Advice for the Casual Taxpayer

It seems I've waited until the last possible minute to call the IRS and chat about this money they think I owe them. After talking to a few friends in real estate, I'm under the impression that there's no point in arguing over the ridiculously arbitrary "penalty" and "interest" calculations, as the IRS doesn't yield when it comes to that sort of thing. (Hey, I wouldn't yield either if I were some free-rein government agency that spends far more money collecting taxes than I could ever hope to bring in.)

However, I'm still open to suggestions on negotiating this insane bill. Has anyone ever actually done it without filing a successful OIC? And as I understand it, they very rarely grant OICs, which is why Roni Deutch is such a racket.

Really, I'm just curious to hear others' experiences with the IRS. We self-employed business owners always have the best stories, like my friend who received a letter requesting over $30,000 in owed taxes. He called the 1-800 number, said "sure thing, lemme just write you folks a check," then laughed until tears and hung up the phone.

Apparently, I have to call them by the end of today or they start moving decimal points.

Comments

[John]

I doubt this will help because it's another country ...... who knows.

Dealing with Tax people at ground level resulted in NO progress,a sore brain, and huge bills that were crippling me. Everyone I spoke to had an attitude ...... chaos ruled my life.

A bar converstaion one evening gave me hope.
I hired an Attorney to file for undue stress due to burocratic BS .......against the Tax dept.

Apparantly filing raises the affair to a higher level hmmmm, suddenly people wanted to talk and they were nice too(rite) A wonderful young man even called to tell me that after re-calculation (previous 5 years)the 200,000 they were nailing me to the wall for, seizing my accounts and house etc..... was errrrrr a mistake. The new number was ZERO, Nada, nothing .......

BTW ... the attorney charged me +/- 500 USD for the single phone call he made .....

[Bexley]

IRS? Did I miss something here?

[Anonytax]

What kind of penalty are they sticking you with? Late filing? Substantial understatement? Unless you can show you had reasonable cause for paying late or understating your income, the IRS usually won't drop or reduce your penalty. Reasonable cause is not as reasonable as you might think. Some examples of reasonable cause would be incapacitation or reliance on written advice given to you by the IRS. Not too likely to help you out.

Interest is sometimes more negotiable. If you could pay the amount in a lump sum today if they lopped off some of the interest, they may be willing to do so. Try that approach with them and see what happens.

Success in OIC generally happens only when people are utterly strapped for cash (in bankruptcy, etc.). The IRS assesses the risk of recovery and takes the lesser amount in these circumstances because it allows them to recover something, where they might recover nothing.

Roni Deutch is an evil liar. Don't fall into that trap. Unless you think you have a real legal argument against the IRS on the amounts they think you owe them (and the penalties and interest), I recommend NOT hiring a tax lawyer. Trust me, I am a tax lawyer. (Yes, a tax lawyer reads your blog.) You'll end up spending more than you would handling it yourself, though you may save yourself some of the headache of dealing with the IRS.

If I were you, I'd try to set up a payment plan with them and chip away at what you owe. The interest the IRS charges is less than a credit card interest rate (IRS usually charges between 5-7%). It's not fun, but the IRS isn't going to forget about you and go away either.

Sorry not to have more cheerful news.

[Alexis]

If I don't know you already, Anonytax, then you're one of at least three tax lawyers that read this blog. Sucky news, yes, but I already knew it. Lucky for us, the IRS puts most of this stuff right on their website FAQ. The best I can do is small payments right now -- and I mean small, so they'll have to take what they can get -- and I'm about to file a small claim against Life Time Fitness, which the IRS is more than welcome to put a tax lien against and eventually take. Question for you, though, as long as it's on my mind: How does this affect my FICO score?

[Mike]

My experience with the IRS was...quite good. A 20 minute conversation to clear up some confusing documents (freelance income and a scholarship from outside the U.S.) and it was done. The agent was pleasant and helpful. A lot of it is the attitude you go in with.

[Alexis]

My cousin said the same thing after getting a surprise 1099 for some construction work he had done. (Bexley, I get 1099s from the Strib.)

I'm on a roughly 30-minute wait right now; my fault entirely.

[Ry4an]

One day the IRS mailed me a check for $67,000, and the next day they mailed me a bill for $67,000 plus $700 worth of taxes and penalties for owing them $67,000. I called the IRS and promised to rub the two together until they both vanished, but the IRS said I'd had their $67K for years and owed penalties and interest. My accountant spent north of 12 hours on the phone with them trying to answer WTF, and in the end I had to pay the $67,700 plus I owed my accountant. There is no winning with that agency.

[Bexley]

Well, I figures that you got 1099s from the STrib. What I seem to have missed was where you got fined by the IRS.

[mplsbruin]

Because of a mix-up, I failed to pay my mother's tax owed from her part-ownership of an apt. When I did pay it, there was an additional 1,600 dollars in interest owed. We appealed by explaining how the confusion arose. The IRS forgave the interest owed in its entirety. They said it was due to our prior record of paying on time.

[Tara]

This is where we Ron Paul nutcases get to remind you all that we could have been completely rid of that agency by now if we had all gotten behind the right crackpot back when we had the chance.

[Relateonce]

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