# I owed $30,000 to the IRS... **URL:** \ **Category:** In My Humble Opinion\ **Created:** [February 11, 2009, 6:47am UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339 "2009-02-11T06:47:34Z")\ **Posts on this page:** 18\ **Page:** 2
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [February 11, 2009, 9:28pm UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/21 "2009-02-11T21:28:31Z")
> [@DiosaBellissima](#): > > Trust me, it’s very easy- with interest and penalties- for a relatively tiny tax debt to balloon up huge virtually in the blink of an eye. Sure, they should have known better and paid in the first place, but people make mistakes and also, your average blue collar construction guy isn’t really going to realize the implications of their oversight until it’s far too late. $5000 becomes $15,000 in 3 years, $15000 becomes $45,000 in another three. . Note that the current IRS rate is around 6%, it was only 8% in 2006. My math works out to under $7000 debt on a $5000 liability in 3 years, using 8%. ---
**Author:** ![DiosaBellissima](https://avatars.discourse-cdn.com/v4/letter/d/a8b319/32.png) [@DiosaBellissima](https://boards.straightdope.com/u/DiosaBellissima)\ **Post date:** [February 11, 2009, 9:29pm UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/22 "2009-02-11T21:29:03Z")
> [@DrDeth](#): > > Note that the current IRS rate is around 6%, it was only 8% in 2006. My math works out to under $7000 debt on a $5000 liability in 3 years, using 8%. Are you also factoring in their penalties? Which often are greater than the actual tax liability. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [February 11, 2009, 9:37pm UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/23 "2009-02-11T21:37:48Z")
> [@DiosaBellissima](#): > > Are you also factoring in their penalties? Which often are greater than the actual tax liability. The tax penalties for late filing are 5% per month - if you ignore your taxes, that adds up darn fast. If its due to fraud it 15% per month. Plus if you pay late its ANOTHER .5% per month you are late - that’s the penalties - the INTEREST is a different calculation. It often takes the IRS a few years to catch up with you for failing to file, and at 5% per month, that can add up real quick. Yeah, pay your taxes, on time. ---
**Author:** ![Steve\_MB](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steve_mb/32/5339_2.png) [@Steve\_MB](https://boards.straightdope.com/u/Steve_MB)\ **Post date:** [February 11, 2009, 9:41pm UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/24 "2009-02-11T21:41:24Z")
> [@An\_Arky](#): > > Annoys the crap out of me. “We got out of paying our fair share”. Objection: Assumption of a fact not in evidence – it’s entirely possible that the IRS was simply in the wrong. ---
**Author:** ![Steve\_MB](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steve_mb/32/5339_2.png) [@Steve\_MB](https://boards.straightdope.com/u/Steve_MB)\ **Post date:** [February 11, 2009, 9:51pm UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/25 "2009-02-11T21:51:13Z")
> [@Shodan](#): > > We actually got a notice from the IRS that we owed a good deal more than $30,000. Our tax accountant went over the forms with them (and us) and we wound up getting a refund. It was the IRS that screwed up. I had a case where a few thousand dollars was owed to my wife by some half-forgotten investment. The people in charge of notification and disbursement never did get around to notifying or disbursing to us, but they did manage to tell the IRS about out (supposed) additional income. Hilarity ensued. :mad: ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [February 11, 2009, 10:09pm UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/26 "2009-02-11T22:09:17Z")
> [@Dangerosa](#): > > The tax penalties for late filing are 5% per month - if you ignore your taxes, that adds up darn fast. If its due to fraud it 15% per month. Plus if you pay late its ANOTHER .5% per month you are late - that’s the penalties - the INTEREST is a different calculation. > > It often takes the IRS a few years to catch up with you for failing to file, and at 5% per month, that can add up real quick. > > . It’s only 1/2 of 1% per month for failure to pay. [http://www.irs.gov/newsroom/article/0,,id=181068,00.html](http://www.irs.gov/newsroom/article/0,,id=181068,00.html) "_Paying tax late: You will have to pay a failure-to-pay penalty of ½ of 1 percent (0.5 percent) of your unpaid taxes for each month, or part of a month, after the due date that the tax is not paid. This penalty does not apply during the automatic six-month extension of time to file period if you paid at least 90 percent of your actual tax liability on or before the original due date of your return and pay the balance when you file the return."_ Now should it be fraud or failure to file, then fuckyeah, the penalties are _severe._ As they should be. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [February 11, 2009, 10:15pm UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/27 "2009-02-11T22:15:21Z")
