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Didn't pay her taxes
Old 03-07-2007, 11:57 AM   #1
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Didn't pay her taxes

I have a friend who is considered self-employed. She hasn't paid any state or
federal taxes for 4 or 5 years. Reason: "I haven't gotten around to it and I
figured I needed the money more than the govt." The state put a summons on
her door and now she is paying $1500 a month. The federal govt. hasn't caught
up with her, yet. Wouldn't it be better for her to contact the IRS before they
find her? I'm wondering if her next christmas card will be from jail. The interest
and penalties must be very high.
Anyone know what happens to these tax evaders?
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Re: Didn't pay her taxes
Old 03-07-2007, 12:06 PM   #2
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Re: Didn't pay her taxes

No answer for you, but this reminds me of back when Harold Washington was mayor of chicago and it came out that he hadn't filed in several years.

His excuse was "Well, you know you get busy around that time of year and I just forgot".

Good luck to your friend, I don't think the IRS is a group you want to mess with !

- John
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Re: Didn't pay her taxes
Old 03-07-2007, 12:13 PM   #3
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Re: Didn't pay her taxes

She may want to read the threads about retiring overseas...
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Re: Didn't pay her taxes
Old 03-07-2007, 12:24 PM   #4
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Re: Didn't pay her taxes

The IRS can be somewhat easy to deal with if you're forthright and PROACTIVE about your circumstances. The key word is: Proactive. "Forgetting to file" or "I was too busy" are the most lamest excuses I've ever heard.

Filing on time and owing a balance that you can't pay is one thing but not filing is bad, bad, bad. From how describe her situation I wouldn't be surprised if they haven't liened her property, attached wages and swiped money from her bank account. You can only run for so long and the IRS and local government entities will eventually catch up with you.
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Re: Didn't pay her taxes
Old 03-07-2007, 12:53 PM   #5
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Re: Didn't pay her taxes

If she owes you any money, get cash from her as soon as possible. I'd predict her bank accounts will be frozen once our friends in the suits & ties find out about this.

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Re: Didn't pay her taxes
Old 03-07-2007, 01:05 PM   #6
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Re: Didn't pay her taxes

Perhaps she should get a lawyer and have him contact the IRS for her.
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Re: Didn't pay her taxes
Old 03-07-2007, 01:18 PM   #7
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Re: Didn't pay her taxes

Is it "worse" to file, but not PAY your taxes, or to do neither?

Just wondering, I know someone who owes a BIG tax to the IRS, but can't afford to pay it.................he is willing to FILE his taxes, but how does he get around not being able to PAY his taxes??
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Re: Didn't pay her taxes
Old 03-07-2007, 01:42 PM   #8
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Re: Didn't pay her taxes

Quote:
Originally Posted by FinanceDude
Is it "worse" to file, but not PAY your taxes, or to do neither?

Just wondering, I know someone who owes a BIG tax to the IRS, but can't afford to pay it.................he is willing to FILE his taxes, but how does he get around not being able to PAY his taxes??
You can negotiate payment terms or ask for relief.
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Re: Didn't pay her taxes
Old 03-07-2007, 01:45 PM   #9
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Re: Didn't pay her taxes

Quote:
Originally Posted by Khan
You can negotiate payment terms or ask for relief.
If you do that, aren' t you setting yourself up as a future "IRA audit magnet"
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Re: Didn't pay her taxes
Old 03-07-2007, 01:50 PM   #10
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Re: Didn't pay her taxes

She NEEDS to get with someone that is knowledgeable about filling taxes for PAST years (may want to stay away from the Sears and other large tax preparers). She will have to gather her data by year for the preparer. I used to do it several years ago and at one time had a person come to me that, like this lady, had not filed for several years. After doing each year it was found that the person did not owe taxes for any of the prior years and all that was needed was to file the returns (both Fed and State). Remember penalties are calculated on a percentage of taxes owed and the failure to file penalty is only assessed if you made enough to be required to file. If you do now owe there is no penalty, in fact this particular person, I remember, actually got refunds since he had been over withheld for the prior years. This is probably not the case here since she was a self-employed person that may not have made any payments. However, depending on the business expenses and/or depreciation she may not have had any taxes due. It is a bit of a chore to go back and do this but I would recommend she needs to do so quickly. The communication with the IRS (other than mailing in the missing returns) IMO is not really recommended since, until the missing returns are prepared she does not know if she owes or not and how much. If she does contact them, without knowing the necessary information, she may be faced with a very quick tax lien from them on anything they can lien. Besides it may be mute as the state may already have notified the IRS. Good Luck.
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Re: Didn't pay her taxes
Old 03-07-2007, 02:25 PM   #11
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Re: Didn't pay her taxes

The only thing she "owns" is her car. She is a travel nurse and takes home
4-5K per month and no taxes are deducted. Just spends it all and has a good
old time. I could never live like that and thank God she doesn't owe me any
money!
I thinks she needs a lawyer, too.
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Re: Didn't pay her taxes
Old 03-07-2007, 02:31 PM   #12
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Re: Didn't pay her taxes

She could arrange for the agency she works for to deduct taxes (like most
people do). She obviously needs to do that since she doesn't have the
self discipline to send in her quarterly taxes.
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Re: Didn't pay her taxes
Old 03-07-2007, 03:41 PM   #13
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Re: Didn't pay her taxes

Quote:
Originally Posted by FinanceDude
Is it "worse" to file, but not PAY your taxes, or to do neither?

