Hello all, I hope someone here can help with this. This will be a somewhat long post but I'll try for the condensed version. My wide died of cancer in May 2004. She was very sick, in & out of the hospital the last few months of her life. I did our taxes & we owed about $1,100.00. We did not have the money to pay it, so I followed the advice of a tax preparation agency and did not file the tax return. I know this was not the right thing to do, but at the time I was not concerned with filing our taxes. My wife was struggling with termnal colon cancer and I was only focused on helping her. The first year after she died, I gave no thought to the taxes we owed. I filed our last "Married Filing Joint" return last year thinking the IRS would apply our refund to the previous year's tax bill and bill me for the difference. They instead sent me a refund check, which I kept. Then in July last year the IRS sent me a letter advising I owed the previous year's tax plus penalties and interest, a total of about $1,500.00. I set up a payment plan with them, $50.00 a month and acknowledging any future tax refunds would be applied to the 2003 tax debt till it is all paid off. My question is, I have so far paid the IRS $300.00 but my balance owed to them is still $1,400.00 on the original $1,500.00. At this rate I will never get them paid off. Has anyone here had any luck negotiating with the IRS for a lower bill on a situation like this? I did write a letter to the IRS explaining what happened, but it apparently had no effect in reducing my tax bill. I filed my own taxes for 2005 last week, I am due a refund of $428.00 which will go towards the 2003 tax bill. I have the money to pay off the difference, but am curious to know if anyone knows whether it could be reduced if I try to negotiate a lower amount with the IRS? I'd like to get the IRS monkey off my back. Any insight or info would be greatly appreciated... JamesN710
Go to www.debtorboards.com then scroll through the sections for "Ask the Experts: IRS Problems? Ask the Enrolled Agent". He could help.
Your answer is "probably". You'll want to ask about a request for an interest and penalty "abatement". Under circumstances such as yours there's a pretty good chance you'll get it. This would knock it back down to principle only. GL. : )
Penalty Abatement For those who have tax debts, it is no secret that the IRS will quickly asses penalties and late fees. The interest, though reasonable, still accumulates at a significant rate and can add to your overall liability and make it harder to pay the IRS back. If you have a large amount of back taxes, and the original balance was much lower than it is currently, penalty abatement may be a good option for you. Penalty abatement allows an individual to dispute interest and penalties for a certain period of time based on several reasons: Reasonable Cause - If you weren't aware fully of tax law code, had a death in the family, have a serious illness or weren't able to file, you would qualify for penalty abatement. Administrative Waivers- If you have had an unfortunate hardship like bad advice from a tax professional, natural disaster, death in the family, first time filing taxes, fixed income, mental diagnoses, lengthy unemployment, lost or destroyed financial records, drug or alcohol problems. IRS Error - If the IRS made a mistake on the processing of your claim or if the IRS gave you bad advice on how to file your taxes. As with all dealings with the IRS, it can be frustrating and time consuming trying to plead your case with them. If you persevere you should prevail.
