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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13314
Experience:  15years with H & R Block. Divisional leader, Instructor
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I have worked out a payment plan with the IRS to repay back

This answer was rated:

I have worked out a payment plan with the IRS to repay back taxes.
Depending on the outcome, I may get a settlement for a lawsuit for lose of revenue to my company due to another companies negligence.
Will the IRS take the amount to pay the tax balance?
The balance is approx. $85,000
The settlement could range from $90,000 (after lawyers fees)
To $260,000 (After Layers Fees)

Thank you, Ken

Robin D :

Hello and thank you for using Just Answer,
If you are in a payment plan (installment agreement) the IRS does not pursue enforced collection procedures. As long as you do not default on your arrangement the IRS does not levy payments.

Robin D :

They will take refunds though while an installment agreement is active and they will leave liens in place (if any have been processed).

Customer:

That's good news.

Customer:

I have one more question. I am sure the settlement itself is taxable? If I agreed on annuity payments is that also taxable?

Robin D :

It would depend on what the settlement would be for.

Robin D :

If it is to pay an amount that would have been taxable to you anyway (wages) then yes

Robin D :

If it is for a physical injury then no, except for any part that was used as a medical deduction in a previous year.

Customer:

Loss of revenue to my business.

Robin D :

Taxable, unfrotunately

Robin D :

unfortunately* sorry

Customer:

OK, that is understandable.

Customer:

Well, thanks very much for your time. I will be sure to give you a good rating.

Robin D :

You are most welcome

Robin D. and 2 other Tax Specialists are ready to help you

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