Our bankruptcy was discharged in February, 2013 but we still owe about $45,000 in back income taxes from 2009, 2010, and 2011. The 2009 and 2010 taxes would have been discharged in BK but we didn't file on time. 
So, I submitted an IRS Offer In Compromise Form 656 along with a Collection Information Statement Form 433-A. We just got an initial reply from the IRS, and I am somewhat baffled. We are not making enough with our self-employed business (around $25,000 per year with three dependents) to file any quarterly estimated tax payments. However, we got this reply from the IRS:
"Our tax records indicate that you are required to make Estimated Tax Payments for the tax year 2013. You must make a payment of $1,201.00 by 10/01/2013 for us to consider your offer."
I don't know why they think we should make an estimated tax payment of $1,201.00 because I let them know that our home is in foreclosure and we are living near poverty level or below.
The offer I made for the $45,000 in tax debt was $1,350. I based this on the fact that we have a car worth $1,200 and $150 in our bank account at the time of filing. This was the recommendation that I got after using the Offer In Compromise acceptable payment calculator.
I am trying to debate whether I should call a CPA on Monday or the IRS directly to find out why they are asking for an estimated tax payment, because we are in really bad hardship. We can barely keep our utilities on and both of our daughters have difficult medical conditions. My wife quit her job at a grocery store last year when one of them went into the hospital for 12 days. I documented this in the Offer In Compromise forms, so I don't know why they figure we owe an estimated tax payment, unless they are basing it on past tax years prior to 2012 when we were doing much better income-wise ($60k in 2011, $70k in 2010).
Apparently the new Offer In Compromise rules base your ability to pay your tax debt on what they think you will make over the next 12 months. Based on the past 12 months, we are not going to make enough to even be taxed on. Last year we got a $3,000 rebate (that the State of Illinois grabbed for back tax payments), so I have no idea where they are getting thus supposed $1,201 estimated tax figure from since we are insolvent.
Do you think I should call the IRS, call a CPA and pay them to handle it (which we don't have the money to do), or just try to pay the $1,201 and see what happens after that?
So, I submitted an IRS Offer In Compromise Form 656 along with a Collection Information Statement Form 433-A. We just got an initial reply from the IRS, and I am somewhat baffled. We are not making enough with our self-employed business (around $25,000 per year with three dependents) to file any quarterly estimated tax payments. However, we got this reply from the IRS:
"Our tax records indicate that you are required to make Estimated Tax Payments for the tax year 2013. You must make a payment of $1,201.00 by 10/01/2013 for us to consider your offer."
I don't know why they think we should make an estimated tax payment of $1,201.00 because I let them know that our home is in foreclosure and we are living near poverty level or below.
The offer I made for the $45,000 in tax debt was $1,350. I based this on the fact that we have a car worth $1,200 and $150 in our bank account at the time of filing. This was the recommendation that I got after using the Offer In Compromise acceptable payment calculator.
I am trying to debate whether I should call a CPA on Monday or the IRS directly to find out why they are asking for an estimated tax payment, because we are in really bad hardship. We can barely keep our utilities on and both of our daughters have difficult medical conditions. My wife quit her job at a grocery store last year when one of them went into the hospital for 12 days. I documented this in the Offer In Compromise forms, so I don't know why they figure we owe an estimated tax payment, unless they are basing it on past tax years prior to 2012 when we were doing much better income-wise ($60k in 2011, $70k in 2010).
Apparently the new Offer In Compromise rules base your ability to pay your tax debt on what they think you will make over the next 12 months. Based on the past 12 months, we are not going to make enough to even be taxed on. Last year we got a $3,000 rebate (that the State of Illinois grabbed for back tax payments), so I have no idea where they are getting thus supposed $1,201 estimated tax figure from since we are insolvent.
Do you think I should call the IRS, call a CPA and pay them to handle it (which we don't have the money to do), or just try to pay the $1,201 and see what happens after that?
Bankruptcy Wizard
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