Today TaxMama® hears from Joseph in the TaxQuips Forum with a big problem. “I drew money from my IRA without paying taxes. The IRS has put a lien on my house for $67,000.00. Should I try to negotiate with the IRS myself or should I get a tax lawyer?
THAT is a lot of money. Didn’t you expect to pay taxes on it?
Do you owe that much to IRS? Or is there some error?
If you do, and your house has that much equity, the truth is, no one can really get the balance due lowered. Is there any reason you didn’t pay the tax when it came due?
For you to owe that much money, you must have drawn a lot of money from your IRA – close to $200,000. Why? What did you do with that money? Did you draw the money from the IRA in error? Were you trying to roll it over somewhere into another IRA?
What is the ONLY benefit you can get from a tax representative at this point? Consider investing in a one-hour consultation to see if there IS a legitimate way to reduce the assessment itself.
There may be a way to challenge the original assessment under certain circumstances – very iffy, though. You don’t need to go to a tax attorney. An enrolled agent, or a CPA who has experience with IRS representation can also help you.
If anyone tells you they can get you an offer in compromise (OIC)? BEWARE! As long as you have enough assets to pay the tax – you cannot get that OIC!
And remember, you can find answers to all kinds of questions about tax liens, and other tax issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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