Ho ho ho.. IRS wants their pound of flesh... and Merry Christmas!

[npincus]

OK, this situation does not compare with the tragedies so many are suffering, but I feel really depressed and worried, so here goes:

In a nutshell, yesterday my husband was informed that the IRS had declared his retirement account 'illegal'- he works for a foreign government, and this IRS policy will affect thousands of others who have set up individual retirement accounts like him. His employer does not offer alternative 401K, pension plan, etc. and the account he opened was his best, only option at the time.

Now we have to pay back-taxes plus interest penalties on this money, plus penalities for dissolving his retirement account... and the worst thing: the IRS is going to assess what we owe (we have to send them our past tax returns) and whatever magic figure they come up with have to pay. Ka-ching ka-ching. With our returns in their hot little hands, they are bound to squeeze extra dollars out of our meager savings, though we have a very competent accountant whom we trust. So, in one fell swoop, the IRS has wiped out our retirement acccount and (likely) bankrupted our savings, or worse, put us in debt. No doubt, this was part of their assignment to generate cash to pay for Chimpy's war. Ho ho ho!

Sorry, money seems petty when people are losing their lives every day-- I know. But I can't help feeling really depressed. The IRS notification was worded in a manner that made us sound like cheaters and criminals. It seems like the government really wants to kill off the middle class.

So, Merry Christmas. So much for the roof repair and holiday for my kid.

BTW- I won't give out any further details re: the situation-- I don't trust you-know-who.

Ok, vent over.

[Virginia Dare]

1. That really really sucks, but I have a suggestion...

I don't know who your Congressperson and or Senators are, but I would contact them right away. This sounds ludicrous, and you need to get some answers pronto.

[sallyseven]

4. Get a tax lawyer to fight them. Also your congressman

or Senator. Don't do both because it just confuses the situation. Since you did not commit fraud they can only go back 3 years and get the lawyer to remind the bastards.

[eallen]

6. Excellent suggestion. If you acted in good faith, you shouldn't be unduly punished.

[MadHound]

2. I'm so sorry to hear this,

And I would highly recommend that you retain a lawyer/CPA combo who is proficient in dealing with the IRS. It would very likely reduce your tax liability since the IRS seems to go easier on those who look fully prepared to defend themselves. I don't know how the IRS could declare certain IRAs illegal, but if this is a new policy, a competent attorney could very well rip the IRS to shreds, and you could actually walk away with at least part of your retirement intact. Contrary to popular belief, the IRS isn't all powerful, nor do they always win. In fact many times if you push back, they'll settle at the drop of a hat. This is why the rich are so rarely touched, they have attornies on speed dial and the IRS knows it, therefore they go out and pick on the weak and helpless. Show them that you're willing to put up a fight, and they will in all likelihood back off.

Good luck, and I hope it works out for the best.

[npincus]

8. thank you

hubby faxed over the 50-page IRS document to our accountant last evening. I hope we can speak w/him next week after Christmas to discuss.

If the IRS wanted to change their policy gong forward, that wuold at least be 'fair'. But to penalize us retroactively for participating in a retirement plan which was advised and 'legal' at the time is unfair, unethical and just plain f*cked-up. The IRS processed our tax returns with no comments or objections- how can they retroactively declare them as non-compliant with codes being enforced at the time?

I'm not a dummy, but that IRS document in legal-speak was over my head and we need professional help. Rich people have deep pockets to fight this kind of shit; we don't.

[riderinthestorm]

14. The IRS has 7 years to decide to audit

if I can recall correctly (it's been a while since it happened to me). And legally they can fish around in the year they are auditing, plus the years around it which means they can pull shit outta their ass to hit you with for 3 year's worth of returns. And it matters naught that you probably filed your returns with that account on it for years, without penalty, is what I learned - by law they are empowered to do this, even years later. They discovered the "violation" (cough) and they are going to prosecute it. There were a LOT of hearings in Congress about IRS prosecutorial misconduct in the late 80s and the IRS reduced their auditing staff after those hearings. I'm sorry to hear that it looks as though they are revving back up again.

