Anybody ever fight the IRS?

[misterdroid]

I while back I quit the shop I was working at. The guy I was working for tried to get me to come back. I politely and firmly told him no. I thought we parted on good terms, but apparently he was ****ed off about my leaving. The guy is a total dirtbag. He turned in false earning statements to the IRS regarding my income.
So one day, out of the blue, I get a letter from the IRS saying my previously filed taxes were wrong, and now I owe $15,000 in back taxes... from ONE year!
The thing was there was nothing I could really do about it. I make cash, so it's tough to prove what I make... it boils down to my word against his word and whatever hand scribed ledgers we can bring to prove it.
HOWEVER... the guy in question has just recently killed a man (Witness 911 Call: 'Stop Running Over That Guy' :: WRAL.com) and is now accused of 1st degree murder and in the intervening year or so has also piled up some other nice charges (assault, child abuse), thus calling his integrity into question. Now I think I might have a shot to get out of this mess. I have just paid the IRS about $4000, and have a payment plan set up for the rest so I am on top of the matter for now, but I'd really like to clear this up.

Have any of you in megoland gone up against the IRS? Is it a nightmare? Is it time consuming? Am I just going to end up paying a lawyer the $11,000 that I am trying to not pay? Do I have any kind of chance at all? Is it even worth it?

[Hector]

That really sucks man.

I also owe the IRS (about 5K) and are paying them on installments.

It sucks but what else can you do?

[toys2cool]

That does suck dude,nothing worse then the darn IRS

I know my Step dads uncle is fighting them right now also,he just got a letter saying he owes $18K from 1995

[Bionic Joe]

I wish you luck, And not to be funny but if you do end up having to pay try calling TAX MASTERS that are always on tv and see if they can't get it cut down, You have nothing to lose but a little time on the phone

[misterdroid]

I wish you luck, And not to be funny but if you do end up having to pay try calling TAX MASTERS that are always on tv and see if they can't get it cut down, You have nothing to lose but a little time on the phone

Thats funny... I have thought of that. I see those commercials every day before I go to work. I actually have the number written prominently on my last IRS letter... might call 'em!

[mitchedwards]

Guess since you were payed cash, you have no record of what you were paid? If you do have a record, it may help your case.

[Adam West]

I am a CPA and although I do not do taxes for a living nor am I a tax expert, I have completed some tax returns in the past for a few people for a little extra money and did end up with a tax return I had prepared and a friend who was audited.

I really had no obligation to help this person since I was in a position of tax preparer and usually a CPA will charge extra if they take on the IRS regardless of whether or not they prepared your return. This was a friend of a friend so I fought for him and won.

In his case, he owned some property that he had inherited from grandparents. It was farmland, he didn't live there and the property basically sat empty. A storm came through and knocked a bunch of trees down on his property. A person who owned a firewood business asked if he could remove the wood and pay him for the firewood. He said "yes", he was paid cash of about $15,000 and we reported the income and paid taxes on it. Next thing I know, he gets a letter saying he owes self employment taxes so I helped him out, researched the IRS guideline to prove that this was not his principal business and therefore did not owe the self employment tax. It didn't go any further than one appeal letter and the IRS sided with me.

Your case is trickier. It sounds like this guy sent a 1099 to the government. There are three issues that I think are in question. 1. He did not report in a timely manner as required by law. I don't think it would get you out of the tax liability altogether but it would be a good case to make to get you out of penalties and interest 2. It sounds like he did not send you a copy of the 1099 which he is also required to do which again would help with getting out of penalties and interest 3. It sounds like the amount owed is in question. Go back and try to reconstruct on paper what you were paid.

My advice would be to find a small reputable CPA firm in your town and see if they can help prepare a tax return and help with the IRS issue. It is going to cost you but CPA's are not as expensive as lawyers and they are allowed to represent you in front of the IRS. Be totally honest and upfront with the CPA and try to reconstruct what you were paid. I think an argument could be made on your behalf that you do owe some money but since you were not issued a 1099 as required, you did not know what to report on your tax return. Reconstruct it as best as possible, it would help if you can go back to your bank and see if they can tell amounts you cashed, etc. so it gives third party credibility. The CPA can prepare an amended tax return for you and fight the IRS on any penalties and interest. You might not win, but I think that would be your best argument.

[misterdroid]

Your case is trickier. It sounds like this guy sent a 1099 to the government. There are three issues that I think are in question. 1. He did not report in a timely manner as required by law. I don't think it would get you out of the tax liability altogether but it would be a good case to make to get you out of penalties and interest 2. It sounds like he did not send you a copy of the 1099 which he is also required to do which again would help with getting out of penalties and interest 3. It sounds like the amount owed is in question. Go back and try to reconstruct on paper what you were paid.

Thanks!! Those are great points which are all true.
1) He filed the 1099 at LEAST a year late (from what I can tell on my end of the paperwork)... my year owed is from 2005.
2) He never sent me a 1099.
3) The amount is in question, as I filed and paid the taxes owed on that year at the time. And further, I always file taxes, AND pay every year ( I ALWAYS owe). Also I have made a gradually increasing, but mathematically consistent amount for the past 15 years.

Thanks again for the advice! I am making some phone calls tomorrow...