Need tax/IRS advice - seeing red

[Opti]

I could really use some tax advice from a tax professional or someone who hase been through what I am experiencing. Looking at what I received in the mail yesterday its getting clear  why I can not seem to get the 2010 federal tax arrears paid.

I do owe for a couple other years, but it is smaller, but honestly, this is like the CC company tactics circa 2008 or so.

Note, I have already sent out my $43.00, because the agreement I received in the mail said it must be received by 7/28 and per the fine print in the agreement they can take/I must allow 10 days from time of mailing for it to be received. So the payment was mailed 7/15 or 7/16.

Here's my billing summary, keep in mind I am being garnished on everything I make over 22 hours of working minus tax liabilities. I get paid every two weeks. Numbers are close, but not exact.

Amount you owed.............................................. $1250.00

Last pymt 6/30/15.............................................  $ 85.00

Addtl failure to pay penalty.................................. $404.00

Addtl interest charges.......................................... $181

Remaining balance.................................................. $1855.00

Monthly pymt due by 7/28/15...............................  $43.00

[NoNamePerson]

Are your wages being garnished AND you are personally sending in $43.00 in addition to the garnishment?

[rangerj]

The "failure to pay (tax) penalty" increases 1/2 of 1% per any part of a month the tax due is not paid up to a maximum of 25%. Once the notice of levy is issued the penalty increases by a full 1% per month. Again the maximum is 25%. At that rate, plus the interest at the "applicable federal rate" (adjusted quarterly), it would be impossible to pay off the amount you owe with the $43.ooo payments. Look into a settlement agreement, aka offer in compromise. You will most likely need professional help with this.

[TheOtherMe]

rangerj have given you excellent advice.  IRS is following the law but if all you can pay is $43, you will never get out of it and need the offer in compromise.

[swasat]

OP owes the IRS money.... And is looking to buy a smartphone and matching purse...and shoes....??

[taz157]

Jul 21, 2015 20:40:44 GMT -5 swasat said:

OP owes the IRS money.... And is looking to buy a smartphone and matching purse...and shoes....??

[NoNamePerson]

Jul 21, 2015 19:45:03 GMT -5 TheOtherMe said:

rangerj have given you excellent advice.  IRS is following the law but if all you can pay is $43, you will never get out of it and need the offer in compromise.

I agree but I'm still confused about garnishment and her sending check too. Is this normal? Been ages since dealing with payroll garnishments. But I don't remember employee also making separate payments too. Maybe it's because she is. PT? 

[Opti]

Jul 21, 2015 20:40:44 GMT -5 swasat said:

OP owes the IRS money.... And is looking to buy a smartphone and matching purse...and shoes....??

Wrong Oh Swaswat.

OP is looking to get a Smartphone. When said smartphone is purchased or the free one I have in my possession is activated on a plan, I will be looking for a purse to hold it. Not sure how you put shoes in there.

Shoes are a whole different deal. I'm tired of having literally one good pair to wear everywhere.

[Opti]

Jul 21, 2015 21:26:24 GMT -5 taz157 said:

Jul 21, 2015 20:40:44 GMT -5 swasat said:

OP owes the IRS money.... And is looking to buy a smartphone and matching purse...and shoes....??

This is how I feel, but its more based on the fact your assumptions are dead wrong. I've been shopping for a smart phone for over a year now. Still on a $80/yr. plus tax dumb phone.

[Opti]

Jul 21, 2015 14:33:21 GMT -5 rangerj said:

The "failure to pay (tax) penalty" increases 1/2 of 1% per any part of a month the tax due is not paid up to a maximum of 25%. Once the notice of levy is issued the penalty increases by a full 1% per month. Again the maximum is 25%. At that rate, plus the interest at the "applicable federal rate" (adjusted quarterly), it would be impossible to pay off the amount you owe with the $43.ooo payments. Look into a settlement agreement, aka offer in compromise. You will most likely need professional help with this.

Rangerj,

I do not have the $$.

If I could pay in full I would, but I can not ignore all the car maintenance I have been deferring so, I am slowly doing that... mo stly with variable $$ I receive from my Dad.

