failure to file

[Possi]

I have a new client who was referred to me. He hasn't filed in forever... and I mean forever. After spending 18 months up the river for DUI, he is now ready to pay the piper.
I have prepared returns for 2001, 02, 03. He was "away" all of '04 and had no income in '05 either, since he got out late in the year.
I spoke to IRS and VA (state) but still do not know what to do when filing these returns. I want to acknowledge the tax liabilities, and avoid garnishment. If both Fed and State garnish, he won't have enough to live on.
Do we send whatever he can afford with an installment agreement request? The installment agreement request would not be attached to any particular year.
I told him I would not want to do an OIC because I have not been successful at it. Is there a website of successful OIC enrolled agents who might not charge the fees of lawyers and CPAs?
Thanks!
~possi

[jainen]

$50 or $100

They won't attach wages if he is making regular payments. Just pick a small number that you know he can commit to, like $50 or $100.

[Unregistered]

While I agree in principle with the above post (i.e. continued payments on an IA will keep the IRS content), your ability to offer a small amount such as $50 per month is dependent on the outstanding liability. Under 10K, an IA is automatic - under 25K, the IA is streamlined - no financial data is required and virtually automatic. But over 25K, you will need to do financials via Form 433 and while the amount of $50 or $100 may very well be appropriate, you will need to demonstrate that it is.

You can search for EAs on www.naea.org - there is a search option for representation work.

New York Enrolled Agent

[Possi]

thanks

The IRS agent said if I'm not doing an OIC, that $70 would be the least they would accept. I'm hoping he can borrow it from a family member and pay it back that way. Is that good advice?
Thanks again.

[ED SMITH]

I find it strange that the IRS would mention any figure. They usually don't discuss payment plans until ALL returns have been filed. If his numbers are such, he can go on temporarily uncollectable status (code 53), which will be reviewed every six months.

His monthly income minus his allowable monthly expenses will usually determine how much he will have to pay on an installment agreement. The financial statements can be done over the phone, without any paperwork (under $25K), and are not verified as with an OIC.

You should know what the National Standards are for you area, so he doesn't exceed the allowable expenses for rent, transportation and food/clothing/misc. They are available on the IRS web site. The last category is a given and you are allowed to take the maximum amount. Also, be prepared to break down the categories, such as utilities into gas, electric, water, etc.

I have done a number of these cases and they can be very time consuming, so charge by the hour. Good Luck.

[Possi]

What an enlightenment

Ed, thank you so much for the information. The IRS gave that figure on what the numbers were so far.
We filed the prior returns and are waiting for the loveletter to come. In the meantime, I will get to the website and find the information I will need.
I feel so much better when I am prepared for what is to come.
... and I will charge by the hour...



~possi