QUESTION
What can I do if I cannot afford to pay the IRS after a short sale on my home?
Asked on Dec 31st, 2010 on Taxation - California
More details to this question:
I owe $20,000 to IRS because of a short sale on our home. I can't afford the $400 month. I tried to do a settlement on it, but everyone tells us that we make to much with two incomes. I do not see how but their response was "well you do not have to pay your credit cards, you can go into collections with those and pay us first?" I really did not like that response and im looking for an attorney to help me settle this debt. This has been the first time I had to do a short sale in 6 years. I had to claim $110, 000 earned income. And now I am penalized with re-paying $20,000. Not only did we loose our home but now were loosing income. Please advise.
3 ANSWERS
Business Litigation Attorney serving Columbus, OH
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E. Ray Critchett, LLC
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Unfortunately, the advice you get may vary from one professional to another. I would recommend scheduling an in-person meeting with a true tax professional to discuss your situation in detail. While phone consultations can be useful, an in person meeting can help reassure you that the professional is truly focused on your case and your facts and not simply pushing you along so that they can get to the next call. You may contact our office to schedule an appointment if you have further questions or if you need assistance with this issue. You can also schedule an appointment or obtain additional information at our website.
Answered on Nov 27th, 2012 at 11:48 AM
Chapter 7 Bankruptcy Attorney serving Lisle, IL
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Mankus & Marchan, Ltd.
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It sounds like the tax liability you speak of was based on debt forgiveness from the short sale of your home. You or your accountant reported that as income on your tax return. However, if the short sale occurred in 2007 or later, up to $2,000,000.00 of debt forgivess on a primary residence is not treated as income (up to the 2012 tax year).
If you correctly owe the money to IRS, you can work out either a payment agreement or an offer in compromise, depending on you financial situation. Consult with a good tax attorney who specializes in this area of the law.
Answered on Jan 08th, 2011 at 8:13 AM
Bruce Givner
You need someone highly skilled with collection matters. This is something that requires a professional who does nothing but collection matters, typically someone who worked for the IRS collections division. If you live in L.A. I can refer you to someone. Otherwise, you must talk to enough CPAs and tax lawyers to find out someone who does nothing but IRS collections and used to work for the IRS in collections.
Answered on Jan 03rd, 2011 at 10:13 AM