It majorly sucks and you definitely need a tax attorney, not just your accountant. Take a deep breath. I know how frightened I was when it happened but you just have to try not to let it take over your life.

[npincus]

16. at this juncture I just feel like giving up

life just seems to be getting harder.

ok... just indulging in some self-pity here. Will feel better tomorrow, i hope.

[riderinthestorm]

19. It's going to be a rough year. I won't kid you but you mustn't give up

if you do, you will 1. regret it later, 2. empower the IRS to go after others in similar predicaments, 3. pay more $$ that enables Bu$hco to continue on his killing ways, and 4. probably set yourself up to be hit again down the road since you rolled over this time without fighting it.

Take today and perhaps even tomorrow for the self pity, it IS shitty. There's a wild picture I have in my office of the back of my husband walking down the barn aisle holding our daughter's 2 year old hand, with the IRS letter informing us we were audited in his other hand. His shoulders are utterly slumped. That very day a professional photographer had come to take some scenic shots at the farm, and I had run out of the house with the letter in tears, handed it to my husband oblivious to the photographer. My daughter scampered up to him as he was reading the letter, grabbed his hand and proceeded to try to drag him down the aisle towards her favorite pony. And voila, the shot. I keep it prominently displayed and it reminds me of how defeated we felt, how horrified and awful on that day.

But then we got mad. And fought.

Get tough and get going. Get professional help, you need it. You will pay something, reconcile yourself to that right now, but with the right help it won't be everything plus penalties.

:hug:

[npincus]

20. thank you.

:hug:

[sandnsea]

3. Well that just sucks

The government has been our biggest obstacle our whole working lives. I guess I can see why some people want them to just go away when it seems like every time you get ahead they either change the rules or create a new agency that's in direct competition with your business. When they do it with your retirement savings, well that really sucks.

If I were you, I'd pretend I didn't get the letter until after the holidays. No way I'd give the IRS the power to ruin my Christmas! lol.

Hope you find a solution.

[necso]

5. Talk to your accountant

(I presume he did your taxes), and see what he says. (He may suggest seeing a tax attorney; probably a good idea anyway, as suggested-above.)

Also as suggested-above, call your Representative and Senators. (Let us know how this goes.)

Research the relevant law yourself.

[Dr.Phool]

7. Yes, contact your Congressman and Senators immediately.

This sounds scewed up beyond belief. It doesn't make sense.

If the account is illegal, and you have to pay taxes on it, why would you be penalized for early withdrawal?

I'd contact an attorney, and don't send them anything until he ok's it. No sense sending them on a fishing expedition.

[Lydia Leftcoast]

11. Ask your local bar association for a list of tax attorneys and discuss

your selection with your accountant, who may know about one or the other (good stuff and bad stuff) by reputation.

I agree with the advice not to send the IRS any paperwork until both your accountant and a tax attorney have seen it.

[riderinthestorm]

9. Contact a good attorney/CPA as soon as you can.

We got audited by the IRS and they WILL nail you for those 3 years of returns you are being asked to provide. That first visit with the IRS will determine how you will fare was what our lawyer said (and he was right). If you go in with big guns and an excellent tax attorney, prepared to fight on that first meeting, you will come out in much, much better shape. If you go in and try to defend yourself, prepare to lose most of that retirement fund.

You will pay something. I can guarantee you that. Once you are audited, the IRS will get something but your attorney can ensure that it is minimal and as pain free as possible. It's true that the IRS goes after "easy prey", not touching any really rich which means they feel pretty solid about their belief that your husband's retirement fund is illegal so get an attorney.

Good luck and try not to fret. What shitty timing, right before Christmas, that totally sucks and you're not going to get any attorney on the line today (Sat) but please know that your kind of fight is what tax attorneys do, and they do it very, very well.

Also, please know that now your file is "flagged" which means your tax returns will be scrutinized more than others. We still have our returns filed by a tax attorney, 20 years later, and even though it costs a fortune, we have never been audited again, and we never will. Our preparer ensures that. Another thought, did you get your return prepared by somebody like H&R Block? My understanding is that their legal services department guarantee H&R Block prepared returns and they will fight the IRS and pay your damages if they prepared the return.

