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Good morning Mr. Stancil, my name is Chris and I have some taxes questions/problems that I'm hopping you can assist me with.  In 2005/2006 when I was 18/19, I had couple of jobs, one being a contractor in which I received a 1099 at the end of the year.  I had my taxes done in 2005 and found out that I would owe the IRS about $3000 and the tax company didn't file my taxes because I couldn't pay the preparation fees.  

Fast forward to 2013, both my 2005 and 2006 taxes have not been filed.  I contacted the IRS who referred me to a tax assisting agency in my area.  They started to help me but discovered that I made about $200.00 over the limit that would allow them to help me and suggest I try to do my own taxes.  I contacted a CPA in my area (Virginia) and they wanted $250 for each year but would not help with negotiating with the IRS. I tried one of the tax relief agencies that I always hear on TV but they wanted, up front, $450 for "exploratory" fees which would help determine how much MORE it would cost for them to file and negotiate with the IRS.

My question is this: My money is very limited.  To get rid of this tax problem, Should I allow the IRS to file for me?  I've heard this is bad because the IRS won't credit you everything that you can get credit for. To paint a picture, in 2005 I made $19,400 with $200 taken out in Federal Taxes and in 2006 I made $24,400 with $930 taken out.  At the time, I didn't have any dependents, didn't own a home or give any donations.  So as you can see, I don't have any deductions and pretty much have lost majority of my tax receipts that I could have wrote off. What is the best solution for my tax issue?

Anything you can suggest will be greatly appreciated.  Thanks

Answer
Christopher,

Thanks for your question.

First, DO NOT go to any of the tax relief services you see advertised on TV.  They frequently take your money and get no results, doing very little.

If you allow the IRS to calculate your taxes, you have very little leverage. They don't really file your taxes, they determine your tax liability based on the income they know about and bill you for that amount plus penalties and interest.

As I see it you have two options.

1) File the returns yourself, explain to the IRS why you did not file at the time and ask for a waiver of penalties.  They cannot waive interest charges.  Arrange for an instalment arrangement to pay your tax debt over a period of time.

2) Hire a professional (CPA or Enrolled Agent) to complete your taxes and to deal with the IRS.  I know you said you don't have the money, but good representation will likely save you more than if you did it on your own.

Not very good options, but that's where you are.  Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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