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Thread: I owe the IRS 30k

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    Featured Member h0ttie's Avatar
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    Dizzy I owe the IRS 30k

    So I had not payed my taxes for 4 years (for camming). I didn't even file all my taxes till sometime last month. Today I got the letters saying how much I owe. Basically it says I need to pay 30k by october 31.. yeah thats obviously not going to happen. But what do I do now? Call them and get on some type of payment plan? I don't feel like I will ever be able to pay 30k.
    "Achieving success is a challenge but so is struggling so you may as well choose success."

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    Veteran Member phoenixxxrising's Avatar
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    Default Re: I owe the IRS 30k

    October 31st? That's very odd. Have they been sending you letters for several months?
    Follow your heart and do what feels right for you, because that’s living. Everything else is dying.

    “Things may come to those who wait…but only the things left by those who hustle.”

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    Banned Eric Stoner's Avatar
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    Default Re: I owe the IRS 30k

    If you can afford it, hire a REPUTABLE tax consultant or tax lawyer to negotiate for you. Usually you can negotiate for a lower lump sum or for a payment schedule.

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    Banned Melonie's Avatar
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    Default Re: I owe the IRS 30k

    you're at a proverbial 'fork in the road'.

    First option is to dispute the IRS assessment of your past income levels ( unless the IRS has past year 1099's from webcam hosts that their computers finally linked up to you via your filing a tax return this year ... in which case the IRS estimate of past income thus taxes due on that past income is very hard to dispute ). This requires a private attorney.

    Second option is to 'admit' that you owe the back tax amount that the IRS 'says' you do, but also to seek a settlement for a lesser amount based on the 'implied threat' that attempting to collect the full back tax amount will force you into financial distress / bankruptcy. This requires a private attorney, or better yet a dedicated tax negotiation service like . They offer a free consultation, which is certainly worth the call !

    The third option is to 'admit' that you owe the back taxes the IRS 'says' you owe, to 'agree' that you will pay the full amount of back taxes that the IRS is saying that you owe, but that you require IRS 'financing' in order to make payments over a reasonable period of time to avoid financial distress. The IRS is prepared to enter into an 'installment' agreement allowing for monthly payments ... see

    Looking on the IRS website, the present interest rate on such 'installment' agreements is 4%. Thus if you were to 'finance' your $30,000 back tax bill over a period of say 5 years, you're looking at monthly payments that are something on the order of $562 a month ( with interest charge assumptions ). However, keep in mind that you will now be watched like a proverbial hawk by the IRS due to your past non-compliance The IRS will be keeping a special eye on you to see that quarterly estimated tax payments due on your current webcam income tax liability ( i.e. 20-30% of the gross amount you receive from webcam hosts ) are ALSO being paid regularly IN ADDITION TO the $562 ( or whatever ) 'installment' payments which will only be applied against past years' tax liability. Thus in order to pay for your current tax liability plus your monthly installments on past tax liability, you need to earn perhaps [( $562 * 1.25 ) installments * 1.25 estimated taxes ] = $ 878 dollars per month in webcam checks before you will have dollar one available to spend for ANY other purpose besides paying the IRS !!!

    I would also point out that if you fail to take one of the three above actions before the IRS deadline, the IRS can and very well may 'freeze' your bank accounts, seize or impound any major assets you own ( like your car , investment accounts, retirement accounts ) etc. So make sure that you do something ... and quickly !

    I would also add that in all three cases above, the IRS will report to the credit bureaus thus trashing your credit rating. The only way to avoid this is to raise the $30k they are asking for from other sources and pay them in full before their deadline.

    While I doubt this offers much consolation, 'don't feel like the Lone Ranger'. This year the IRS added additional auditors / investigators to form a new targeted tax enforcement unit to be focused on particular types of businesses that have a poor past history of tax compliance. Among these are 'Adult Businesses', with webcams and strip clubs falling under that IRS heading. This was authorized by last year's US congress as a by-product of the ( then ) new National Health Care law. At any rate, you certainly won't be the only webcam girl / exotic dancer to receive nasty letters from the IRS this year.

    ~
    Last edited by Melonie; 10-13-2011 at 02:26 PM.

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    Default Re: I owe the IRS 30k

    Sorry to hear you have the IRS 'wrapped around your axles', but it can be fixed.

    The IRS 'estimate' of tax owed is based upon their simple calculations with no deductions. If you are able to itemize you can reduce that amount considerably. (Work related expenses such as costumes, make-up, travel, vehicle mileage, etc.) Keep in mind that their calculations involve penalties based upon the amount of tax owed, so reducing the tax owed for any given year also reduces that year's penalty and interest.

