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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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Hey Wayne, I have not filed my personal or business taxes

Customer Question

Hey Wayne,

I have not filed my personal or business taxes in 4 years! I have them finished and I owe $110,000 and only have $30,000 to pay. How can I work this out with the IRS? I rent my home and I'm scared I don't know how to go to them and work this out.
Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.

There are a couple of options you may try in attempting to settle a tax debt with the IRS.

The first is an Offer in Compromise (OIC) where you basically try to settle your debt for an amount that is less than what you actually owe. You must know ahead of time that the majority of OIC's end up not being accepted. The IRS will generally not consider an OIC if they think that the taxpayer has the potential to pay the debt in full either as a lump sum or through an acceptable payment plan. However, if your assets and income are limited, then an OIC might be something you want to try.

Here is a link to a section of the IRS website which will give you the details involved with an OIC, including the information needed to file.,,id=104593,00.html

If you do not qualify for an OIC, then you may also try to work out an acceptable installment agreement with the IRS to pay off your debt. Once an acceptable installment agreement is reached, then as long as you stay current on your payments, this will let you avoid having a levy or lien placed on your assets. Please refer to the following IRS information on how to set up an installment plan.,,id=108347,00.html

As far as the money which you currently have in the bank, it is impossible to tell you whether or not the IRS would take all of it or not. There is no formula set in stone which they use. Each case is reviewed independently, but in all likelihood, if they did not take all of the savings, they would take a good portion of it. The only way to avoid this is if you are successful in setting up a payment plan with them, and staying current on your payments.

Although a tax attorney is not absolutely necessary, because of the amount of your tax debt I would highly recommend that you use one. Dealing with the IRS on these issues can be quite complex, and a tax attorney will have the experience that I think you will find helpful in your IRS negotiations, and you are more likely to have a successful outcome in getting this tax debt settled.

If this was helpful, please press the Accept button. Positive feedback is also appreciated.

Thank youCustomer and best of luck in getting this resolved.

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