Owe Back Taxes? HAGGLE over the sum with the IRS. THEY MAKE ALLOWANCES!
This was in my morning paper, the "Valley DAILY NEWS" today. It sez, we
can HAGGLE over amt owed and get a real tax break!!
"An (IRS) field revenue officer has more authority than the president..."
BY BARBARA CORREA, Staff Writer
Inland Valley Daily Bulletin
One spring back in the late 1990s, Jennifer Jones decided she wasn't
going to file a tax return.
"I had changed my withholding and took the maximum, and I knew I was
going to owe," said Jones, an executive assistant at The Academy of
Motion Picture Arts & Sciences.
"I thought I would just pay late that year."
But procrastination became a habit for Jones, and by 2002, she owed the
government $70,000 in unpaid taxes, penalties and interest.
No taxes, no wedding
She held off marrying her longtime boyfriend, because she thought her
secret would come out in the process. She didn't tell family about the
predicament. She stopped opening letters from the Internal Revenue Service.
Finally, Jones contacted Michael Rozbruch, a tax resolution specialist in
Encino, when the IRS said it would begin garnishing her wages to pay her
debt. Rozbruch's firm, Tax Resolution Services, spent three years
negotiating with the Feds. In the end, Jones settled her $70,000 debt for
"It's like this fairy-tale ending to this completely wacky story," she
Tax mistakes don't have to ruin your life. But they can if you let them,
which usually happens to taxpayers who bury their head in the sand instead
of seeking help. That's the worst thing consumers can do, say experts,
because there's no creditor like the IRS.
"An (IRS) field revenue officer has more authority than the president of
this country," said Rozbruch. "They can freeze your bank account, freeze
your retirement accounts. They can repossess your car ... I'm talking about
hardcore people who owe in excess of $75,000."
The point is, ignoring the IRS isn't an option. So why do so many people do
Fines on rise
In 2006, the IRS fined 3.7 million taxpayers, up from 2.7 million in 2005,
according to IRS data. The government took enforcement action in the form
of liens on property against 630,000 taxpayers in the same period, up from
523,000 in 2005.
The overwhelming majority of people in trouble with the IRS are in their
situation because they have suffered or experienced something traumatic in
their life, like an illness or loss of job, said Josh Baker, a spokesman
for JK Harris & Co., a large tax representation firm with offices in
Glendora, Ontario, Pasadena, Whittier and elsewhere.
Barbara Garcia stopped filing taxes after she was laid off from her job as
an accounting assistant at a manufacturing company in Torrance. She was
jobless for about a year, living on about $30,000 she withdrew from her
"I just wanted to avoid filing my taxes, but then I was so intimidated I
just let it go for five years," she said. "I knew I would owe because of
the penalty from the 401K ... it was one of my Scarlett O'Hara moments of
just saying, I'll think about that tomorrow."
Her wakeup call came when she arrived home one day to find the calling card
of an IRS agent stuck in her door. Like many taxpayers before her, Garcia
had a negative experience in trying to deal directly with the IRS. She said
the agents were abrupt and referred all her questions to written
Like Jennifer Jones, Garcia finally went to a resolution specialist and
expects to finalize her ordeal this month.
As frustrating as these experiences are, it's even worse when people run
into problems through no fault of their own. Gib Poiry, a retired GTE
executive from Westlake Village, was surprised to learn that his wife had
taken half a million dollars out of her separate retirement account without
Not only had she not told him about it, she kept the withdrawals secret
from the IRS and the couple's accountant. By the time Poiry received a
notice from the IRS announcing an audit based on the failure to report the
withdrawal, the tax penalties had ballooned to more than $100,000.
"I had a very unpleasant conversation with the IRS. They said they would
freeze my bank accounts unless this was resolved, including my Fidelity
retirement accounts," said Poiry.
"I developed hypertension."
Eventually, he went to a tax specialist after failing to make headway with
the IRS on his own. After he filed an IRS form called Request for Innocent
Spouse Relief, Poiry's debt was cleared. His wife's estate did have to pay
it all back.
Theoretically, individuals can resolve some of these tax problems
themselves. But if the amount in question is of any size, it's probably
wise to seek professional help.
"If it's a big debt, you're better off finding someone ... who really knows
the ins and outs," said Mark Cook, a certified public accountant who makes
his living doing taxes of big corporations, but found himself in over his
head after a divorce left him with tax debt from his spouse.
"If you had an issue with cancer, you would not go to a general
practitioner. These guys are specialists in a very specific area."
Rozbruch of Tax Resolution Services said he charges between $2,000 to
$4,000 to negotiate an installment plan, and $5,000 and up to complete an
Offer in Compromise, which is an IRS process by which the government and
taxpayers make a deal about what they are going to pay back.
In looking for help, seek a professional with specific experience in tax
resolution, not just in tax preparation. Tax resolution, like credit
counseling and debt management, is a target for fraud, since it involves
people who are already in a tense financial situation and vulnerable to
scams that promise more than they can deliver. One quick way to weed out
some of the con artists is to make sure a street address is listed on Web
The IRS warns against companies claiming that they can settle back taxes
for pennies on the dollar, although a lot of reputable firms are able to do
just that. Tax Resolution Services keeps a running total of its taxpayers
debt and the settlement amounts, and the average settlement is 13 cents on
Still, it's up to individuals to do their homework and check credentials.
Advisers that would have the correct experience to resolve complex tax
issues would be certified tax resolution specialists, CPAs or lawyers
specializing in that area, or enrolled agents, who have to either pass an
exam or show that they have qualifying experience as an IRS employee.
Indeed, lots of tax cleanup people advertise the fact that they used to
work for the IRS and so they have inside information that gives them an
edge. Whether or not that's true, it's certainly not a requirement for
resolving tax problems effectively.
People who have been through a process with the IRS universally express how
much relief they feel once it's resolved, and how much they regret ever
falling into the situation. "Once you've been audited in a case like this
... from this point on, I'll never try to take advantage on my taxes," said
Gib Poiry. "I don't ever want to go through that again."
If you can't pay what you owe:
File anyway, it will avoid 'failure to file' penalties.
If you miss the deadline (April 17 this year since April 16 is Emancipation
Day, a legal holiday in the District of Columbia), don't panic.
The late filing penalty is
5% a month up to a max of 25% and after 5 you are capped at 25%.
If you are a wage-earner, and have misplaced your W-2 forms and can't get
copies from your employer, IRS can often provide you with the information
Sources: IRS, Daily News research.
KNOW YOUR RIGHTS
Most people are a little bit scared of the IRS. Tax specialists say IRS
field revenue officers have been instructed to be in the field three out of
five days to make house visits. However, taxpayers do not have to let a
field representative enter their home.
See more rights at the California State Board of Equalization Web site: