IRS relief services questions

Factual Questions
1

I’m hoping there are some dopers out there who might be able to give me some good advice concerning my tax problems and what solutions are available to me.

My current situation is that I did not file last year due to not having any ability to pay. I’m a small business owner and my business is dying quickly. I’m in a pretty severe financial crisis that is just getting worse. I’m getting ready to close the business and find a job, having failed at this endeavor. My income for 2003 was approx. 28K and for 2004, around 20K.

This situation has seriously affected my health, mainly from the result of panic attacks, chest pains, and severe bouts of insomnia. Thoughts of being sent to jail, having whatever wages I may earn garnished, etc. are all that I think about. Before I started this business, I never had a problem at all with the IRS, always filed on time, always got a return, never any issues. I stuck with this business far too long though and it is ruining my life. At 38, I don’t own a home, have shitty credit, an almost non-existant bank account, and now with this situation looming overhead, I feel like everything is about to come crashing down hard.

I know that I have the ability to find work, a regular job, and would therefore be able to make payments in small increments. The one thing I have is a good reputation in my industry and that is probably good for at least a 30-40k position somewhere. I’m hoping that there is a light at the end of the tunnel.

Ok, I know I should be asking some questions here. I just felt that some background info would be helpful.

  1. I’ve been researching some of these tax-relief services that offer to handle your case with the IRS and negotiate offers of compromise and such. Are any of these reputable or are they scams? Can they really help? If so, does anyone know what they charge for something like this? Do they allow you to make payments?

  2. Has anyone used these services and were you happy with the results?

  3. Are there any other avenues you could suggest in the way of getting assistance with my situation that doesn’t cost an arm and a leg?

Lastly, I would like to make a sincere request that, it even though it might be tempting, could we please refrain from any lectures or “you’re a moron” posts. I’m well aware that I’ve screwed up royally. Trust me on that one. I really need helpful advice right now.

Thanks in advance to anyone who might be able to provide some insight for me. I’d really appreciate it.

2

  1. Relax. You’re not going to jail.

  2. Do not use a tax-negotiating service. All they do is sell you information that you can get for free.

The most important thing is to get up-to-date with your filing. Even if you can’t pay, you still have to send the paperwork. You can still file your return for last year, and there will be a penalty for paying late. The next step is to ask the IRS to help work out a payment plan. They deal with failed small businesses all the time, so it’s nothing new to them. This should get you started. The IRS website is really quite helpful once you get used to the jargon.

Finally, you may wish to consult a tax attorney. (Note: Not one of the tax-negotiation/consolidation scams - a real live lawyer.) Your local Legal Aid Society or Small Business office may be able to get you a brief consultation for free.

3

The reason that I’ve been considering this option is simply because I feel like I’m out of my league and having someone more experienced represent me would possibly be in my best interest.

I must say that the idea of someone else, more qualified, doing the negotiating is quite appealing right now (which is probably why that is one of their biggest selling points).

Thanks for your response. I especially appreciate your first point. :slight_smile:

4

  1. Relax. You’re not going to jail.:slight_smile:

  2. Do you use an accountant, or have you always done your returns yourself? If you use an accountant, that is the place to start. Accountants do simple individual returns for <$100–I do not think you will need to pay much more than a few hundred to get the return properly prepared with late filing fees and penalties calculated. Get the paperwork filed–even if you don’t pay what’s due, that will start the process properly. (You don’t say whether you have an entity which requires a business return in addition to your personal return, and you don’t say whether your have been skipping quarterly estimated payments. The total cost for an accountant to prepare all of the filings for only one missing year should be a few hundred dollars, my best guess. Because your liability is relatively small, I would go with an accountant over a tax attorney to start with.)

  3. Your income is low enough that, if you kept up with withholding/est. payments, you may not owe anything–you may even get a refund–the ability to get a refund expires after a few years while the need to pay doesn’t, another reason not to delay.

Good luck.