Owing & Paying Income Tax

[ladyhawk4]

My boyfriend owes $10,000 to the IRS, since 1993, and has been paying approx. $1000/year toward this debt thru his income tax return (they've kept his refunds every year). He called them today (6/28/00) to negotiate a payment plan, but they requested too much a month and refused to discuss other offers. Can they refuse an offer? Should he seek counsel to help him negotiate a fair amount (he can only afford approx. $50/month, in addition to their keeping his end-of-year refund). Would they accept a $2000 or $3000 flat amount thru the "offer in compromise" program, or do they have limits on how much (how little) they will accept? (I would lend him the money since his income is low and he has no bank account). What is meant by the "10-year statute of limitations on collections?" After 10 years of owing, does the debt get wiped out? Can the IRS begin garnishing his wages, even though he made a "good-faith" attempt to negotiate a payment plan?

 

[Attorney_Replogle]

Yes the evil empire (aka IRS) can certainly garnish his wages. I am not positive on the 10 year statute of limitations, yet my recollection is that they have so many ways from Sunday to keep that open and protect themselves.

The good news for your boyfriend is that he made a good faith attempt to resolve his tax problem, and the evil empire rejected it. The next good thing is that the evil empire has a separate department which is actually very friendly and helpful to people such as your boyfriend. It is called the Problem Resolution Office (PRO) or informally called the Taxpayers Advocacy something.

The PRO requires that taxpayers such as your boyfriend have already attempted in good faith to settle the problem with the evil empire. He did. Now, they will take his case on for free.

The evil empire does have the right to reject payment plans. There is of course, as you mentioned, the opportunity to do an offer in compromise. There is also the opportunity to get your status changed to an "uncollectable" status. That status means that the evil empire now lists you in their computer as having no money, assets, or any reasonable hope in the near future of getting any. Thus, there will be no further attempts at collections until such time as the status is changed.

The PRO will advise you as to which is best for him, and will then attempt to achieve that goal. You will be required to fill out two forms, as well as submit certain financial documentation. They are not hard to fill out, and are not that painful to do. Heck, they are a whole lot easier then that stupid Census 2000 long form!

You can get the toll free number of the PRO from the evil empire, or an accountant.

I hope this helps!

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Mark B. Replogle