Back Tax Question

[goingcrzy]

I just got a letter from the friendly folks over at the IRS. Looks like our old accountant screwed up our 2007 and 2008 returns. I owe about 17K back.

If I do a payment plan, are they pretty agreeable. I saw under 10,000 they have to accept the payment plan. Does anyone know if they scrutinize larger amounts?

Also, I am still in our 7. Am I allowed to set up a payment plan before I get discharged? I am in overtime with our lawyer and I am trying to avoid calling him unless neccesary

[southernbelle]

This comes directly from Form 9465 from the IRS's website:

http://www.irs.gov/pub/irs-pdf/f9465.pdf

Guaranteed installment agreement. Your request for an installment agreement cannot be turned down if the tax you owe is not more than $10,000 and all three of the following apply:

During the past 5 tax years, you (and your spouse if filing a joint return) have timely filed all income tax returns and paid any income tax due, and have not entered into an installment agreement for payment of income tax.

The IRS determines that you cannot pay the tax owed in full when it is due and you give the IRS any information needed to make that determination

You agree to pay the full amount you owe within 3 years and to comply with the tax laws while the agreement is in effect


This comes from the NOLO site for more information on Installment Plans:

http://www.nolo.com/legal-encyclopedia/article-29563.html

The most widely used method for paying an old IRS debt is the monthly installment agreement, or IA. If you owe $25,000 or less, you should be able to get an installment payment plan for 60 months just by asking for it. If you owe more than $25,000, you will have to negotiate with the IRS to get an installment plan.

If you owe more than $25,000 or can't pay the amount you owe in three years or less, your request for an IA begins with an IRS collector's analyzing your Collection Information Statement on Form 433-A. The collector uses the information on the form to determine the amount you can pay. Payment amounts are at the discretion of the IRS. If you deal with eight different collectors, you might end up with eight different IAs!

In my personal experience, the IRS did not talk to me at all about my account until my BK case closed. It might be different in your case but that's how they treated mine.
Hope it helps.

[goingcrzy]

Thank you!

I don't think they know I am in bk. We thought we were up to date on our taxes until today.

Does anyone know if I need to have my lawyer update my forms? Or is this considered debt that occurred after I filed?

Thank you!!! I love this board!

[biotechsolution]

I just got a letter from the friendly folks over at the IRS. Looks like our old accountant screwed up our 2007 and 2008 returns. I owe about 17K back.

If I do a payment plan, are they pretty agreeable. I saw under 10,000 they have to accept the payment plan. Does anyone know if they scrutinize larger amounts?

Also, I am still in our 7. Am I allowed to set up a payment plan before I get discharged? I am in overtime with our lawyer and I am trying to avoid calling him unless neccesary

Since it's not dischargeable it doesn't effect your filing.

You may have to fill out an extensive financials since your amount is over 10K. The IRS allowed expenses are more stingy than the BK expenses. If you can pay it back in less than 3 years it would be considerably easier to set up the plan. Since you are in bankruptcy they may work with you since they know you are essentially insolvent.

[hereforinfo]

Are you sure you actually owe the $17k? I would consult a CPA to look over your documents. A couple of years ago our accountant left out a 1099 for some stocks that we sold. We got a letter from the IRS saying that we omitted this taxable income and owed X amount to them. We panicked. But then with the help of our accountant, we realized that the IRS didn't have all the info they needed. All they knew was that we sold X amount of stock, but they didn't know the amount we originally paid for the stock so they had to assume a $0 cost basis until we amended our return showing the actual figures. In fact, we had sold the stock for a very small loss so there was no taxable gain and we owed nothing. All we had to do was amend the return. Whew! My point is, don't just take their word for it - th IRS only knows what the income is and not the deductions or cost basis until you tell them.

[goingcrzy]

Thanks hereforinfo-

I am going to double check it, but I think it may be right. Our old CPA used some of our business's deductions twice.

[hereforinfo]

Oh, darn. Well maybe if you dig deep enough you can find some expenses that were left off? Good luck.

[qsr]

As far as installment agreements go, you should be able to get one pretty easily for under $300 a month or thereabouts. I don't know how your bk will affect it, but they don't ask a lot of questions if you want to get an agreement going (other than can you borrow the money from someone else--don't do it! You can probably discharge all of the interest and penalties when you get near your payoff.)

[goingcrzy]

Thank you all-

Quick question:

"During the past 5 tax years, you (and your spouse if filing a joint return) have timely filed all income tax returns and paid any income tax due, and have not entered into an installment agreement for payment of income tax."

Since I owe for two years, can I only do an installment for one of those tax years, or can I lump it all together.

And, does anyone know the rule on if they can talk to me during my bk? Hopefully we will get discharged but (as some of you know) we need to go to court to battle the UST. The amount I can afford monthly will vary depending if I lose or win.

I am wondering if I can call them and tell them I am in bk and see if I can wait until discharge to set up the installment plan.

Thanks again!

[OhioFiler]

Thanks hereforinfo-

I am going to double check it, but I think it may be right. Our old CPA used some of our business's deductions twice.

This is hard to fathom. To create a $17,000 shortfall the duplicate expenses would have had to be at least $45,000. Seems like a pretty large "oversight". If he intentionally misrepresented your schedules I'd sue his lazy azz.

[lookingforward]

I've set up payment arrangements with the IRS for amounts up to around 15000.00 with no problem. I think my payment was around 300.00 or thereabouts. In fact, I make a payment arrangement with them every year since our first year in business when I was completely shocked at the amount we had to pay. They are pretty nice in the payment arrangement department.

[goingcrzy]

This is hard to fathom. To create a $17,000 shortfall the duplicate expenses would have had to be at least $45,000. Seems like a pretty large "oversight". If he intentionally misrepresented your schedules I'd sue his lazy azz.

I had another CPA take a look at the returns. He was amazed. He said the IRS can audit all of his clients looking for similar errors. He also told me that most CPAs have some type of liability insurance. I am not the suing type, but this does make my blood boil!

(I should add the other CPA was my brother and thinks I should report the guy)

[goingcrzy]

I've set up payment arrangements with the IRS for amounts up to around 15000.00 with no problem. I think my payment was around 300.00 or thereabouts. In fact, I make a payment arrangement with them every year since our first year in business when I was completely shocked at the amount we had to pay. They are pretty nice in the payment arrangement department.

Thank you! I have been worrying about the multiple payments.

[StartingOver08]

If you find that the $17k is correct (definately check it out), you can lump in both years together and make an installment arrangement with the IRS. I find that actually going to the local office is a lot more effective then talking to the phone reps. Make your payment arrangement for a payment you can easily meet and pay more than the minimum. 5 yrs is the max term they will allow. Good luck.