Hi there. I am sorry to hear about the situation. If you already contacted Tax Adviser, she or he will advice you what you need to do to next. The bad news is you are still responsible for what's on your return, regardless who prepared it, you, a friend, or paid preparer. Here's the good news. If you agree on an installment agreement aka payment plan and you don't skip the payments and make reasonable effort to pay it back as soon as possible, IRS will cooperate with you. Unless amount you owe is huge, they will not place a lien on your house. But don't expect any refund until the balance is paid off. What you should be concerned about, however, is the state. If your federal return is audited and changed, state will receive the changes made to your federal return and they will recalculate your state return. Usually state use all resources available to collect their revenues, including collection agencies, liens and reporting to credit agencies (TransUnion, Equifax, Experian).
I expect the amount to be around 25-45k. Is that huge?
And my adviser plans on informing the state of the changes before they contact me. So is that good?
everything over 25k is a big number. If you contact state before they contact you, you might avoid some penalties and late fees.
So there's a possibility they might place a lein on my house? I've only been in it for roughly 8 months. :-(
If I agree to a payment plan, will it prevent a lien?
Sorry. I'm still fairly young and I'm trying my best to figure out what to expect.
Chances are they will. But it doesn't mean they will take it. Lien is place as guarantee until the balance is paid off.
So I could lose my house even if Im making the payments?
You should also contact the agency who prepared your taxes, they should be responsible for penalties and late fees.
If you have lien on the house it doesn't mean you will loose it as long as you make payments.
It is like collateral, a guarantee. If you stop making payments than yes, you can loose the house.
Okay. Is it any way possible to prevent a lien? So far they are only asking for supporting documentation for my 2010. But I told my adviser the truth about the things that my tax person did.
So the adviser is working up something to present to the IRS ebfore they go back all the years.
It is too early to say. You need to submit paperwork they ask for, amend your returns if needed.... it takes month before they reach the decision
... and with the tax season just started and all the changes they are proposing, don't expect decision any time soon.
probably 6 - 8 months
Alright. Thank you. Sorry if I sound repetitive. But do you think they will try to work with me on this issue as long as I'm trying?
IRS usually will.
State is more unpredictable.
okay. now what are some the disadvantages to having a lien on a house?
One of the reason I know is that you might not be able to refinance your mortgage, it might effect your mortgage payments....
Okay. Thank you.
But my adviser should be trying to prevent all of this right?
Okay. Thank you so much. I pray that the only thing I get hit with is monthly payments.