Will a taxpayer be in criminal trouble because he has a very large tax debt?
- May 17, 2017
- David Greene
- Comments Off on Will a taxpayer be in criminal trouble because he has a very large tax debt?
As I’ve stated many times before, a taxpayer is not going to jail for non-payment of taxes. There has to be some kind of fraud or deliberate attempt to avoid tax involved to be referred to the criminal division. By filing returns every year, one will avoid breaking any criminal laws. The IRS knows that people get behind in their bills, especially these days, and they are generally willing to work with you. For a self-employed person, the first step is to make sure the returns have been done correctly to take advantage of all tax breaks allowed to a self-employed taxpayer. If a problem is found amended returns can be filed for the past three years if advantageous. If the taxpayer truly has a very large debt, he will probably qualify for an Offer in Compromise by which he would offer to pay the IRS a smaller amount than he owes to retire the entire debt. This is a negotiation process whereby the IRS looks at his assets and liabilities and an agreement is reached on how much of the total debt he can pay. If the Offer is accepted, he will pay the amount agreed upon and the entire remaining debt with the IRS will be canceled.