Terrible tax problems, any suggestions?

Freerepublic ^ | 3/29/2010 | Oshkalaboomboom

[Oshkalaboomboom]

My sister and her husband have got themselves in a terrible jam. When they had to transfer back to the USA from an overseas government job they took money out of his thrift account to use as a down payment on a home. They knew there would be penalties and taxes due but they thought it was all taken out in advance. It wasn't, and now they found out they owe $40,000. I'm trying to see if anyone can come up with suggestions on how they should deal with this. Does anyone know the current interest rate with penalties figured in for an IRS payment plan? Are there better ways to go about working out a payment plan when the amount due is over $25k? Would an accountant or lawyer with tax experience be of any use or would that be throwing away more money when they are already in such a mess? They have a little over 2 weeks to come up with some answers.

[sr4402]

Facing the KGB, I mean IRS is no fun. I'd tell them to try for a second mortgage or second loan and chalk it up to, as Dave Ramsey says, "Stupid Tax".

Don't take a 401k loan for the same reason, if you lose your job and can't pay - Guess What? The KGB, excuse me, IRS will come out to suck your blood!

[fremont_steve]

Well - that may generally be true, but Mr. Moskowitz is well known in the bay area. He is not Melvin Belli. Mellanie Morgan amongst others has used him previously. He is also a CPA - and has been in practice for 30 years.

If I had trouble in this dimension - this is where I would turn at this point.

[VOA]

“
Would an accountant or lawyer with tax experience be of any use or
would that be throwing away more money when they are already in
such a mess?
“

Just my $0.02:
They need to hit the ground NOW.
And get opinions from multiple tax attorneys AND “enrolled agents”.
(an enrolled agent isn’t an attorney but can represent them before
the IRS and other state/local tax authorities).

If possible, they should try to confer with at least three or four
of these tax attorneys or enrolled agents. Checking with the local
Better Business Bureau might help them select the better of the tax
attorneys and enrolled agents.

But it ain’t gonna’ be fun. April 15 (and your relatives’ deadline)
will make this a forced march to respond to the IRS.

One thing: if they don’t have a complete resolution of their situation
by the deadline...CALL the IRS and do NOT ignore or run-and-hide.

Final note: make sure they ask the tax attorney/enrolled agent about
tax implications on their state tax returns. It could be they will
also owe more money to their state tax authority.