> [@Steve\_MB](#): > > Objection: Assumption of a fact not in evidence – it’s entirely possible that the IRS was simply in the wrong. It happens. But it is rare for the IRS to _assess_ taxes and be “simply in the wrong”. You get a audit notice, then if you ignore that a follow up (maybe a call), then a _proposed_ deficiency, then a follow up (usually), then a 90Day letter aka SNoD, \*then \*the IRS assesses. Then the billing starts. Honestly, you simply can’t ignore the IRS and hope they will go away. Hwaaaay too many dudes do that. Now sure, if your return is just hard to read or you goof up and put something on the wrong line, the “error correction notice” will not go through all those steps. ---
**Author:** ![The\_Devil\_s\_Grandmother](https://avatars.discourse-cdn.com/v4/letter/t/74df32/32.png) [@The\_Devil\_s\_Grandmother](https://boards.straightdope.com/u/The_Devil_s_Grandmother)\ **Post date:** [February 11, 2009, 10:49pm UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/28 "2009-02-11T22:49:30Z")
DiosaBellissima, if you don’t want to answer this question, feel free to ignore. How much does an average client of these tax-help services pay? I’m wondering because the ads for them around here always say things like, “_We owed $33,000 but only had to pay $8,000_” and my tiny, bitter brain fills in “_because we gave this lawyer $20,000!_” ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [February 11, 2009, 10:52pm UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/29 "2009-02-11T22:52:06Z")
> [@The\_Devil\_s\_Grandmother](#): > > DiosaBellissima, if you don’t want to answer this question, feel free to ignore. > How much does an average client of these tax-help services pay? I’m wondering because the ads for them around here always say things like, “_We owed $33,000 but only had to pay $8,000_” and my tiny, bitter brain fills in “_because we gave this lawyer $20,000!_” Starts at $500-$1000, afaik. ymmv ---
**Author:** ![The\_Devil\_s\_Grandmother](https://avatars.discourse-cdn.com/v4/letter/t/74df32/32.png) [@The\_Devil\_s\_Grandmother](https://boards.straightdope.com/u/The_Devil_s_Grandmother)\ **Post date:** [February 11, 2009, 11:32pm UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/30 "2009-02-11T23:32:00Z")
Hmmm, not nearly as bad as I thought. Thanks, DrDeth. ---
**Author:** ![N9IWP](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/n9iwp/32/3154_2.png) [@N9IWP](https://boards.straightdope.com/u/N9IWP)\ **Post date:** [February 11, 2009, 11:34pm UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/31 "2009-02-11T23:34:09Z")
> [@Sarahfeena](#): > > For that matter, 100 pennies are still pennies on the dollar! 🙂 Or for that matter, 342 pennies are pennies on the dollar… Brian ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [February 12, 2009, 12:03am UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/32 "2009-02-12T00:03:32Z")
> [@DrDeth](#): > > It’s only 1/2 of 1% per month for failure to pay. > > [http://www.irs.gov/newsroom/article/0,,id=181068,00.html](http://www.irs.gov/newsroom/article/0,,id=181068,00.html) > > "_Paying tax late: You will have to pay a failure-to-pay penalty of ½ of 1 percent (0.5 percent) of your unpaid taxes for each month, or part of a month, after the due date that the tax is not paid. This penalty does not apply during the automatic six-month extension of time to file period if you paid at least 90 percent of your actual tax liability on or before the original due date of your return and pay the balance when you file the return."_ > > Now should it be fraud or failure to file, then fuckyeah, the penalties are _severe._ As they should be. That’s what I said - but its 5% for failure to file. Which is also what I said. And they will hit you with both if you don’t file - the 5% for not filing, then the .5% for not paying what you didn’t file. ---
**Author:** ![An\_Arky](https://avatars.discourse-cdn.com/v4/letter/a/87869e/32.png) [@An\_Arky](https://boards.straightdope.com/u/An_Arky)\ **Post date:** [February 12, 2009, 12:28am UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/33 "2009-02-12T00:28:58Z")
> [@Steve\_MB](#): > > Objection: Assumption of a fact not in evidence – it’s entirely possible that the IRS was simply in the wrong. Yes, and their scintillatingly sophisticated commercials are an assumption of my willingness to believe they’re only marketing to innocent victims of the big, bad, wrong, old meanies the IRS, too. 🙂 ---