    Do be prepared that they can seize bank accounts. Your first indication that they have done this will be 'bounced check notices'. Typically they send a notice of 'intent to levy' 30 days prior.

    *** Disclaimer: I am not an accountant or tax attorney, but suggest you get a good one to interface, because if you speak to them directly, they will likely ask you many questions before answering any of yours. (Like the police, they are trained investigators, so they will ask you about account numbers, sources of employment, etc. anything that shows up in their database...)

    'Interview' tax professionals like you are hiring any contractor. Tell them your source of income and situation. They should be able to ask you about categories of expenses, and ask you if any apply to you.

    Good luck!

    Good luck!

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    Banned Melonie's Avatar
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    Default Re: I owe the IRS 30k

    ^^^ unfortunately, with the OP stating that these back taxes are being collected from income earned via camming from 'home', the potential list of legal tax deductions is going to be significantly shorter than if she were dancing live at strip clubs. There are most likely webcam host 1099's sent to the IRS that makes the income level difficult to dispute. Deductible 'work related' expenses are constrained by the 'housewife test' ... so that, unless the OP works with leather / whips / chains and theatrical makeup, dep't store makeup and Victoria's Secret lingerie aren't going to provide much in the way of useful deductions.

    Now it IS possible to deduct some percentage of ISP internet access charges, based on arguable percentage of internet use for business versus personal purposes. Under certain circumstances it's also possible to claim some percentage of mortgage / rent costs as a 'home office' deduction, based on percent of square footage EXCLUSIVELY attributed to business use ( i.e. a dedicated room ). In a typical tax filing scenario, these deductions will usually 'fly' without much scrutiny by the IRS. But having already been 'caught' failing to file and underpaying taxes due, the IRS is undoubtedly now going to scrutinize every detail of any such 'after the fact' tax filings. Thus there's an equation to consider as to whether the accountant costs associated with preparing 3 years worth of belated tax returns ( that are absolutely going to be audited ) in order to claim these deductions may actually wind up costing more than the reductions in tax liability thus reductions in tax penalties these deductions may generate.

    And of course, from a 'legal' standpoint, this would also require the OP to officially reject the $30k 'settlement offer' she just received from the IRS. Doing so could open a Pandora's Box worth of other IRS possibilities i.e. higher past income estimates thus higher back taxes and penalties due, siezure of bank balances and other 'assets' etc.

    ~
    Last edited by Melonie; 10-16-2011 at 09:02 AM.

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    Default Re: I owe the IRS 30k

    tots- something like this happened to me. call them and ask for an extension. they will give you a few months. call a reputable tax attorney. hire him. he will negotiate with them. i bet you you end up paying less than 10k.

    the irs are actually reasonable as long as you stay in contact with them.

    pm me if you want more info. xo

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    Veteran Member Robertjordan's Avatar
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    Default Re: I owe the IRS 30k

    Quote Originally Posted by h0ttie View Post
    So I had not payed my taxes for 4 years (for camming). I didn't even file all my taxes till sometime last month. Today I got the letters saying how much I owe. Basically it says I need to pay 30k by october 31.. yeah thats obviously not going to happen. But what do I do now? Call them and get on some type of payment plan? I don't feel like I will ever be able to pay 30k.
    Dear Hottie,

    As usual, you get all kinds of answers from this forum. Consult a tax attorney, dispute the amounts, etc. I read your post and your question seems pretty straightforward to me. It looks like you just recently filed 4 years worth of tax returns. And it looks like the total tab for all those tax years which probably includes penalties and interest is 30k. And your question is very direct, what do you do now? You are correct, you can call them and set up a payment plan. Generally speaking they will work out something that you can afford (and you don't need to hire someone to negotiate a payment plan for you). And someone did post a very good response, that the IRS is typically reasonable as long as you communicate with them. I will add, that whatever you agree to pay on a monthly basis, pay. And if for some reason you are short, call them immediately.

    RJ

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    God/dess threlayer's Avatar
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    Default Re: I owe the IRS 30k

    The point must be made that you need to know how much you OWE. Is it $30-,000 or is this some number crunched up by IRS which has no basis? You didn't state this. There are different approaches depending on your answer.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: I owe the IRS 30k

    Did you sort it all out? How much you been making for the 4 years you didn't file? And which site(s) you worked on?

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