12 k + taxes due please help...

[Anonymous]

My parents owe like 12k in taxes for the years of 2006 and 2007 combined... We found out they are not behind anything from years before that on federal but I think they might be on state we wont find out till monday...  I know there is at least another 1.2k for the state taxes unless taht was included in some garnishments my dad had on his paycheck a while back.  My mom let it go for quite a while then yesterday we finally made the call.  My parents have 10 kids still living at home no assests whatsoever not even a car in their own name...  My dad is a lease driver for a trucking company and his paychecks lately have been like nonexistant they have a little savings but not a lot and My mom doesnt really work right now (other issues she cant work).

Anyone know what kind of payment plans the irs and utah tax commission has if any?  they cant afford to pay 600 a month or anything but might be able to afford a total of like 150 for a while also from the federal taxes which is a little over 7k they will be getting a stimulus check of like 3k so it will help but there will still be like a total of 9k owing any geusses on payment plans?

[Anonymous]

UNfortunately, your parents probably won't get their ESP. More than likely, it will be offset to pay for the back taxes.

FORtunately, their payments should NOT be $600/month, unless they're the Rockefellers. The payment plan, usually designed to be paid off in one year or less, is income sensitive, taking into consideration dependents, rent/mortgage, etc (but NOT luxuries or niceties like cell phones, cable, etc). The US gov does NOT want to put your parents (or anyone else, for that matter) in the poorhouse.

I would talk to a tax atty. They can negotiate to get the interest lower or forgiven completely. It's the interest and fees that balloon the amount that high, usually. Since Uncle Sam doesn't usually realize that you owe the money until 4-5 years AFTER the fact, that interest racks up QUICK.

Ask me how I know. :/ Hubby and I (did the whole Turbo Tax online) transposed a number, and ending up owing $100 ... after 5 years, the interest, fees, penalties, etc, ballooned it up to $1K. State came back and bit us in the patootie, too, though with THEIR interest rate, fees and penalties, that $100 mistake was only $500 with them.

I sincerely wish you (and your parents, of course!!) the best of luck. Please do see a tax atty (it wouldn't have been worth it for us since it's about $500 for the atty fees and would have only saved us about $500 -- the IRS seems to be more willing to forgive the interest on higher debts than wee ones). At least for a free consultation!!

[Anonymous]

I can't help but to ask, but was there recently a major change in income?

It seems that is a lot to owe, especially with only 1 working and 10 dependents at home.

Make sure there wasn't some kind of mistake made........even the IRS makes mistakes or the accountant doing the taxes.

Message Edited by sidewinder on 07-04-2008 08:19 AM

[rodney0126]

I owed about $40,000 on federal taxes from not filing and not paying for about 7 years. Long story short....I was told that if the amount is under $25,000 then they will be very flexible on your payments. Over a five year period (60 months) the 12k comes out to about $216 per month. If I was you/them...I'd set up at least that amount and then DO ALL I COULD to pay more than that each month. if not...the interest (I heard) is even worse than if it was on a credit card. I paid about $10 grand more in interest on my debt in 2 1/2 years. I did every thing I could to pay them off as quickly as possible.

If I was you...I'd research on the internet before paying any company who claims they can help you any money. I found it to be a complete sham and something you can do on your own.

The IRS reps. give you their ID number when they first pick up your call. Be ready and right this down each time you call them, just in case something happens and they send you papers that are different than what you talked about.

ALSO....they type in notes on your screen when they talk to you, so if they say they will do something (favorable) to/for you then specifically tell them to put that in the notes. Make sure you hear them typing or they will put you on hold so they can update the notes.

ALSO....some IRS agents are A-hole's and some are nice. If I were you/(your parents) I'd write down their ID number, immediately tell them that you (your parents) have a cordless phone and sometimes the battery goes out and you'll call right back if it goes out. This is in case you get a real butt head. You can hang up on them, claim it was the phone and then call right back and hopefully get a nicer person. Make sure you tell them that the cordless phone went out on you in the middle of your conversation the last time and to make sure the previous person didn't put down in your notes that you are combative or difficult person. (They will do this and then antagonize you on the phone to get you to lose your cool to say and make stupid mistakes.)

