Dealing with IRS on behalf of Step Daughter

[jimnjana]

Step Daughter wants me to conference call w/her and the IRS. Long story short, she owes the IRS from 10 yrs ago and now the IRS wants to collect. She is on SS Disability and a few years back bought a home through a USDA Rural development program. Additionally, she works part time as a customer service rep at Amazon. She is on disability for mental health reasons and other than the home and 20 yr old car has no other assets(she likely has a few hundred in the bank but also likely has 2-3k in credit card debt). About six months ago I told her she should try to negotiate a settlement (that is about how long we have known about the issue). I don't really know what advice to give her. My strategy on the cc with the IRS is to get an understanding of options she has for repayment. She is convinced that she paid the taxes, but has no proof. The IRS has no ability to confirm that they received the debit card payment from that long ago. The letter she received gave her a specific date they would freeze her bank account etc. but I find it hard to believe they will go after her to the extent of seizing her home. thoughts? advice?

thanks

 

[Rambler]

Do you know the amount they are after?

 

[Texas Proud]

Is this a scam

When was the tax assessed? I know there are probably exceptions, but I would look into this... I would challenge them that they lost their ability to collect...

Now... it looks like if the taxes were assessed then they do have 10 years go collect.... (news to me)...

For most cases, the IRS has 3 years from the date the return was filed to audit a tax return and determine if additional tax is due. After the IRS determines that additional taxes are due, the IRS has 10 years to collect unpaid taxes.
​

How Long Does the IRS Have to Collect Back Taxes




Read this about collection process and appeals....

https://www.irs.gov/pub/irs-pdf/p594.pdf

 

[USGrant1962]

Is this a scam

Good question. Going back 10 years sounds very fishy. Does she have multiple letters from the IRS documenting this, or just one threatening to seize her bank account?

If not it may be a scam. https://www.irs.gov/uac/tax-scams-consumer-alerts

If it is real, you probably need to get some legal help, depending on the amount.

 

[FlaGator]

I vote scam.

For all their shortcomings, the IRS knows who paid what and when. My understanding is they only reach back that far in the case of fraud. They typically do these things via mail as well.

Ask for a meeting, and the local office address, phone and supervisor contact info.

 

[REWahoo]

I vote scam.

For all their shortcomings, the IRS knows who paid what and when. My understanding is they only reach back that far in the case of fraud. They typically do these things via mail as well.

Ask for a meeting, and the local office address, phone and supervisor contact info.

^ What he said. My experience says all dealings with the IRS are via US mail or, to a far lesser extent, in person at an IRS office.

 

[powerplay]

Consider talking to the bank she believes she made the debit card payment through. They should be able to do research and find out if the payment was ever made. It will likely cost money for the research, but could be a lower cost place to start.

 

[Taxman59]

The IRS generally doesn't take Debit Cards. I vote scam.

 

[cathy63]

The IRS generally doesn't take Debit Cards. I vote scam.

Yes they do! https://www.irs.gov/uac/pay-taxes-by-credit-or-debit-card

You can also pay by debit card when e-filing through a 3rd party, which is probably what OP's step-daughter did.

 

[ivinsfan]

The IRS says she didn't so how would they confirm a non-payment? It would be the bank she used that might help her track it down.

Have you seen the paperwork from the IRS yourself? In other words are you certain this isn't a scam? In fact if your SD has certified mental health issues,this should be a fairly easy route to some sort of monthly auto-payment if she has even a few bucks a month to pay on the debt.

It sounds as though she doesn't have money to pay a settlement either, so how would that help her?

 

[jimnjana]

Consider talking to the bank she believes she made the debit card payment through. They should be able to do research and find out if the payment was ever made. It will likely cost money for the research, but could be a lower cost place to start.

She tried this, records don't go back that far.

 

[jimnjana]

Do you know the amount they are after?

5k plus penalties and interest I believe.

 

[jimnjana]

Is this a scam

When was the tax assessed? I know there are probably exceptions, but I would look into this... I would challenge them that they lost their ability to collect...

Now... it looks like if the taxes were assessed then they do have 10 years go collect.... (news to me)...

For most cases, the IRS has 3 years from the date the return was filed to audit a tax return and determine if additional tax is due. After the IRS determines that additional taxes are due, the IRS has 10 years to collect unpaid taxes.
​

How Long Does the IRS Have to Collect Back Taxes




Read this about collection process and appeals....

https://www.irs.gov/pub/irs-pdf/p594.pdf

Thanks for links. Don't think it is a scam. She has received letters in the past, from what I understand. Think it is more of a case of her neglect of the issue...

 

[jimnjana]

Yes they do! https://www.irs.gov/uac/pay-taxes-by-credit-or-debit-card

You can also pay by debit card when e-filing through a 3rd party, which is probably what OP's step-daughter did.

