My wife and I owe about $115,000 in federal income taxes
for 2010 (after paying about $50,000 on time - it was a good year income wise - but we [knowingly] used a chunk of the money for a down payment on a home).
We have been making $2,500 per month payments since November. We filed a 433A information form for self-employed taxpayers along with an installment plan request. We are trying to avoid a tax lien
on our home.
Our accountant today emailed us to report that the agent assigned to our case has verbally rejected the installment plan request, appears to be demanding immediate full payment, is threatening to record a lien next week,and is suggesting that we liquidate our IRA account to pay the tax.
. My understanding is that a decision to reject an installment plan request must be in writing; that we have a right to an appeal, and a right to talk to an immediate supervisor if we want to challenge a decision communicated verbally. I am also concerned about the pressure to liquidate our IRA (and take a tax hit on that) when we have the resources to make installment payments. Further, a tax lien on our home will destroy my personal and business credit, trigger a possible foreclosure on my home by the lender, and thereby make it much more difficult for us to pay off the taxes owed.
We are willing to pay the taxes in full, with interest etc. We just need a payment plan to do so, and without the devastation that a tax lien might create. While in the past I have been late some years in paying income taxes (I am self employed), I always paid in full, and have never had a lien or other collection action taken against me. My credit score is over 720.
We are meeting with our accountant tomorrow. I am beginning to think that she needs to be more aggressive in asserting our position. What do you think? And, what negotiating tips might you have?