If they only owe 12K, you don't need anyone to make a payment plan for you. You/they can do it themselves and they will accept it if it's not $25 a month. I'd tell them $225 a month and they should go for it. If they've already filed for those years and the IRS has sent them a tax bill...you may be able to set a payment plan up over the phone using the automated computer voice response thing-a-ma-gig and not even talk to a live person. They will send you a letter letting you know if your payment amount is acceptable or not. Make sure the computer response tells you you have a debt that's due. I'd try that first before talking to a live person, because they will try to get you to pay as much as possible, even though you can pay less each month.

Make no mistake....the interest will mount up if they don't pay it off quickly. I wouldn't be surprised if they end up paying 5-6k in interest over a 60 month period if they only pay the minimum due. I know first hand.

As far as knocking down some interest for one of the years....I was told that you can only do it one year at a time (since they have two years due). More than likely they will only knock off the interest and penalty for one of the years if it is a very, very good excuse. Then after that...you can try to get the same thing done for the second year, which will be alot harder.

If any of this doesn't make sense or is confusing...I'll try to explain it another way.

It's not as bad as you might think, but time is against them because of the interest.

[Anonymous]

I owe also. I'm self employed and am about to pay 2003 taxes (I think) off. Long story short, I didn't know when I started that the IRS dinged me at the end of the year if I didn't pay as I went, and I didn't make very much when I started. Anyway, how do you get them to remove the interest? I would think it'd be very very difficult.

Karen

[llecs]

I too had a tax issue this past year. I knew it was coming, but ended up with just over a $10k tax bill last year ('06). I ignored the first few statements, but after fining these forums it is better to tackle it than to hide. So, I made payment arrangements and aggressively paid down the tax bill. I studied the tax code and did everything to create deductions (including new kid!) and the IRS ended up owing me $8k for 2007. A chunk of that went to pay off my debt with them.

Tell you folks to setup a payment plan. Get it as low as possible, but throw extra at it with each payment and they won't have any problems.

[RobertEG]

I wont proffer tax advice, just credit advice.  The FICO implications are the imposition of a tax lien.  That is a major FICO hit, if reported to any of the CRAs.  A tax lein will continue to show in the credit report for 7 1/2 years from the date of payment in full of the lien.  Apparently, that has already happened to some extent. Your IRS problems will seep into you CR if not attended to. 

If you contract with IRS for a repayment plan, and stick to its terms, they might not file a credit lien.  They will charge  you montthly interest on the repayment plan, just as any creditor would.  I would do my best, from a credit perspective, to forstall imposition of a taxs lien.

You need an attorney.

[Anonymous]

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RobertEG wrote:

 A tax lein will continue to show in the credit report for 7 1/2 years from the date of payment in full of the lien. 

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And an unpaid tax lien will remain 15 years from filing date.

[haulingthescoreup]

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@Anonymous wrote:

I can't help but to ask, but was there recently a major change in income?

It seems that is a lot to owe, especially with only 1 working and 10 dependents at home.

Make sure there wasn't some kind of mistake made........even the IRS makes mistakes or the accountant doing the taxes.

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I'm guessing that since OP said the dad is a truck driver, he's gotten killed by diesel prices.

A co-worker's husband is an owner-operator, and they're having to let his rig be repossessed. He's only owned it for a year, when he went in business for himself. With diesel prices, it costs more to run it than he can earn.

[smallfry]

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@RobertEG wrote:

I wont proffer tax advice, just credit advice. The FICO implications are the imposition of a tax lien. That is a major FICO hit, if reported to any of the CRAs. A tax lein will continue to show in the credit report for 7 1/2 years from the date of payment in full of the lien. Apparently, that has already happened to some extent. Your IRS problems will seep into you CR if not attended to.

If you contract with IRS for a repayment plan, and stick to its terms, they might not file a credit lien. They will charge you montthly interest on the repayment plan, just as any creditor would. I would do my best, from a credit perspective, to forstall imposition of a taxs lien.

You need an attorney.

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Robert is correct. Some states are a lot less forgiving at least where reporting to the CRA's is concerned than the IRS. 10 kids huh?