Need tax/IRS advice - seeing red

[Peace77]

I'm surprised that the IRS didn't have a lien against her home.

Perhaps she is making payments.  People that ignore the IRS have been known to have their bank accounts seized.

[NancysSummerSip]

Aug 11, 2015 11:27:34 GMT -5 Peace77 said:

I'm surprised that the IRS didn't have a lien against her home.

Perhaps she is making payments.  People that ignore the IRS have been known to have their bank accounts seized.

OK, did not consider that. And of course, a payment plan would not show up anywhere; only when it's paid off would it show. That would make sense, though. I mean, she sold her primary residence (for more than it was worth, but I fault the buyer, a friend of hers, for paying too much), and paid off the lawsuit filed against her in county court by her previous office landlord about a month later.
She also has the private loan for about $170,000 outstanding, though it does not come due in full for another five years. That's the office condo loan.
But doesn't it make more sense to pay the feds first? Mainly because they're the feds, but also because it's the older, larger debt in her case (older by about four years, and the original amount, at least was about$76,000, compared to $13,000 she owed the landlord).

[Peace77]

She may have been doing the Dave Ramsey plan of paying the smallest debt first.  However, even Dave Ramsey says to pay the IRS first.

[NancysSummerSip]

Aug 11, 2015 12:58:21 GMT -5 Peace77 said:

She may have been doing the Dave Ramsey plan of paying the smallest debt first.  However, even Dave Ramsey says to pay the IRS first.

Indeed. Or funding her new lifestyle.
She and the boyfriend (now her DH) had a baby and then she had to get him out of a lot of financial trouble - multiple liens on his properties, money owed in medical bills and to the court from a DUI and a lawsuit by his first wife (she was a passenger in the car when he had the DUI, and was critically injured. He was charged and found guilty in the accident).

[TheOtherMe]

The IRS usually puts liens on properties for employment taxes.  They have no mercy on those because that is not your money.  The money belongs to the employees and you are to remit them to the IRS.

I would be surprised if the IRS didn't get some funds.  I've seen liens for less than $500 for employment taxes.

[NancysSummerSip]

Aug 11, 2015 19:22:47 GMT -5 TheOtherMe said:

The IRS usually puts liens on properties for employment taxes.  They have no mercy on those because that is not your money.  The money belongs to the employees and you are to remit them to the IRS.

I would be surprised if the IRS didn't get some funds.  I've seen liens for less than $500 for employment taxes.

OK, so here's my next question...if she and DH co-own their current home, can that jointly-owned property be seized? FWIW, he owned it on his own before they married. She now owns it with him.

She does not yet own her office condo - as I mentioned, that loan, to the best I can find out, is not due to be paid off for another five years. But can that be taken as well, and if so, at what point?

[TheOtherMe]

I was never a Revenue Officer, so I did not specialize in or work Collections.  I do think that anything with her name on it could be gone after. 

I had neighbors way back when.  The wife's father didn't trust the husband.  He bought his daughter a house and put it in her name only.  Good thing as the husband started a business and didn't pay the employment taxes.  IRS could not take the house because he was not on it. 

By the way, an IRS lien has a negative impact on your credit report.  I do not know how long they stay on the report once satisfied.   I know that because my neighbor told me that any credit cards they had, had to be in her name only because the IRS destroyed her husband's credit. 

[rangerj]

When employment taxes are involved you get into serious legal issues. The IRS can lien, levy, and seize in order to recover the taxes. All officers of a corporation, or members of an LLC, or partners of a partnership, are liable for the full amount of the taxes. The bookkeeper and/or accountant may also be held liable depending on what part they took in the business, e.g. had authority to write checks. Yes, the IRS can go after property held jointly, but there are provisions in the tax code regarding "innocent spouse" that could take the onus off of the one party. The tax code also provides for the IRS with the ability to go after property transferred in order to avoid paying tax and that is the "transferee liability provisions". As stated above, employment tax money is not the employers money. The second the employee earns money the employment tax associated with that money is owed to the government in behalf of the employee. All to often a business in trouble will "borrow" the employment tax money to stay afloat. This also includes tips that the employer is made aware of, that is if the employer is made aware of tip income the he/she is liable for the employment taxes on the tips and should withhold the employees half. As stated above these are collections matters and there are some complex statutes involved and should be handled by someone who specializes in such matters.

[Opti]

Jul 22, 2015 18:07:28 GMT -5 TheOtherMe said:

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?

I'll make it simple. I declared BK because I got $90K in medical bills in 2010. My income was less than $20K.

Where did the money go - to rent and things I could not afford otherwise. Obviously I did not pay enough in estimated taxes and it took me a long time to recover to what was done to me prescription medicine wise in 2010.

I'd reading a book on athletes. The IRS does give max penalties to those it thinks are hiding things. I am not, but my guess is they believe I am making money under the table. Do not know. My house was sold in 2007 at a 5 figure loss. I was not able to use even half of it on my taxes that year.

ETA: It really is complicated and I really prefer not to explain because no one wants the facts unless it allows them to thumb their nose at me.

[NoNamePerson]

Just wondering if they have started withholding the garnishment from your pay at work? That alone should be reducing the debt some? Oh, and is your employer submitting the monies withheld to the IRS?

[TheOtherMe]

Aug 17, 2015 7:27:12 GMT -5 Opti said:

Jul 22, 2015 18:07:28 GMT -5 TheOtherMe said:

I'd reading a book on athletes. The IRS does give max penalties to those it thinks are hiding things. I am not, but my guess is they believe I am making money under the table. Do not know. My house was sold in 2007 at a 5 figure loss. I was not able to use even half of it on my taxes that year.

Of course the IRS throws the book at anybody they think is hiding things.  Why wouldn't they?  If you are in a business that lends itself to receiving cash, there is a reason to think you are taking money under the table.  I saw a man once during an audit put cash in a cigar box under the cash register.  Found out where he spent it also.

[rangerj]

Did you have an attorney handle the bankruptcy?  The tax issue should have been resolved in the bankruptcy and an attorney should of made sure that all the legal "T's" were crossed and "I's" dotted. If everything was done correctly the taxes owed should have been eliminated.

[Ombud]

rangerj

Opti said:

the lawyer who did my BK as pro bono work for Legal Aid

I'm not slamming those who do pro bono work but sometimes you get what you pay for. Opti is there anyone who can gift you money to have a qualified CPA help you out with this?

[rangerj]

Again, the Offer in Compromise process should resolve this problem.