I owe back taxes for years dating back to '97' thru '02'. Should I deal with the IRS or an outside Lawyer.

Question

I don't know if trying to do my own taxes with all the different tax forms and laws that pertained back then, its pretty confussing. I don't know if the IRS people would be willing or able to reduce my penalitys as maybe someone like H & R Block or some other tax people. Thru the years I have made payments off and on working with the IRS but that was about 3-4 or 5 yrs ago. I have been intouch with the IRS recently but like I said its pretty confussing and I just want to get this over with. What do you think...And thanks in advance for any advice you have...Shelley

Answer 1

The tax law IS confusing. If you don't know what you're doing, or you're not rich enough to write a check for whatever amount the IRS names, then get a lawyer who specializes in tax law. Otherwise you'll either spend a ton more than you may have to, or you'll never get everything cleared up.

Answer 2

As far as the IRS was concerned, all deposits were considered income. You didn't give an explanation in your question as to what those deposits were. They don't have to be from your business to be income. The IRS was not satisfied that the deposits were not subject to tax. All income (e.g. deposits to your bank account) are considered taxable unless the IRS specifically excludes the money from tax. If you had been able to document that the deposits were income but not from self-employment, you might have been able to reduce the additional self-employment tax assessed. From your wording of the question, it appears that this argument is not going to be effective at this point, since the auditor is convinced that you were not fully disclosing your self-employment income. You now don't have money in the bank. If you had money before in the bank, causing you to be audited and assessed additional tax, and now you don't have money in the bank, don't you think the IRS can figure this out? This may be interpreted as an unwillingness to pay, rather than an inability to pay. Once this occurs, the IRS will start to impose levies and liens against you. Any assets you have (including receivables from your business) could be seized. Although your home has gone down in value, it still has some value, and the IRS can put a lien against your house so that you cannot sell it without paying your back taxes. If you do not want to hire a tax attorney, you could probably hire an EA for $100 an hour or so to represent you. However, you best course of action at this point may be to ask for a payment arrangement and make timely payments. A confrontational attitude will not be to your benefit.

Answer 3

It may sound like a good idea to get a lawyer and have him/her deal with the IRS but it pobably isn't a good idea. Let's look at the facts: One, you will still owe the IRS and also owe the lawyer. Two, you may piss off the IRS and they make an example of you. Three, you will still owe the IRS, and may go to jail.

Try this: call the IRS and explain your situation. Ask for a payment plan and ask if they can accept an offer in compromise. This is a legal tactic that the IRS often considers. Tell them that you want to pay your taxes and need their assistance to do so. Get them on your side. They are people just like you and me. They will help you. They are not the devil, they are not evil, but they do feel they are doing something important that keeps our country strong. It doesn't matter whether or not we agree with that statement. They do feel that way.

Now, if that fails, then and only then is it time to get a lawyer (often called blood-sucking lawyer and the basis of many jokes such as, what do you call a 1,000 lawyers chained together at the bottom of the sea. ... a good start). Where do you think those lawyer jokes come from. BTW, lawyers will postpone your case just long enough to increase your fine and interest while you end up paying a pissed off IRS the same amount you would of paid them in the first place.

Get the IRS on your side. Schedule an appointment and treat them with the same respect you want yourself. Then you can check out alternate avenues. If you do check out alternates then ask to have your case reviewed by the TAX ADVOCATE. His web link is here: http://www.irs.gov/advocate/index.html

Good luck. I have been there myself. Oh, btw, your credit record will be affected if you don't settle with them quickly and it stays on your credit record for about 7 years after you pay them off.

Answer 4

Don't go to H&R Block for something like this. They're OK for doing returns that aren't real complex, but this is a bit out of their range.

Whether to hire a lawyer or deal with it yourself depends on how much you owe. If you have a business, it can get pretty complicated, especially if you have employees. If you're an employee, should be pretty straightforward.

I'd talk to the IRS and tell them what parts you don't understand - but don't sign anything. If you're still confused after talking to them, talk to a tax lawyer, CPA or enrolled agent - not H&R Block.

Good luck.

Answer 5

You should absolutely seek the advice of a qualified tax attorney. In most cases you can "negotiate" with the IRS and pay much less than you think you owe. If it is a matter of bankruptcy then you have even more leverage with the IRS. But you must get an attorney to help navigate these waters.

Of course, it depends on how much you owe the IRS. If it is a substantial sum ($100k+) then an attorney is cost effective. It is considerably less, then using a CPA to help is probably best.

Answer 6

Get an attorney if taxes are 7 years are older they go away only deal with years that are 7 or less years however if you have contacted them to discuss taxes older than 7 years it opens the door for another 7 years so be careful also they figure things out based on your ability to pay if you can pay everything you owe at 1 time they will give you a discount if you need 24mos to pay it will be a little more

Answer 7

You can deal with the IRS directly. I too owed taxes and called them. They were very helpful and understanding. I did a payment plan and it worked for me. Good Luck

Answer 8

In addition to lawyers and accountants, an enrolled agent can be a good choice. These are often former IRS employees who know the ins and outs, and they may charge less than an attorney or CPA.

Answer 9

I would deal with the IRS directly. If you use a lawyer, you'll owe him a bunch of money, on top of the IRS payment. I think the IRS will cut you a deal.