I have not been able to get a job for the past 5 months. I want to pay my owed taxes but I am afraid of what more damage they can do to me. This is friggin miserable. Anyone here have a similar experience?
Sorry for your loss. You want people to share their experiences? That’s a forum called IMHO, not a General Question. Moved.
samclem, moderator
Thanks samclem
I’ve had it happen but it was about 40 years ago, so maybe things have changed.
I had ignored correspondence from the IRS. They levied/attached my bank account. I contacted them and provided the information they’d been asking for. Everything was fine after that. If I remember right, after the audit, I was even due a refund.
Your situation might not be the same. You need to explain why your account was levied, and someone might be able to advise you.
Definitely share more information with us. I feel pretty confident there is a way out of this. I hadn’t paid taxes for YEARS (this was about 30 years ago), and I worked with an accountant (a friend, but she wasn’t a CPA) who was “licensed to practice before the IRS” (or whatever the official phrase is). She wrote them a letter and got a bunch of the taxes cancelled and just generally straightened me and them out. I’ve been religious about paying my taxes ever since (I’m a freelancer, so that means quarterly taxes paid in advance.)
The IRS is not mean. In spite of the way they are portrayed in stories. I do believe there is help for you. They don’t want do “do damage” to you.
Have you talked to anyone at the IRS?
They usually aren’t mean, but they are a huge red tape filled bureaucracy and if you can afford professional advice - someone who knows how to write letters to the IRS, it will save you time and headache. You can do it yourself, but it may take months to get a letter that says what it needs to say in the hands of whomever needs to respond to it and in the meantime, as you have learned, they will just dock your pay.
I once got a notice that I owed them $80k. I’d misfiled a schedule. I refiled the schedule, with proof and a letter and got an all clear. I gave my tax professor a call - he told me what to do.
Sounds like you are in a bad spot. If you had a job they would have tried to levy your paycheck, but since you don’t have a paycheck - bank account it is!
Might I suggest that you have been in a hole and you are continuing to dig? I’m not trying to scold but…it is likely you received some correspondence in advance of this levy? Did you respond in any way to the correspondence? No? Really, you needed to contact them at the first point and explain your situation, get in front of the problem rather than letting them control the outcome (general words to live by). But, I’m guessing that bus already sailed, as it were.
So, you might be able to make some progress with help from a tax professional, there are probably free services in your area if you research on that internet thing.
They have the power to waive a lot of things but tend to save that for persons who respond to correspondence, return phone calls, provide requested documentation. People who do so find that they can often be very cooperative and even understanding.
This is exactly right. Once you realize that you owe them money and can’t pay it right away, you contact them and tell them and set up some kind of payment plan.
A few years ago we owed a couple thousand dollars for one year. We contacted them and they set up an on-line account to pay into and we were allowed to choose how much we wanted to pay. I paid them $50 a month even though we could have paid more. I think I could have even paid less, I don’t recall if there was a minimum. The interest was very minimal.
And then it was like we were a closed case to them. By maintaining contact with them, by making that little payment, it showed that we acknowledged the dept. and we never heard another peep from them. We would get a receipt in the mail for each payment and that was the full extent of further contacts with the IRS.
The IRS has people to track down, wages to garnish, liens to place on property, but they won’t do any of these things if you are making some small effort to clear things up. If your bank account is being garnished you have waited too long. You may still be able to have that attachment removed if you can agree to some payment terms now.
They will get progressively less nice the longer you wait. If you are pro-active and offer to pay even a little, they will usually take it. Being out of work sucks, but if you can pay anything at all I would still contact them and try to come to terms.
I’ll just second the Conventional Wisdom in this thread. I’ve found the IRS to be pretty willing to help work things out as painlessly as possible. I suspect, aside from “not being mean”, that doing stuff like garnishing wages and starting legal action involves a lot of paperwork on their end, while setting up a payment plan gets your file off someone’s desk.
So whomever you talk to over there, its in their interest to help you get this dealt with with as little storm-and-thunder as possible.
This is one of those times when I wish the OP would check back in…
Hi, I’m here. Actually been out looking for work.
Thank you all for your replies/insights. Yes, the levy is all my fault for not responding to the IRS notice immediately, but its a bit intimidating when you are out of work.
I had an issue with the IRS and was likewise wary of dealing with them. I endedup finding a local field office and going there with my paperwork.
The ppl there were incredibly nice and helpful! I believe they get so many assholes yelling at them that when they do get a guy like me who comes in nicely asking for help they are more than willing to do so!
Bring all your papers in order and be nice.
Thanks for sharing Dallas. The amount they say I owe is $6k and no, I cannot pay anything at the moment.
Mapping the field office now. Wary of dealing with them is it. Basically have not filed for the past 5yrs. Although, I really only owe taxes for one of those years. As, the rest of the time I spent traveling.
Is there any way you can find a tax professional-- even a volunteer-- to run interference for you?
When did this levy happen? If you respond to the IRS quickly enough, the IRS can tell your bank to release the funds, effectively reversing the levy. Typically, you have only about 20 days to make this happen.
Here are the basic rules of handling this kind of issue with the IRS:
- Never ignore a notice. Respond right away, by phone or in writing - or both. The IRS phone people are not entirely reliable about doing what they say they will. The IRS rarely levies people who respond to notices.
- Always file all tax returns on time, whether you can pay them or not. Get caught up on any late filings ASAP.
- Payment plans for a streamlined agreement apply to balances under 25,000 for people who are caught up on filings. Under the streamlined plan, the IRS will agree to any payment that will cover the principal in 5 years. (So divide your pre-interest/pre-penalty balance by 60 - that’s the monthly payment they’ll agree to).
- If you can’t afford the streamlined amount, ask them to put you on noncollectible status. If you have no job and minimal assets, this is likely to work. The debt doesn’t go away, but the IRS will not ask for payments until your situation changes.
- If 3 and 4 aren’t working for you, you can still negotiate payments below the streamlined amount, but you’ll have to complete form 433 and show proof of your living expenses. Still worth it, especially if you’re out of work.
- Lots of people focus on Offer-In-Compromise (OIC). There are lots of TV commercials about them. They are very rarely the right approach to handling a tax debt. Maybe they’re right for you, but don’t go spend $5000 at these shady “pennies on the dollar” places until someone ethical has run you through steps 1-5 and concluded that an OIC is your best bet.
Oh, I probably need to add the official disclaimer. I’m not your accountant. I don’t know the details of your situation. Always seek professional advice. Don’t rely on my advice to avoid penalties. This is not a covered opinion, etc. etc.
I am way way past due on response to the levy. I have now setup an appointment with a CPA next week.
Also, I am creating another thread about how to file my forex losses.
Thanks again.