Last fall, I reached out to him in prep to leave NJ and move in reluctantly with him. I was temporarily flush a couple months ago based on what he sent me, however, to get the car in a position to make an 18 hour drive or even a 1 hr commute in a non-painful manner is a $$$ proposition. I have only one working window, driver's side passenger window that I did a payment plan on with the dealer because of how it broke. They would not let me leave the dealership w/o replacing it and then were a bit miffed it did not get paid off as quickly as they hoped but about in the timeframe I had told them up front.

I am more than prepared to refile BK over my taxes when my 7 years is up. Payments actually agreed to are $21 per two week paycheck. I think fees and penalties might be waived once the agreement started and this shit on Optimist fee thing was like what the CC companies do right before a payment arrangement. It is their way to bump up the amount owed b4 accepting payments. Gives them a bigger nut to go after in the case of the default.

[Opti]

Jul 21, 2015 21:43:52 GMT -5 NoNamePerson said:

Jul 21, 2015 19:45:03 GMT -5 TheOtherMe said:

rangerj have given you excellent advice.  IRS is following the law but if all you can pay is $43, you will never get out of it and need the offer in compromise.

I agree but I'm still confused about garnishment and her sending check too. Is this normal? Been ages since dealing with payroll garnishments. But I don't remember employee also making separate payments too. Maybe it's because she is. PT? 

NNP, I am modifying my garnishment and setting up a payment arrangement. The $43 is the fee the IRS charges simply to set up the payment arrangement. I will have to send in the $21 each pay period on time myself until payroll is modified.

It is however likely, I will go more fully into the red until payroll is fixed, because they currently sweep everything after 22 hours a week. I currently work 26.5 or 27.5 hours a week, paid 26 or 27 because lunch is unpaid on the one day I work more than 6 hours. This is one of the many reasons I am irritated by the FT person hire. I originally projected I'd have this paid off via the current garnishment by year end, but given they(IRS) keep dicking me over, likely under the assumption I must be working under the table, I have no qualms on planning to let them lose legally in 4 / 5 years on the bargain, if I can't off this b4 then.

[Opti]

Jul 21, 2015 14:33:21 GMT -5 rangerj said:

The "failure to pay (tax) penalty" increases 1/2 of 1% per any part of a month the tax due is not paid up to a maximum of 25%. Once the notice of levy is issued the penalty increases by a full 1% per month. Again the maximum is 25%. At that rate, plus the interest at the "applicable federal rate" (adjusted quarterly), it would be impossible to pay off the amount you owe with the $43.ooo payments. Look into a settlement agreement, aka offer in compromise. You will most likely need professional help with this.

I tried to get my original BK lawyer to assist with this, but he wanted me to make the calls b4 the BK was granted. I knew I was unlikely to pull it off as I could barely handle living on the phone to straighten out unemployment snafus all day when I was not working.

This payment arrangement is the first time I have spoken to someone at the IRS in less than three hours wait on the phone AND the computer system was actually up. If you have suggestions on how to approach the lawyer who did my BK as pro bono work for Legal Aid, I am all ears. He did a decent job, but as expected he did not cover certain bases the lawyer who works for Legal Aid would have done. (I've still to mail the form to Legal Aid on how he did... it may have had something to do with being left on the hook on this, etc... )

[NoNamePerson]

Jul 22, 2015 3:10:55 GMT -5 Opti said:

Jul 21, 2015 21:43:52 GMT -5 NoNamePerson said:

I agree but I'm still confused about garnishment and her sending check too. Is this normal? Been ages since dealing with payroll garnishments. But I don't remember employee also making separate payments too. Maybe it's because she is. PT? 

NNP, I am modifying my garnishment and setting up a payment arrangement. The $43 is the fee the IRS charges simply to set up the payment arrangement. I will have to send in the $21 each pay period on time myself until payroll is modified.