This is exactly what she claims. The IRS used three different third party processors and none of them have records going back that far (according to her)

 

[Blue Collar Guy]

well, i got audited, make sure its not a scam , ie call the irs 800 number, assuming its legit, how much back money is owed?, if its a manageable amount they will do a 2 year payment plan, with zero hassle, fyi , after she settles with the irs, if her state has a tax they will send her a letter that she now owes them some money too,if its not big bucks you can make it an early inheritance gift and pay it off for her, dealing with them is not fun, getting it over with is a huge relief, you said she had mental health problems, this could add to her stress, it sure added to mine,

 

[jimnjana]

The IRS says she didn't so how would they confirm a non-payment? It would be the bank she used that might help her track it down.

Have you seen the paperwork from the IRS yourself? In other words are you certain this isn't a scam? In fact if your SD has certified mental health issues,this should be a fairly easy route to some sort of monthly auto-payment if she has even a few bucks a month to pay on the debt.

It sounds as though she doesn't have money to pay a settlement either, so how would that help her?

I know, the IRS makes the rules. I'll try to get her to send me the ltr she received as well as tax transcripts for the year in question.

I told her six months ago that she needed to clean up situation. She tried to but she isn't exactly the easiest person to talk to when she is stressed..., subsequently she started to work at Amazon and she had one month where she exceeded her SS disability income limit (thus getting her knocked out of SS and Medicare, subject of another thread for another day). This is likely the reason a flag went up at IRS that she now had some income they could go after.

 

[jimnjana]

I vote scam.

For all their shortcomings, the IRS knows who paid what and when. My understanding is they only reach back that far in the case of fraud. They typically do these things via mail as well.

Ask for a meeting, and the local office address, phone and supervisor contact info.

She may not have filed. Back then, she was in a bad place mentally. I know she underpaid her taxes when she did file, her withholdings were a fraction of what they should have been. Fraud, I'd say so on the facts, but I don't know if IRS would take into account her mental health in the matter.

 

[ivinsfan]

Well if it comes to that, they might knock-off the penalties and interest due to her circumstances. Can she manage a couple of hundred bucks a month?

At this point her insisting she paid is not going to help her without some proof of payment. Most likely, she didn't pay it as it sounds as though 5K would have been a huge amount of money for her to come up with at one time.

 

[pb4uski]

If the IRS wrote us a letter saying that we did not pay taxes from 2006, how many of us would have proof of payment that far back? Very few I suspect... I know that I would not since I don't get cancelled checks and haven't for a very long time.

I think you/she would be well off to consult with an experienced tax practitioner to help her navigate this issue. I wouldn't think the IRS would want to spend much time on a $5k claim from someone who has meager resources... much bigger fish to fry I would hope... which is part of why the whole saga seems so suspicious to many of us.

 

[Brat]

I agree you need an experienced tax practitioner.

 

[ivinsfan]

This young lady has a negative net worth and little income, a tax practitioner will have to look at all her records, get up to speed and then rep her with the IRS, how is she going to pay for this?

As for proving her payment she either didn't make it or the IRS credited it to someone else and the young lady never noticed or followed up on the missing money?

FWIW the IRS is pretty good about matching money to SS number and tax returns and I'm in the she didn't actually pay the money camp. In fact, it sounds like a version of the check is in the mail.

 

[Brat]

Dad could pick up the tab for the tax practitioner.

 

[ivinsfan]

Dad could pick up the tab for the tax practitioner.

If step dad wants to help I'd suggest some money to the IRS, because she probably is going to have to pay that anyway.

 

[Taxman59]

Yes they do! https://www.irs.gov/uac/pay-taxes-by-credit-or-debit-card

I know that you can use Debit and Credit cards, that was a brain fart. I was thinking about the prepaid cards being sent in to a PO Box. Those are scams.

 

[Texas Proud]

If the IRS wrote us a letter saying that we did not pay taxes from 2006, how many of us would have proof of payment that far back? Very few I suspect... I know that I would not since I don't get cancelled checks and haven't for a very long time.

I think you/she would be well off to consult with an experienced tax practitioner to help her navigate this issue. I wouldn't think the IRS would want to spend much time on a $5k claim from someone who has meager resources... much bigger fish to fry I would hope... which is part of why the whole saga seems so suspicious to many of us.

But I do not think the OP is telling us the whole truth.... and what is being left out is huge....


I think that the IRS sent a letter many years ago saying she needed to pay taxes... she probably ignored that letter and all the other ones she received over the years...

I think that she might have done a different tax return and actually paid using her debit card... but the IRS has payments by years and since they were for a different year they have not looked to see....


Now that it has been 10 years, they are coming after her big time because they have to collect now or never....


I just checked to see... I can only get stmts from 7 years ago which is what a bank is supposed to keep... however, I do have all the tax returns that I ever filed and the supporting docs.... now, I do not think that I put any checks that I wrote into the file... but, I did not do that often... now I just have them ACH the money....