, done that. This applies in TX and NC.

Chapter 13 is a clean slate and carries no shame with it. US Bankruptcy is up 45% just in the last 2 years. It's available to you as an American citizen because this country was founded by more than a few people fleeing debtor's prison. It will help your stress levels, too.