It is however likely, I will go more fully into the red until payroll is fixed, because they currently sweep everything after 22 hours a week. I currently work 26.5 or 27.5 hours a week, paid 26 or 27 because lunch is unpaid on the one day I work more than 6 hours. This is one of the many reasons I am irritated by the FT person hire. I originally projected I'd have this paid off via the current garnishment by year end, but given they(IRS) keep dicking me over, likely under the assumption I must be working under the table, I have no qualms on planning to let them lose legally in 4 / 5 years on the bargain, if I can't off this b4 then.

Gotcha ya.   

[The Captain]

Jul 22, 2015 3:10:55 GMT -5 Opti said:

Jul 21, 2015 21:43:52 GMT -5 NoNamePerson said:

I agree but I'm still confused about garnishment and her sending check too. Is this normal? Been ages since dealing with payroll garnishments. But I don't remember employee also making separate payments too. Maybe it's because she is. PT? 

NNP, I am modifying my garnishment and setting up a payment arrangement. The $43 is the fee the IRS charges simply to set up the payment arrangement. I will have to send in the $21 each pay period on time myself until payroll is modified.

It is however likely, I will go more fully into the red until payroll is fixed, because they currently sweep everything after 22 hours a week. I currently work 26.5 or 27.5 hours a week, paid 26 or 27 because lunch is unpaid on the one day I work more than 6 hours. This is one of the many reasons I am irritated by the FT person hire. I originally projected I'd have this paid off via the current garnishment by year end, but given they(IRS) keep dicking me over, likely under the assumption I must be working under the table, I have no qualms on planning to let them lose legally in 4 / 5 years on the bargain, if I can't off this b4 then.

I have to respond to this.

The IRS has protocols and procedures in place where they have to notify you of what is going to happen, and what the consequences are for not taking action. They are a government agency following pre-set procedures and not some individual interested in screwing around with you.

Not.one.damn.thing. that's happening should come as a surprise if you actually read what was sent to you.   

And, while I realize you're obviously the expert in taxes and bankruptcy here, and not me, don't assume taxes will be discharged in bankruptcy automatically - because that is not always the case. I'm pretty sure that the factors that didn't allow for them to be discharged in your last bankruptcy will prevent them from being discharged in future bankruptcies. Not positive mind you, but if you did some homework (like I just did) you'd know there is that risk.

But go ahead and keep doing what you're doing, because it's obviously working so well for you.

[NoNamePerson]

Jul 21, 2015 14:33:21 GMT -5 rangerj said:

The "failure to pay (tax) penalty" increases 1/2 of 1% per any part of a month the tax due is not paid up to a maximum of 25%. Once the notice of levy is issued the penalty increases by a full 1% per month. Again the maximum is 25%. At that rate, plus the interest at the "applicable federal rate" (adjusted quarterly), it would be impossible to pay off the amount you owe with the $43.ooo payments. Look into a settlement agreement, aka offer in compromise. You will most likely need professional help with this.

 rangerj    I gather from a post where she quoted me that this $43. is just a SET UP fee. Not her monthly agreed upon payment. But I am getting confused.     

[rangerj]

Generally the IRS, according to the laws written by Congress, sets the payments in a payment agreement at an amount that will result in a fully paid liability within a given (agreed) amount of time, e.g. 6 months, a year, etc. Given the fact that this is a tax from the 2010 tax year, due as of 4-15-2011, and the fact that the notice of levy was issued the penalty for failure to pay would be at the 25% rate, plus the interest at the quarterly adjusted applicable federal rate. The longer this goes on the accumulating penalty and interest make getting the liability paid off progressively more difficult. The OP also tells us that taxes from other tax periods are also due and owing. I reject the insinuation that this is somehow the governments fault. In order to owe tax you must have taxable income. What happened to the taxable income, that is the money, in the year it was earned? Why wasn't the tax paid then? If the OP wants to see red then the OP should look in the mirror. Move back home, pay off your debts, and learn how to responsibly handle money.

