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Answer:
Dear
BuyandHolder,
Yes.
The IRS has the right to pursue anyone who owes taxes.
However, there are also scam artists who do the same
thing. One needs to distinguish between the two. I
suggest that to do so, you turn to an expert, either
a certified public accountant or an enrolled agent
-- both are qualified to represent taxpayers before
the IRS.
If
you need help in locating a professional tax preparer,
ask your lawyer for a recommendation or find an Enrolled
Agent in your area at: www.naea.org.
Obviously,
it is important to settle up with the IRS. Your "friend"
has several options.
Paying
by credit card
Your
friend can pay his taxes by credit card and then make
monthly payments to the card company, just as he would
on any debt. The IRS accepts Visa, MasterCard, the
Discover Card or American Express.
Caution:
There is a 2.5% convenience fee -- which goes
to the credit card processor. It's based on the amount
to be paid. He will also have to pay any interest
incurred on his credit card.
The
installment plan
Another
alternative -- he can apply for an IRS installment
agreement, provided all his returns have been filed.
He will then make monthly payments by mailing in a
check or by automatic withdrawal from his checking
account.
There
is a $43 fee to set up this type of agreement. Interest
will be owed on the balance. To apply, use Form 9465,
"Installment Agreement Request," which can be downloaded
at: www.irs.gov.
Here
come the debt collectors
The
IRS recently announced that it is planning to use
private debt collectors to rake in as much as possible
of the $76 billion owed in uncollected taxes. Apparently,
some $30 billion is currently unpaid just because
the IRS does not have the manpower to go after it.
You
may recall that several years ago, Congress made it
more difficult for the IRS to be "heavy handed" in
its collection policies, and thus we were introduced
to the "kinder, gentler IRS." But now, as part of
President Bush's tax cut bill, the IRS will be able
to use approved private collection firms.
The
collection agency, in turn, will keep a percentage
of what they collect -- perhaps as much as 25%. The
collection agencies will be allowed to contact taxpayers
by letter or phone. The taxpayer, in turn, can negotiate
either a lump sum payment or set up an installment
plan. Taxpayers will not be allowed to make a partial
payment.
Bottom
Line
I
recommend that your "friend" settle with the IRS before
they roll out the private collectors...they're not
likely to be very friendly.
Click
here to read a previous Under the Oak piece to
learn more about Enrolled Agents.
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