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If I owe the IRS back taxes for both Indiana and Kentucky, will I need TWO lawyers to help me?

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Location: Indiana  |  Law type: taxes-consultants & representatives
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Received 2nd letter from IRS for Ky state tax. Lost husband 2014. He handled ALL financial matters. Always filed extension. I finished installment for 2014 with the life ins money. I filed extensions in 2016/17. After that, just gave up. Did not know how to file. One person kept documents for 6 months. No help. Gave them back. Next CPA wanted 100 hr. Did not have. Failed to file for federal since 2018. I kept past returns and receipts in cardboard box in closet. (in Horse Cave Ky at that time. All destroyed by water damage. Impossible to file if I cannot prove my expenses!!! I am self-employed artist for monument company in Dale IN. (etchings on black granite) I have no assets. Live with daughter and/or boyfriend in Indiana. I am 65. I receive SSI. I keep income below 18,000.00 a year. Do I get a tax advocate? An attorney? Go for amnesty? Installment agreement? I have no clue. HELP!!!

Thank you, Dinah Schum

812-630-3851

 

 

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Legal Solution

The response provided below is specific to taxes-consultants & representatives in the jurisdiction of Indiana. If the response is inadequate, please submit a detailed inquiry.

Complex IRS Back Tax Matters Across State Borders

After analyzing your situation, it seems you're facing a layered predicament involving back taxes with both the federal IRS and state agencies in Indiana and Kentucky. Not only is there the challenge of outstanding taxes, but there's also the added difficulty of lost documentation due to water damage, and the complexities brought about by self-employment.

Relevant Legal Provisions:

Possible Solutions:

  1. Tax Advocate Services: An IRS tax advocate can assist taxpayers who are facing financial difficulties or immediate threats from the IRS actions. They act as intermediaries between you and the IRS, and their services are free.

  2. Attorney Assistance: Given the complex nature of your situation, consulting with a tax attorney can help. An experienced lawyer will have knowledge of both federal and state tax regulations and can negotiate on your behalf with the tax agencies. Especially, as you deal with two states, it's prudent to compare lawyers in your area to get the right fit for your situation.

  3. Amnesty Programs: Some states offer tax amnesty programs where penalties or interests are waived if taxpayers pay the owed amounts within a certain period.

  4. Installment Agreements: If paying the tax debt upfront is not feasible, the IRS and most state agencies offer installment plans to gradually pay off the debt.

Average Service Costs in Indiana:

Service Average Cost ($)
Consultation with Tax Advocate 0 (Free Service)
Tax Attorney Consultation 200 - 300/hr
Full Representation by Tax Attorney 3,000 - 10,000+
State Amnesty Application 500 - 1,500
Setup of Installment Agreement 250 - 750

Note: These costs are average estimates for Indiana and can vary based on the lawyer's experience, complexity of the case, and other factors.

Clarifications and Action:

Your situation is certainly complex, and while the above solutions offer a guideline, understanding the specifics is vital. It's always recommended to consult directly with a professional. Remember, the sooner you act, the better. Don't hesitate to find the right lawyer to guide you through this.

Relevant Questions for Further Insights:

  • Did you receive any formal notices or letters from the IRS or the state tax agencies outlining the specific amounts owed?

  • Have you ever been under audit or scrutiny by the IRS or any state tax agency in the past?

  • Are there any other circumstances or additional details you believe might be relevant to the resolution of your tax issues?

Q1: What if I can't afford a tax attorney?

Many attorneys offer flexible payment plans, and there are also pro bono services available in certain areas. Moreover, the IRS's Taxpayer Advocate Service is a free service for those who qualify.

Q2: How does the IRS determine the amount I owe, especially when I've lost my documentation?

The IRS often uses previous tax returns, income sources, and other available information. They may also estimate based on standard deductions or averages in similar situations. However, having an attorney can ensure these estimations are as favorable to you as possible.

Q3: Are there penalties for not filing even if I didn't owe any taxes?

Yes, the IRS imposes penalties for failure to file. The amount varies, but it can accumulate over time. This is separate from any penalties for unpaid taxes.

Q4: Can the state tax agency seize my Social Security or other federal benefits?

In certain circumstances, state tax agencies can garnish federal benefits, including Social Security. However, there are limits and protections in place for taxpayers, especially those of retirement age.

Q5: Is bankruptcy an option to discharge tax debts?

Some tax debts can be discharged through bankruptcy, but there are specific criteria and timing rules. It's essential to consult with an attorney specializing in both tax and bankruptcy law to understand this option fully.

Disclaimer

This content is for informational purposes only and does not establish an attorney-client relationship. It's always recommended to consult with a local attorney about your specific situation.

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