[ArchietheDragon]

Jul 22, 2015 12:43:46 GMT -5 rangerj said:

Generally the IRS, according to the laws written by Congress, sets the payments in a payment agreement at an amount that will result in a fully paid liability within a given (agreed) amount of time, e.g. 6 months, a year, etc. Given the fact that this is a tax from the 2010 tax year, due as of 4-15-2011, and the fact that the notice of levy was issued the penalty for failure to pay would be at the 25% rate, plus the interest at the quarterly adjusted applicable federal rate. The longer this goes on the accumulating penalty and interest make getting the liability paid off progressively more difficult. The OP also tells us that taxes from other tax periods are also due and owing. I reject the insinuation that this is somehow the governments fault. In order to owe tax you must have taxable income. What happened to the taxable income, that is the money, in the year it was earned? Why wasn't the tax paid then? If the OP wants to see red then the OP should look in the mirror. Move back home, pay off your debts, and learn how to responsibly handle money.

presumably the OP lives in her home.   perhaps you meant, move out of your home, into a cardboard box. 

[Value Buy]

If one expects the government to take care of the poor, they must pay their fair share at the exact time the bill is due, when they are making the bucks to support this social stance.
Keep promoting this stance, and you too will soon be there.

[Value Buy]

We have had the IRS contact us twice in forty some years over issues where they said we owed them money with penalties......
Thank God we kept really good records.
Once after showing documents, they said, nothing owed.
The other time we received a check.

Of course, we always made sure the piper was paid in the first place.

[rangerj]

I meant "move back home" as in back with the parents. Again, you can only owe taxes if you made money. Poor people do not owe taxes.

[ArchietheDragon]

Jul 22, 2015 13:11:56 GMT -5 rangerj said:

I meant "move back home" as in back with the parents. Again, you can only owe taxes if you made money. Poor people do not owe taxes.

If she is not poor, then she shouldn't have to move back with her parents to pay her debts. 

[Peace77]

Opt

You may not owe the failure to pay penalty and all the additional interest.

It seems that the IRS department that sends out notices is much faster than the one that processes payments.

This past April when I did our taxes, I wasn't feeling well and made a mistake.  I got a letter saying pay $XXX by June xx.  I paid the entire amount online at least 2-3 days before the due date.

Then, I received a letter on June 19th but DATED June 22 stating that I owed a failure to pay penalty and additional interest on the bill that was ALREADY PAID.  I called the IRS to verify that they had received the payment and they stated that they had received it.

They had some lame excuse for doing this and when I complained that it didn't make any sense, the agent hung up on me.



Is there any chance that you can get a full time job at a different company?

[TheOtherMe]

Jul 22, 2015 13:00:55 GMT -5 Value Buy said:

We have had the IRS contact us twice in forty some years over issues where they said we owed them money with penalties......
Thank God we kept really good records.
Once after showing documents, they said, nothing owed.
The other time we received a check.

Of course, we always made sure the piper was paid in the first place.

These sound like correspondence letters.  I had one of those and it all went away because I could prove I owed nothing.

Opt is not saying she doesn't owe the taxes.

Interest is statutory if owed.  Yes, there may be some crossing in the mail of small amounts of interest.  My former boss at the IRS could not get interest removed when he forgot to mail the check in for the amount he owed with the tax return.  Since it was the first time for him, the penalty was removed.

[TheOtherMe]

I also reject the idea that this is the fault of the IRS.  She must have had income if she owes taxes.  Where did the money go?  Why was there not enough withholding or estimated taxes paid in to cover taxes?

[Ombud]

This is Opti's 2nd thread on basically the same thing: resolving a $1855 debt by a payment contract. If OP cannot do it, she should see if Taxpayer Advocate Service can help. When asked nicely to help, IRS reps bend over backwards to help

[TheOtherMe]

Nicely being the key word.

[rangerj]

The OP should try the taxpayer advocate route. Before talking to the advocate he/she should prepare a list of any mitigating circumstances, e.g. mental or physical illness, did not know money paid under the table was taxable, did not report tip income to the employer so that tax could be withheld, all returns were filed and filed on time, job was eliminated or lost due to bad economy or business closing, etc. Again, you can only owe taxes if you had taxable income. Be prepared to answer the question "what was done with the money" (income). Was it used for medical bills or something else that might be considered reasonable given the facts and circumstances?