[Nite Owl]

10. Definitely get a lawyer!

Geez they talk the talk about not raising taxes but then hit on people who did the right things in good faith while those who really scam the public like the corporations get off with a slap on the wrist and huge pensions no matter what they did.

[conscious evolution]

12. Could this be a form

of retaliation for being politically active for the 'wrong' side?
It happened to me once.The first time I ever signed up on a political website(Smirking Chimp)I got a letter from the IRS wanting to audit me.The letter came from an office that does not deal with my region.I called them and complained that it seemed politically motivated and that I thought they were full of it.
I never heard back from them.

[Virginia Dare]

23. Yes, the IRS has been used for political purposes...

most definitely.

[bleedingheart]

13. How did this happen to you?

Didn't the people who made this available to your husband for investing tell him about what it may mean in terms of taxes?

I think this smells like some sort of fraud situation because you should have known all the tax risks ahead of time.

This absolutely sucks and I would call your congressman or senator right away.

[mainer]

15. The IRS was sorry they ever bothered us

They sent threatening letters saying we owed them thousands of dollars.

After many ulcer-inducing weeks of record-checking and consultations with accountants, we discovered that yes, we had made a big mistake. But it was the IRS that owed us money, and it was a huge amount. The mistake was entirely our fault -- not our accountant's -- so we can't blame anyone but ourselves. It goes to show that some of us aren't good with numbers. As our accountant told us later, "You should send the IRS flowers!"

A few months later, we got the check from the IRS. And they haven't bothered us in a long time. I think they realized that it's better to let some idiots (us) keep making mistakes.

[roamer65]

26. Get a good tax attorney. Quick.

They can freeze bank accounts and put liens on a lot of stuff. A good tax attorney makes it a real fight for them and they often will settle for much less to keep it out of litigation.

[roamer65]

27. Apology, reply meant for main thread.

[bluedeminredstate]

17. The IRS just took hubby and me

for many thousands last month. We had to pay it at the time or else they were going to slap a lien on the house and we were trying to refinance at the time out of a terrible mortgage. They were counting a huge loss in the stock market from 2002 - you remember when Chimpy send it south? - as a gain and demanded the back taxes. Now we have to fight to get the money back by having an attorney and an accountant prove that we lost money, not made money. That will cost big bucks, natch, but I'll be damned if they'll keep our money on their say so.

I feel for you. There's no negotiating with them unless you bring in the professionals.

:grr:

[riderinthestorm]

21. .

In my case, the IRS said we weren't horse professionals so they disallowed everything we had deducted to get started running the farm and establishing a training business.

I mean, we were running a boarding and training operation for horses, and suddenly we weren't "professionals" in their book. I believe at one point they demanded we pay something like $15,000 dollars in penalties and back taxes which for us, just starting out 20+ years ago, would have totally killed our business.

We fought it too, and our attorney got us off most of it except for some miscellaneous items like Bean boots (they are so sturdy and we wear them around the place when we aren't in much more expensive riding boots) since the IRS was bound and determined to collect SOMETHING after their ridiculous premise (that we weren't professionals) was disproved.

It pays to fight. Good luck with yours. I've been there. :hug:

[npincus]

22. so sorry for you!

We had (about 6 years ago) another problem with the IRS- in a nutshell, they did not acknowledge any of our numerous responses to the matter (which would have cleared it up), and they also ended up sending us a threating letter (liens, seizing assets, bla bla bla). That's when we got the accountant we have now- he informed us that the IRS has a departemnt called "Problems Resolution"- he referred us there and wrote a letter, etc. on our behalf, we filed with them and eventually the problem went away.

I do't know if this will help you at all. See what your professionals have to say.

I hope to speak to our guy next week, ASAP.

best of luck.

:)

[Totallybushed]

18. Ya gotta love the IRS.

They're going to make sure you pay your fair share, no matter what? All for the greater good of society, of course. :sarcasm:

Maybe our new Democratic Congress will take a look at IRS abuses and stop them. But I doubt it seriously. While I'm certainly glad they got in so they can investigate the Bush Cabal crimes, they are politicians, after all, and live off the fat of the taxpayer.

