Photo (cc) by B Rosen
I got an email this morning that I want to share with you, omitting only the person’s name and location. (And btw, just to be clear: that’s not their picture accompanying this post.)
Here’s the initial email: I am in a bit of bind and I do not know where to get the help I need from. I am $12,000 in debt to the state and am $95,000 in debt to the federal governemnt. They have been garnishing my tax refunds and now they have put a lein on my house. I cannot remortage or anything to pay them off so how am I supposed to pay them off? Who would I talk to? Not to mention I am scared that they are going to start garnishing all my money in my checking account making it impossible for me to pay all my bills. I am left with no answers and am wondering what to do.
My response: How did you get these tax liens? Did you have a lawyer or accountant representing you when the Federal and state governments said you owed money? Or did you ignore notices from the government and the liens just showed up?
They responded: Well I got these tax liens becaues I owned my own business and didnt pay the taxes that I was supposed to and it built up for about 4-5 years and i just got the papers in the mail yesterday that say i owe 88,0000.00 to the federal governement and 12,000 to the state governemnt. But since I ingored all the papers cause i didnt have the money to pay for them they put a lien on my house (the federal gov is the one with the lien i think) they have been taken my tax returns but that doesnt make a dent in what i owe at all.
My response: Do you have an accountant or know one?
They responded: No we don’t have one..and no I don’t really know a good one. Would an accountant help? How would he help pay off the HUGE amount of debt?
My response: You need either an accountant or a tax lawyer to negotiate with the IRS and try to reduce either the amount you owe or the amount you’re now being forced to pay monthly. Actually, you needed to do this prior to the IRS getting a judgment and placing a lien on your property. In other words, you shouldn’t have ignored the many notices the IRS undoubtedly sent you. Doing that has now narrowed your options considerably. Nonetheless, you should still contact either a CPA or a tax lawyerimmediately and see if there’s anything they can do to help. At the minimum, you might get a break on the amount of the garnishment if you can prove it’s a hardship.
If you have a friends you can ask for a referral, do so. If you don’t, just do a search online: Google “Find a CPA.” When you talk to them (which you should always do before hiring one) make sure they have experience in exactly what you want to do: negotiating with the IRS. Then ask them how much they’ll charge for an initial consultation (hopefully nothing) and how much they’ll charge to do the complete job. Talk to several, pick the one you like best, ,and see if they can help reduce the amount you owe the IRS, or at least the amount you have to pay every month.
And not to be bitchy or rub salt in the wound, but from now on, don’t ever ignore notices from the IRS. Even if you can’t pay, that’s a very, very bad idea. As you now know, they have access to both your income, your savings and your property, and won’t hesitate to seize anything and everything if you ignore them. In short, with the exception perhaps of the Mafia, the IRS is the very worst group of people in the world to blow off if they think you owe them money.
The Lesson: When you owe somebody money and can’t pay, ignoring them is usually not your best course of action. But ignoring the IRS is NEVER your best course of action, for the reasons I listed above. Unlike other creditors, the IRS can and will simply decide what they think you owe and when you ignore them, they’ll take it. If you respond, however, they will often reduce the amount considerably (for example, much of what people owe is often penalties and interest, which the IRS will sometimes forgive) and make less onerous payment arrangements.