OT-John T legal questions

John - I know a guy with addiction issues. He has worked intermittently; I think the guy has paid him on a 1099. He has not filed taxes for 10-15 years. He is a caregiver for his elderly parents. Questions - if he goes to the IRS and fesses up, how do they usually settle? is there a formula? What are the chances he gets some jail time? Will a lawyer help, or will the IRS do what they are going to do?

Not John T, but I know a fellow who worked in Bazil for 20+ years without filing with the IRS...until they caught on. He had to hire a tax attourney and make several trips to Miami. Ended up cutting a deal with feds that involved back taxes and fines, but no jail time, plus pay his lawyer. Now if he didn't, have the money to pay, it might have been a different story!

Knew a guy who had never got a SS#, never paid taxes, was just invisible. He had bought and sold equipment, did repairs, etc. Was about 65, had been doing it his entire life.

His mother was getting up in years, and wanted to give him the real estate. He couldn't figure out any way to do it without a SS#, so hired a big time tax atty to work it out with IRS.

IRS tried its darndest to get info:
"Please submit your records"
"Don't have any"
"Well, submit what you have"
"Never have had any- always just operated out of my pocket- when I had money, I could buy stuff. When I didn't, I couldn't, so concentrated on fixing other people's stuff, until I had some operatin' captal again."

After much sighing and gnashing of teeth, IRS made an offer- he pays $20,000 in settlement of all back taxes and issues, gets a SS#, and promises to be a good boy for the duration. His atty, bless his heart, chimes right in with "Let my client and I discuss this".

They go to a little conference room, and atty says "Whattya think?"
Client says, "He11, I thought 20 grand would just be the down payment. I've got that in my pocket. Lets just pay them and have it over with."
Atty smiles and says, "We don't want them to think they're leaving a bunch on the table. Lets 'reluctantly' agree, ask for a year payment program. Then everybody feels good."

Yes, you do need an attorney.

Me not a legal, but if he was on welfare for addiction or only worked odd jobs he may not owe any taxes. May get him for failure to file. Used to be some people were exempt due to disability (they got a letter from irs on it)

There is and has been a bunch of people that have and do it legal but yet not pay income tax. Yes there is a loop hole and they get by I know my brother has done it for decades and yes it is 100% legal. Why because if you go back income tax as it was written is not legal in the first place so Congress changed the law to fit there wants/needs so this group has used that so they do not pay income tax. Yes it is 100% legal how I do not know but know it goes on

He may not owe anything.
I'd talk to an accountant first.

If the guy didn't get a SS# till he was 65 he is going to have to work till at least 75 (assuming he makes, or claims, enough income each quarter) before he can collect any SS payments. With no Medicare he could lose his realestate real fast. He probably never earned enough to pay much income tax anyway. People that fly under the radar usually have no savings, investments, retirement and don't tend to live all that well. Almost always the joke is on them.

Chris, I'm sure that you're aware that there are at least 3 attorneys (to my knowledge) that regularly post on here and that Mike is one of 'em. Perhaps you're a fourth?

It is unlikely that any criminal issues (jail time) will arise.

There is no "formula."

He will likely do as well dealing with the IRS himself as he will if he hires so-called tax advocates or even an attorney.

He may indeed have no tax liability, depending upon how much he earned each year.

The IRS will ask for records, of course, but will eventually accept what he has if he has little.

Dean

Chris, Im a semi retired Country Lawyer AND DO NOT PRACTICE TAX LAW (highly specialized for those CPA's who became attorneys) WHATSOEVER and my legal colleauges like Mike or Dean likely have a lot more knowledge and experience then myself in this area. Also as I always post BEWARE of lay opinions especially in highly specialized areas such as tax law. Most lawyers other then tax attorneys know much about this area let alone those with no formal tax law training.

That being said and based on my limited experience with tax matters, heres my thinking.

1) Questions - if he goes to the IRS and fesses up, how do they usually settle.

IT DEPENDS on the investigator and what the dude has to offer as far as records and his story and how much liability were talking about. If he may owe hundredes of thousands of dollars in back taxes thats one thing but if its only a few thousand they arent going to expend tons of resources. No one can answer or predict that accurately !!!!!!! YES they often "settle" but theres are so many factors such as amount owed and intent to defraud and the investigator I cant put any figure or precentage on it.

2) What are the chances he gets some jail time?

Slim to none


3) Will a lawyer help, or will the IRS do what they are going to do?

A good CPA would be my first stop unless and until such time the IRS starts talking serious consequences and fines at which time Id consult a tax attorney (not A GENERAL PRACTITIONER)

Those TV adds you see are nore for high dollar tax liability issues NOT mom n pop small change.

John T Country Lawyer NOT a Tax lawyer and this opinion isnt worth much more then a lay opinion so theres no charge lol

Even if he gets a 1099 he may not have made enough money for the year to file.How much is the 1099 for?May be smart to file if he's below the poverty level he can get all his $$$ back plus a bunch more by getting food stamps.

Chris, no disrespect meant but most folks who have SS take'n out of their check every week don't have 20k in thier pocket. I have a feel'n those of us who are under the age of 40 and are pay'n into SS every week and have been for 20 years are go'n to have the joke on us some time in the next 20 years. I know at my house if we could keep the big half of my wife and I's pay checks every week instead of pay'n the big half in some form of tax we could do alot better for our selves instead of wait'n for the government to take care of us in our later years. I know I would be glad to give up what I have paid in SS to be able to opt out of the system for the rest of my life.

Dave

Dave, I agree with you. However, the SS picture is completely different for someone that is already 65 and could be collecting. SS is a transfer of wealth from young people like yourself or, me 42, to older folks. It is not fair and the benifits will be greatly reduced for us, and it will cost more. The point I was trying to make was financial, not legal. It is difficult to accumulate wealth without bank accounts, owning realestate or having retirement accounts. Cash stuffed under the bed loses to inflation allways, it is easly stolen, there is no return on investment, and what if your rented house burns down ?

Perhaps. For the majority of folks, SS is a good deal, the average person gets their investment back within a few years. Medicare is a great deal for all but the very wealthy. Without it, most old folks would be destitute.

I know very little about tax laws. What I do know is the IRS frowns on 1099's. There are 20 things you must prove to hire some and turn in a 1099. A body shop wanted it's employees to be 1099 instead of W-2. The IRS came in, put a tax lean on the business and shut him down. The IRS said his people were not 1099 canidates. The owner was responsible for paying all his employees back taxes. If this person you are talking about had regular hours and didn't work for other people..he is most likely a W-2 and his employer may be in more trouble than he is.. SEEK PROFESSIONAL HELP. Where I live you can go to the IRS office and ask them one on one and get a straight answer.
George

First question is, why does he want to get straight with the IRS after stiffing them for years? If he has truly cleaned up his life, then he wants to get squared away so he can live a normal life: get married, own a home, get a real job, etc. If he hasn't really cleaned up, then he isn't serious about straightening things out with the IRS.