[Deleted]

I had a pretty good experience working with the IRS as well.  My boyfriend (future husband) in college had failed to file for a few years as a self employed person and got nervous and decided he'd better do it.  I think he owed something like 8 or 9K and for us still in college and making about 25K/year between us, this was an overwhelming number.   We went in and spoke with someone in person and I helped him fill out an Offer in Compromise.  I think we settled for like $2400 and he got a loan from his Dad to just pay them off.

[mwcpa]

Lots of good information about how the collection process works from the IRS given by some here. The process can seem difficult, but, the IRS has its hands tied by the laws written by Congress.  Not paying taxes timely can be very costly... penalties and interest add up really fast....

Generally, when the IRS gets to a point of garnishment, levies, etc. it is because the person receiving such has not taken action to address the issue.  Mistakes sometimes happen.

The IRS, can be very compassionate in regards to helping someone get back on track with back taxes.  But, that compassion comes with a cost.... the IRS is not going to allow someone to live a lavish lifestyle and make a deal at the same time.  Lavish to the IRS may not be lavish to you.  Once I had a client attempt an offer in compromise, he paid for a summer share on the NJ shore during the process.  The cost was under 1,000 for some summer vacation.  The position of the IRS, at the time, was if he can afford a vacation he can afford his taxes and the offer was rejected.  Was it harsh, yes, was it fair, yes (in my opinion).

In regards to the post related to the timing of payments, etc.  The IRS charges penalties monthly.  The month for them ends on the 15th.  So, if one owes tax on April 15 and they pay the tax on April 30, while on the calendar it's only 15 days, under the law it's one month.  So, if a payment was due June 14 and it was paid June 16, that's another month late.  A computer will generate the bill.  In my experience, if you call and calmly explain the issue of the day, have proof of the payment, have a reasonable excuse, etc the IRS will consider an abatement of the extra fines. 

[NancysSummerSip]

Aug 2, 2015 6:05:01 GMT -5 mwcpa said:

Lots of good information about how the collection process works from the IRS given by some here. The process can seem difficult, but, the IRS has its hands tied by the laws written by Congress.  Not paying taxes timely can be very costly... penalties and interest add up really fast....

Generally, when the IRS gets to a point of garnishment, levies, etc. it is because the person receiving such has not taken action to address the issue.  Mistakes sometimes happen.

The IRS, can be very compassionate in regards to helping someone get back on track with back taxes.  But, that compassion comes with a cost.... the IRS is not going to allow someone to live a lavish lifestyle and make a deal at the same time.  Lavish to the IRS may not be lavish to you.  Once I had a client attempt an offer in compromise, he paid for a summer share on the NJ shore during the process.  The cost was under 1,000 for some summer vacation.  The position of the IRS, at the time, was if he can afford a vacation he can afford his taxes and the offer was rejected.  Was it harsh, yes, was it fair, yes (in my opinion).

In regards to the post related to the timing of payments, etc.  The IRS charges penalties monthly.  The month for them ends on the 15th.  So, if one owes tax on April 15 and they pay the tax on April 30, while on the calendar it's only 15 days, under the law it's one month.  So, if a payment was due June 14 and it was paid June 16, that's another month late.  A computer will generate the bill.  In my experience, if you call and calmly explain the issue of the day, have proof of the payment, have a reasonable excuse, etc the IRS will consider an abatement of the extra fines. 

On and off-topic:

A former neighbor of mine still has an IRS lien against her. It's from 2007-08 for failing to pay several quarters' worth of employment taxes. The original lien total is about $76,000. I just checked the state and county records; no indication that it has been cleared. Interestingly, she has sold her former house, got married, bought joint property and bought a new office condo (after getting kicked out of her old office for not paying rent - she had a judgment against her and paid that). The new office condo was financed by a private loan, since she apparently could not get a bank to finance it.

I'm curious, given the subject...anyone have a clue what she might owe now? And when a person does owe, especially that much, why does the IRS not step in and collect what's theirs via seizure?