Question:I stopped paying taxes in 2001, when my long-time employer bankrupted.  I have worked on and off as a sub-contractor since earning about $30K/year but have no assets of value.  I’m getting letters from the IRS.  What can they do except throw me in jail?

Answer: When you owe the IRS money it can be very intimidating to say the least.  They will send you many letters demanding payment and threatening all sorts of things.  However, you do not have to worry about going to jail just for owing the IRS – unless you have fraudulently filed your tax returns or if you have been evading the IRS and your tax liabilities.  Assuming you have not done those things then we can work with the IRS regarding your tax problems and help you through this tough time.

You stated that you haven’t paid taxes since 2001.  I assume that means you have not filed your tax returns since that time as well as not paying the tax due.  So your first step should be to file all of your tax returns due since 2001.  This should help you out all by itself because when you do not file your tax returns, the IRS will prepare one for you.  When the IRS prepares a return for you they do not give you the full benefit of all of the deductions and tax credits that you would be entitled to.  So, generally, when you file your own tax returns you will owe less than the IRS says you do.

Next, we would need you to fill out a form 433-A (or B) so we can get an idea of your current financial situation.  Depending on your personal financial situation you may qualify for an offer in compromise where you can settle your tax debt for less or we may have to look into other tax problem resolutions such as an installment agreement or possibly even currently not-collectible status.