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I have tax debt. I owe $8,000 from 2015. story. I figured I

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I have tax debt. I...
I have tax debt. I owe $8,000 from 2015. Long story. I figured I would try to set up an installment agreement for this amount, and then, try to be smarter next year. But come to find out, I also have an additional $5000 owed from 10 years ago! Surprise! I have tried to set up a regular installment agreement with the IRS, but because the $5000 will fall off the account in September, they are being more aggressive. What they think I can afford is not what I think I can afford. I am an independent contractor and I am moving into my slow season. My hope is that I can hold off until September when this $5000 will fall off my account and then, when I am making more money I will set up a payment plan that I can handle. Is this wise? What can they do to me if I ignore them until September?
Submitted: 1 year ago.Category: Tax
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Answered in 14 minutes by:
6/2/2016
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 year ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,876
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi,

...

Waiting likely works here.

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What they can do is place a tax lien on property, garnish wages, and levy bank and other financial accouints.

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However, if they have not started providing the required notices, you have some time.

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Also, as an independent contractor, they can require backup withholding from your payors (those contracting with your for services).

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The difference, however, between contractors and employees is that a wage garnishment stays in place... and they only have to take one action ... for contractors, they have to issue a new order or every payout/pay period.

...

Many times this becomes too administratively difficult/costly for them to keep doing this over and over, for contractors.

...

If you don't have funds available in bank accounts, and depending on HOW you are paid, waiting this out MAY be an effective strategy.

...

The good news here is that, although leaving the country, bankruptcy and an offer in compromise tolls the CSED date (stops the 10 year clock).

...

An installment agreement doesn't. I'd set up an installment agreement to buy the time to get to that CSED date

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 year ago

I hope this has helped.

...

Please let me know if you have any questions at all.

...

If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the faces or stars on your screen, and then clicking “submit")

I know it takes an extra step, but JustAnswer won’t credit us for the work until you rate.

...

Thank you!

Lane

I hold a law degree (JD, Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security/Medicare, estate, corporate, both for-profit and non-profit, and tax advice, since 1986.

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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,876
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Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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