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Subject Author Date
2004 Fed, $36K owed (pen/int inc) - Questions ecombatant 03-20-2007
Posted by ecombatant on March 20, 2007, 3:04 pm
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 State Filed Taxes in Question? ILLINOIS
Year in Question? 2004
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 in 2004 (unlike
all other years) due to loss of job
(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 disposable income of $750-$1000 a month that I
couldapply 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?


Thanks all in advance.

Posted by Dick Adams on March 21, 2007, 1:27 pm
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> .....
> (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 am not familiar with the company you have mentioned. Over
the past 11 years of moderating this newsgroup, I have seen
similar companies asked about and complained about.

My recommendation has always been to find a local CPA,
Enrolled Agent, or Tax Attorney with experience in IRS
negotiation.

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

In my rarely humble opinion, self-representation before the
IRS is financial suicide. Always send someone to represent
you and never go to their offices unless they sent you a
supeona - even then do not go alone.

Dick

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Benjamin Yazersky CPA on March 21, 2007, 1:27 pm
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> State Filed Taxes in Question? ILLINOIS
> Year in Question? 2004
> 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 in 2004 (unlike
> all other years) due to loss of job
> (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 disposable income of $750-$1000 a month that I
> couldapply 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?

Late filing penalties & interest are applicable.
You may want to review the calculations.

> (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?

You know what they say about one representing him/her self

> (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?

If you've already got an IRS lien - call your CPA today

> (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"

No idea - but I'm not keen on those types of folks
My specualtion is that they're not CPA's or lawyers

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

see my comment #2

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Phoebe Roberts, EA on March 21, 2007, 1:27 pm
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ecombatant@gmail.com wrote:

> 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?

You should have gotten a letter telling you how they arrived
at the balance due.

> (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?

The time for that was February, 2005. "Please find me
enough deductions to reduce my tax by $10,000. By the way,
you'd be amending a return I originally filed delinquently"
doesn't make you a very good client in mid-March. ;)

That said, if you think the return was done wrong, and you
have documentation for expenses not deducted on that return,
by all means, get it amended so you're working with the
correct tax liability.

> (3) How can I best avoid a Tax Lien in any situation

Pay your taxes.

> is the lien easily removeable once the debt is settled?

In theory, yes.

> because of my disposable income I do not
> quality for a "offer in compromise"

That's consistent with what I recently heard from a local
attorney who does a lot of OIC work.

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

I've had enough trouble dealing with some people in the
collections department that IMHO if you don't know where to
begin, you probably won't get a good answer. (I've also
dealt with some people who are great, but it's luck of the
draw.)

If you can scrape together enough money to get your balance
below $25,000, the form to request an installment agreement
is pretty simple.

Phoebe :)

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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