Just wondering, I know someone who owes a BIG tax to the IRS, but can't afford to pay it.................he is willing to FILE his taxes, but how does he get around not being able to PAY his taxes??
Failure to file is worse... the time limit for audit starts when you file... if you don't file, you are open for ALL years...

Also, (and this is from a LONG time ago)... the penalty CAN be calculated on the tax amount, not just the taxes owed... so if they wanted to screw you, even if you overpaid they could penalize you on the full tax liability...

And from what I understand.. the states talk to the IRS... so she should be caught soon...
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Re: Didn't pay her taxes
Old 03-07-2007, 03:54 PM   #14
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Re: Didn't pay her taxes

Quote:
Originally Posted by skipper
Just spends it all and has a good
old time.
Therein lies the real problem. I'm willing to bet your friend has/had credit card debt too. As others stated in this thread, she'll need to consult with an attorney. After all years are filed and up to date, she may be able to declare BK and have some prior years released. The BK laws changed recently and I don't know if one could get releases from a Chap 7 these days. Martha would know. Your friend could get square and clean up her act if, and only if, she's proactive about her situation (there's goes that word, proactive again!).
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Re: Didn't pay her taxes
Old 03-07-2007, 06:17 PM   #15
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Re: Didn't pay her taxes

Quote:
Originally Posted by Texas Proud
Failure to file is worse... the time limit for audit starts when you file... if you don't file, you are open for ALL years...
I have an admission, and some questions...

Several years ago, when "younger and dumber", I failed to file for about 3 years. I recieved a couple notices (about 6 years ago) from the irs that I needed to get my ass in gear. Never received anything further once I started filing again. But those 3 years are "unfiled".

I've filed the last several years, and received refunds from both state and fed, with no mention about the missing years. I am absolutely certain that I was due for refunds in the missing years, and I'm aware that it's past the time that I can collect them. I don't have a problem with that (it's my "stupid-tax").

Should I see about getting this straight with the feds/state? The lack of contact, and subsequent successfully filed returns lead me to believe that they're not coming for me. Will this bite me in the butt at some point?

I have some recollection of reading that they effectively 'do your return for you' based on the amounts reported to them by employers/brokers/etc, after a certain amount of time has passed. Since no additional tax would have been due....

So how screwed am I? Are there negative consequences to "catching up" the old stuff? More negative than doing nothing?
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Re: Didn't pay her taxes
Old 03-07-2007, 06:31 PM   #16
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Re: Didn't pay her taxes

mja:

While I am certainly not an expert here, I will offer up my opinion as to what will happen.

What you have done is not strictly within the law, however since they owe you money you aren't going to do any prison time.

I suspect that there is no real penalty (other than lost money that you should have received) to not acting now. They'll let you know if they want a check !
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Re: Didn't pay her taxes
Old 03-07-2007, 08:40 PM   #17
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Re: Didn't pay her taxes

wasn't tax evasion how they got al capone?
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Re: Didn't pay her taxes
Old 03-07-2007, 09:27 PM   #18
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Re: Didn't pay her taxes

yes it was. irs is scarier than god. if you don't pay they can freeze your assets. best to be proactive.
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Re: Didn't pay her taxes
Old 03-07-2007, 09:27 PM   #19
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Re: Didn't pay her taxes

I forgot to report the basis for my wife's stock options in 2004. I get a very nice letter from the IRS stating that they were treating the basis as zero and that I owed them some $40,000 in taxes and $15,000 in penalties. I justed filed an amended 1040 and all was forgiven. However, they do treat this as the worse case scenario.

That being said, your friend is probably getting 1099s so no tax is withheld on them. She needs to find them.
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Re: Didn't pay her taxes
Old 03-07-2007, 10:40 PM   #20
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Re: Didn't pay her taxes

MJA....

I am with Masterblaster.... if you were due a refund who cares if they go back... there is nothing you would owe... and if they have not made a claim against you, and given you refunds... well, seems you are safe...

And remember, they only would look if you were audited... and most agents would not go back more than three years anyhow... now, if you owed money... I would file..

BSSC... the way the IRS thinks... any cash received is income unless you show them otherwise it is not... and no deduction is taken unless you claim it... so, yes they take the worst case and make you prove up the difference.. when you do, no problem like you found out..

IN TRUTH (I and I know I will get flammed for this...) of all the audits I have done for people and organizations, the IRS has been reasonable all the time... they have waived penalties for late filing when someone died, for a charity that was small and had not filed for 3 years... for someone like BSSC who proved up something was not income and BTW we have more deduction (got a refund on that one)...

Yes, they can be the worst to deal with if you don't do what you should... and can do it without going to court.. that is why you stay away from getting there...
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