**Author:** ![artemis](https://avatars.discourse-cdn.com/v4/letter/a/91b2a8/32.png) [@artemis](https://boards.straightdope.com/u/artemis)\ **Post date:** [February 12, 2009, 1:39am UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/34 "2009-02-12T01:39:13Z")
> [@DrDeth](#): > > It happens. But it is rare for the IRS to _assess_ taxes and be “simply in the wrong”. You get a audit notice… Not always. I didn’t receive an audit notice last year; I simply got a letter from the IRS stating that they had ‘recalculated’ my 2006 taxes and according to their calculations I owed them nearly $10,000, and needed to pay them at once to avoid additional penalties. It took nearly 6 months for my accountant to prove to the IRS that they were 100% in the wrong, and that I didn’t owe them a dime. (They didn’t believe my charitable contribution figures, so instead of simply requesting additional documentation - which I of course had - they simply wrote a zero on that line of my tax return when they performed their recalculations. Nice - NOT!) ---
**Author:** ![Markxxx](https://avatars.discourse-cdn.com/v4/letter/m/5daacb/32.png) [@Markxxx](https://boards.straightdope.com/u/Markxxx)\ **Post date:** [February 12, 2009, 1:50am UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/35 "2009-02-12T01:50:38Z")
It isn’t fair but you have to look at the big picture. Do you complain when a company doesn’t pay all the taxes it should? Do you complain when a company comes into town and gets a break on paying taxes? The company says “well we create jobs so that helps the economy.” Well if you don’t owe the IRS you spend the money you’d pay them and that helps the economy too. If you feel it’s unfair for an individual tax payer to get a break, then I’ll assume you don’t patronize any company that gets a tax break as well. ---
**Author:** ![DiosaBellissima](https://avatars.discourse-cdn.com/v4/letter/d/a8b319/32.png) [@DiosaBellissima](https://boards.straightdope.com/u/DiosaBellissima)\ **Post date:** [February 12, 2009, 4:17am UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/36 "2009-02-12T04:17:27Z")
> [@The\_Devil\_s\_Grandmother](#): > > DiosaBellissima, if you don’t want to answer this question, feel free to ignore. > How much does an average client of these tax-help services pay? I’m wondering because the ads for them around here always say things like, “_We owed $33,000 but only had to pay $8,000_” and my tiny, bitter brain fills in “_because we gave this lawyer $20,000!_” It varies TREMENDOUSLY based on what stage of collections the case is in, what needs to be done, the person’s current financial situation (if they have more money, it’s harder for us to do certain settlements, etc.). Figure about 10%. Again though, this can very tremendously based on any number of factors. ---
**Author:** ![An\_Arky](https://avatars.discourse-cdn.com/v4/letter/a/87869e/32.png) [@An\_Arky](https://boards.straightdope.com/u/An_Arky)\ **Post date:** [February 12, 2009, 2:12pm UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/37 "2009-02-12T14:12:06Z")
> [@Markxxx](#): > > It isn’t fair but you have to look at the big picture. Do you complain when a company doesn’t pay all the taxes it should? Do you complain when a company comes into town and gets a break on paying taxes? > > The company says “well we create jobs so that helps the economy.” Well if you don’t owe the IRS you spend the money you’d pay them and that helps the economy too. > > If you feel it’s unfair for an individual tax payer to get a break, then I’ll assume you don’t patronize any company that gets a tax break as well. The companies that get a break for coming to town get it before the taxes are owed, not after. And no, I’m not pleased that some companies don’t pay their fair share of taxes, but not to the extent of boycotting, since that’s ineffective. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [February 12, 2009, 5:07pm UTC](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339/38 "2009-02-12T17:07:20Z")
> [@artemis](#): > > Not always. I didn’t receive an audit notice last year; I simply got a letter from the IRS stating that they had ‘recalculated’ my 2006 taxes and according to their calculations I owed them nearly $10,000, and needed to pay them at once to avoid additional penalties. It took nearly 6 months for my accountant to prove to the IRS that they were 100% in the wrong, and that I didn’t owe them a dime. > > (They didn’t believe my charitable contribution figures, so instead of simply requesting additional documentation - which I of course had - they simply wrote a zero on that line of my tax return when they performed their recalculations. Nice - NOT!) That’s an error correction notice, and I have little doubt it’s becuase there was an error in the way you filled out your taxes. Wrong line or something. That dept in the Service center can’t disallow anything, nor can they toss out deductions because they “don’t beleive them”. [Previous page](https://boards.straightdope.com/t/i-owed-30-000-to-the-irs/485339.md?page=1)