I'm sorry for your troubles, but it is not surprising. Reality is that resolving IRS issues is in many ways quite deterministic. Behind "the curtain," the government
has very strict rules
and only where the law
is ambiguous do things get sufficiently murky to make for an argument.
The result of all of this is that 99% of all income
tax issues have an extremely narrow range of solutions, and your representative must try to make things seem a lot more mysterious in order to make the high cost of representation seem to be worth the price of admission.
In your circumstance, when you don't file a return, the IRS will do nothing, perhaps for years, and then it will send out a substituted tax return and assess a tax liability
, which then requires the taxpayer to file a return rebutting the IRS's "guesstimate" of the tax liability.
So, the answer to the first question of whether or not you can file your own returns using a commercial software package, is "yes" -- unless you have some unusually complex tax issues, such as may be involved with allocation of expenses or depreciation
associated with a business enterprise.
Assuming that you can file your own return, then once you do, the IRS will want you to pay the taxes, plus interest
compounded daily from the date when the original tax return was due, based upon the short-term fed rate
applicable to each quarter year during which the tax was due, plus a 5% penalty for each month that the tax return was late, up to a maximum of 25% per return.
Conversely, if you are owed a refund, then the government would owe you interest at the same rate (but without the penalty), and you would owe a penalty of $100 for any return where you were late in filing (which can be waived by the IRS phone rep).
The sum of all of these calcuations represents your tax obligation. If you cannot pay, then you can request an installment
plan, or you can make an offer in compromise, for approximately what the IRS would be likely to be able to collect during the next 60 months from you.
And, if you can manage to squeeze by until all three tax returns
are at least three years beyong their filing date, plus another 240 days from the date when the tax was actually assessed (typically, the date that you file your returns), then you can wipe out all of the tax liability by filing for bankruptcy
If you don't pay, and you can't make any payment arrangements, then the government will garnish your wages according to the IRS rules for garnishment, which basically will leave you with about 15% of your after-tax disposible income, until the debt is paid. And, if you have any assets
, such as a home with equity, then the IRS can levy/seize those assets and sell them to satisfy your tax obligation.
That is the whole
deal. In my view, the only time that you actually need a professional to represent you is where there is something over which an argument can be made, or where you simply don't understand what's going on, and you just want someone to deal with it for you -- because the stress is too great, or of course, where the government intends to levy your assets or investigate you criminally.
The IRS very rarely conducts criminal investigations, because throwing taxpayers in jail costs the government more money than the taxes to be collected, and unless the taxpayer is working, there's no way to collect or obtain future taxes.
In sum, from what you've described, you need to prepare your tax returns, file them and then figure out if you can negotiate a payment plan that will permit you to have a life, going forward. And, you may want to have someone else prepare them, just because you appear to be stressed by the whole affair. As for whom to use, in my view, an IRS Enrolled Agent or CPA is the minimum required. You do not need a tax attorney (yet), because they are generally lousy accountants, and their use is mostly where there is an arguable dispute to be made.
Hope this helps.
NOTICE: My goal is to assist people who cannot afford traditional legal services. Without your contribution, I will be unable to continue to help others in this forum. I am always available to answering your follow-up questions after you click Accept – however, if you do not click Accept, the website gets paid, and I receive nothing. This is true, even if you are on a subscription plan. So please click Accept, so that I will be able to continue to provide this service for others in the future.