Filing Back Taxes

momtotwo__2May 4, 2008

I'm very concerned for a close friend of mine. He has ADD really badly and has procrastinated filing taxes for the last several years. He has wanted to do it, but is worried sick because he doesn't have the money to pay the taxes and penalties that he owes. He is not trying to be dishonest, but is truly concerned about the money that he will owe and knows that it is continuing to add up. Does the IRS put people in this situation on a payment plan? How do they handle it? He cannot continue to go on like this and doesn't want to.

He is losing sleep and it's really affecting his life.

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There's a wealth of information simply by Googling 'filing back taxes'. Would be wise for your friend to get ALL his papers together since he stopped doing his returns and hire a tax professional - simply to have an advocate when dealing with the IRS. And yes, even though the IRS can't distinguish procrastination from evasion, they are generally pretty open to working with people and setting up payment plans, etc.

However, with your friend's ADD, you or someone will have to do some hand holding to make sure he sticks to the repayment schedules, etc. The IRS is accommodating - but only to a point.

    Bookmark   May 5, 2008 at 2:22AM
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The first step is to get the back taxes completed and filed.

If he lives within a reasonable distance to an IRS office, I suggest he take the returns to that office. The IRS employees can help him set up a multiple year payment plan.

Also, if making the payments is a concern, the IRS will debit the monthly payment from his checking account, if authorized to do so.

    Bookmark   May 5, 2008 at 7:40AM
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I know from expereience with un-filed tax returns, if you come forward it's better. Get your records together, file the back taxes. You can request they waive the penalties and interest, because of personal problems like health or frequent job changes or moving around or inability to obtain records, etc. And when you know the sum total of what you owe, the IRS will accept monthly partial payments of whatever you can pay. When you file, pay as much as you can and include a letter showing how you plan to pay the balance. I owed about $4000 and they let me pay $400 a month out of my checking account.

    Bookmark   May 5, 2008 at 9:31AM
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IRS interest and penalties can make your local loan shark's rates look good. On the bright side, the IRS would much prefer your money to putting you in jail and won't send anyone to break your legs. After all sitting in a federal prison costs the government money so they're more than happy put you on a payment plan.

Your friend should hire a tax pro and get his returns filed. If he had a diagnosed medical condition, a letter from his doctor may help convince the IRS to waive penalties and/or interest charges.

Not filing is evasion and that's how they got Capone. ;-)

    Bookmark   May 8, 2008 at 8:26AM
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Encourage him to get a pro, and to act now.

It can only get worse, in all arenas.

Remind him of the "removing a Band-Aid" tactic--pull it off fast, it'll be over sooner.

And in his case, it'll never hurt LESS by waiting!

i wish him luck.

    Bookmark   May 8, 2008 at 2:44PM
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