And Merry Christmas, of course. My company just announced a layoff, the week before Christmas. How come they always do it then?? Evil corporate bastards!!

[judaspriestess]

24. thanks to *asshole the IRS has alot more power to go after

you to fund the war. First things first, INCORPORATE yourself if you can. Get a small home based business going if you don't have anything. This will save you big tax dollars in the future. The IRS's #1 target is 'sole proprietors'. Corps are at the bottom of the totem pole for being audited. Whatever you do don't go to the people who advertise on TV to help you with your 'tax issues' they are just there to take your money.
I learned the hard way, I hired a tv personality tax attorney paid them $2600 upfront to get me a settlement agreement for back taxes, they did NOTHING but send me letters of appeasement for a year and half as well as the IRS telling me we know you have an attorney etc. Then lo and behold the IRS slapped me with a tax lien that ruined my credit. I got laid off from my job a month later and it took me over six months to find anything cause I was now being judged on my 'bad credit'
forced me into a bankruptcy to save my home.

Everyone should incorporate no matter what they do and get a good tax attorney someone who know how to fight back and get you a settlement.

[seriousstan]

25. You are being forced to pay your fair share after being caught ....booo frickin hoooo.

I pay my taxes and so should you. Why should you be special?

[Virginia Dare]

28. How do you know you're paying your fair share?

they might be coming for you next.

[seriousstan]

29. Because I don't have illegal tax evasion schemes....

the sky MIGHT be falling also

[Virginia Dare]

31. Yep, it could be...

so are you no longer hiring people off the street and paying them under the table?

[seriousstan]

32. I am still paying people with signs that say..Will work for food.

I just paid 2 homeless people $150 to clean roofing trash out of a friends yard. And you?????

[Virginia Dare]

33. As a matter of fact...

I have helped to feed the homeless in the past few weeks, both financially and physically.

Merry Christmas Stan!

[seriousstan]

34. And a happy new year to you also.

MERRY CHRISTMAS, may all your days be joyous and gay.

[npincus]

36. look, genius:

How is a retirement account a tax evasion scheme? I suppose folks in lofty tax brackets as yourself don't have to worry about the future.

As for it being an "illegal" investment you don't know what you're talking about- it is a "legal" IRA, the gov't decided to NOW to say that people employed by a foreign gov't can't hold this account, and retroactively PUNISH them. This retirement plan was set up for us by a legitimate, reputable company (you would know them) and we've had our taxes done for years by a guy who is excellent, knowledgeable and on the up and up. For the record, we always pay our taxes on time and have never participated in an 'evasion scheme'.

I suppose it was a matter of time until some jerk offered a mean-spirited bit of snark. Ho ho ho.

[originalpckelly]

37. Some people just assume that you must be wrong...

because the government said so.

:eyes:

I'm terribly sorry for your problems, I hope the assholes at the IRS get investigated themselves!

Who the hell does that anyway? Just sounds like a government scheme to steal more American tax dollars to give to the rich defense contractors.

[Little Wing]

30. Leave the country

say goodbye to your friends because you'll get arrested at the airport if you come back, but seriously - take off.

[mikelewis]

35. Just lay down and take it up the ass like a good little American.

Whatever you do... don't fight them...

Lay down... The IRS can do whatever they want when ever they want and are not accountable to anyone. If they say you owe them money... pay them whatever they want and then some... don't resist... bitching and moaning is OK but never challenge them. Besides, after all, it's not like you actually worked for the money you received and its not like you won't get Social Security (or some form of national assistance) when your too old to function in our beloved society. The wise course of action is just to lie down and take it however they want to give it to you because in the end, they'll just take whatever they want anyway. To the IRS the 4th Amendment is a joke, the 5th Amendment doesn't apply and anything in the 1st will be used against you as profitably as they can manage. It's best to just surrender now and hope they're feeling generous as they're taking everything away from you they think they can sell for a profit. This is, after all, what our country was founded upon, the idea that the government can tax you without accountability and throw you in debtors prison if you can't afford to pay them. Ironically, the mafia is sort of set up the same way but at least with the mafia, they kill you mercifully quick compared to the IRS. Best run along now and figure out the best way to capitulate before the tax man cometh.