Accepted Answer

Hello jmh,

There is a chance that you may have some of the penalties waived from your assessment, but the IRS will never waive any interest that is due on unpaid taxes.

In order to have penalties waived or reduced, you must be able to show reasonable cause as to why the taxes were not paid when they were due. There is no defined list of what may constitute reasonable cause, but just as an example, it might be if you had a terminally ill family member, or you were the victim of a casualty such as a fire or tornado. You must be able to show some reason that would have caused you to not tend to your business or tax matters as you might under normal circumstances. It cannot simply be the fact that you did not have the money to pay the taxes due.

Even liens are hard to have removed once they have been put in place. You would first have to set up an acceptable payment plan with the IRS to pay this tax debt, and you would also have to show that the existence of this lien would likely cause your business to suffer or even close. Even once a payment plan is set in place, the IRS tends to leave the liens in place as a back-up, just in the event you were to default on the payments. So you would have to be able to show them how this could cause your business economic hardship.

There is really not much more that you can do at this point, other than to work with them on a payment plan and try to lay out for them the reasons why this lien would cause your business to suffer. And if you think you can show reasonable cause for why the taxes were not paid when they were due, then of course you should provide that information to them as well.

There is no way to tell you for sure whether or not the IRS will also try to place a levy on your bank account, but they certainly could do so. However, if you are able to work out a payment plan with them, then as long as the liens they have on your property will cover any amount that you owe, they would likely not add a levy to your bank account, as long as you stayed current on your agreed to payments.

I wish I could give you more alternatives here, but unfortunately this is just the nature of how the IRS works. Your only other choice might be to consider taking out a loan for the money you owe to pay off the debt, and at least that would assure you of having the lien removed.

Thank you jmh and let me know if you have more questions.

Expert:	Merlo
Pos. Feedback:	99.8 %
Accepts:
Answered:	9/19/2009

Accountant

25+ years tax consulting. Specializing in returns for US citizens living abroad