Tax problem that I am experiencing:
My IRS problems started in 1996 when I was audited for 1994. This audit was a frivolous audit without any basis: at the time I was unemployed and my wife was working for a low paid job locally and our total income was much lower than the local average in our Santa Clara county in the San Francisco Bay Area. The IRS auditor was very intimidating and refused my computer use expense, saying that "why do you need a computer?" a typewriter is all you need!! I was trying to work as Consultant and computer was essential to the type of work I was proposing to do: I had to use computers to do some "statistical computer modeling" applied to the raw materials/energy field (not very employable here in silicon valley where high tech/computer was the hot profession).
Anyways I never accepted the audit findings, but regardless the IRS imposed a penalty + interests of about $10k and also audit me for 1995. So IRS sent me a bill of about $17k in 1996. How could I pay $17k? I was unemployed and my wife making little money for this SF bay area. Before this auditing I never had any previous problems with the IRS, I worked for 14 years always paying my due taxes. This $17k grew due to penalties and interests to $56k as of 10/2009.
The IRS tax code is a tremendous white elephant, too big, too complicate and dubious. I always did the taxes myself and went to the audit by myself. (that was a mistake, but I coming from another country did not know how the system works here).
I hired one EA (Enrolled Agent that was a former IRS employee) to take care of my case. I paid him $1000 in advance and he ended up doing nothing and run away with my money!
After that I was in what IRS calls an non-collectible status because I have no assets, no shares, no equity in my condo and in the end of month there is no money left. Even in a non-collectible status the IRS through the ACS group (Automated Collection Support, out of Fresno, CA) keeps sending threatening letters saying that IRS will levy wages, bank accounts, etc,. IRS is very powerful, they can literally leave you homeless in the streets with no money.
I have in the meantime submitted what the IRS calls Offer-in-compromise (OIC) where you make an offer to settle your case for less money then the IRS say that you owe. The problem is that the IRS accepts very little OIC's, maybe 20%. And now every OIC that you submit 20% is lost if the IRS do not accept your case. I have submitted 2 (two) OIC's that were refused by the IRS. I appealed the last one, with no success. The IRS appeals officer asked me if I offer about $35k!!! they would accept. Unfortunately I do not have $35k on hand.
So the IRS Offer-in-compromise group not only did not accept my last offer, but also filed a tax lien against my condo that I live here in the SF Bay Area. The problem this condo is a below market rate, that I have to sell back to the city. The city keeps a pool of homes to sell to lower income people. I am sure the IRS will not try to rob the city of a condo. I appealed the tax lien, by filing a CDP Hearing. The IRS appeals officer seemed more interested in knowing how I was gonna pay the IRS instead of try to help me by withdrawing the tax lien against my home.
Lately I have asked for a taxpayer advocate (by contacting my representatives in Washington) help to solve my case (the IRS have this group called Taxpayer Advocate to try to help the taxpayer solve their cases) but they could not help. The last taxpayer advocate asked the IRS for the audit reports from my 94/95 audits, but the IRS do not have the records anymore!!! Therefore nothing was done and as of today (10/09) 14 years later I still have this IRS problem!!!
In 2007 the IRS tried to levy my wife's wage. Recently, about 2 months ago the IRS tried to levy our bank accounts. I called collection and I told them that I was willing to make a small affordable monthly payment (the IRS says that if you can not pay them in full you can make smaller payments). They asked for my financial statement trough the phone which is prone to have errors. Then I received a letter saying that IRS has not accepted my payment plan, saying that I can pay more!!! I called them back to clarify, and they say that they have national standards. So it does not matter if you spent the money or not the IRS assumes that you can only spend an amount they choose. It does not matter if you live in an expensive city like the SF bay area or in Manhattan, NY or Honolulu, HI, they say for example that for food & miscellaneous expenses you can spend only $768 per month.
Now they said if I can not pay more money per month, I will have to appeal their decision in two weeks, otherwise they will levy the wages and bank accounts!!!What a crazy IRS! The IRS is a too powerful organization (I would compare to the nazi "Gestapo", famous Hitler's secret force or the russian KGB). The only problem instead of try to get the money of the poorest people like me the IRS should go after the richest americans that have a tax heaven loophole in Switzerland or in the Caribbean, or the companies that set offshore accounts or or main headquarters like the former vice-president's company Halliburton.
In summary the Taxpayer Advocates never really helped me. Based in what I have seen it seems that they work for the IRS not for the taxpayers. Other option is to hire a taxlawyer or a CPA or an EA, but it is difficult to find an honest one and they are expensive. I can not afford to hire one, right now.
I am open to suggestions on how to solve my case !!!
