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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11861
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I have tax debt. I owe $8,000 from 2015. story. I figured I

Customer Question

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
Expert:  Lane replied 1 year ago.

Hi,

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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.

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

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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.

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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).

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

Expert:  Lane replied 1 year ago.

I hope this has helped.

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

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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.

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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.