I got a call today from a friend who hadn't paid their taxes since 1998. He got a letter from the IRS asking saying that they showed he owed taxes for 2004, but they didn't have his return. Now he's freaking out. Here are his stats:
- He lives in a travel trailer parked in a campground.
- His mailbox is on a highway 3 miles from where he lives.
- He owns an army truck and a camper
- His checking account is overdrawn by $200
- He owes back child support payments.
- He has one dependant, so if he did file, he'd file as Head of Household.
- Most of his employers are in Podunk, Missouri, and probably don't file themselves.
- The ones that did file, filed him as an independant contractor.
My advice was to do one of the following:
- To forget the letter. Get a PO Box and don't file a Change of Address with the Post Office.
- Go see a tax advocate. They're free and they can eliminate tax obligation with a keystroke.
- See a CPA and pay his taxes (my best advice).
--- They'll write off everything, even without receipts, like:
--- 35c a mile which could easily add up to $1,000 a year.
--- $10 lunches, which could add up to $2,600 a year.
--- Computer purchases, and ISP charges.
--- A Business fishing trip, complete with boat rental alcohol and hookers.
He's worried that the 'Men in Black' are going to come after him.
Now, when he works he only make $35,000 a year tops. I would call this, an irrational fear. He's worried a cop will pull him over after running his plates, and they'll see he owes taxes. He's been worried about it since he got the letter.
Lets analyse this fear.
I think there's only 4 tax centers in the US. Ours is in Ogden, Utah, and its about the size of a Walmart. His is in Cincinati, Ohio. To my knowledge, the IRS can seize anything on record (property, bank accounts, wages), but they can't knock you down and take your wallet. Al Capone was the only person that I ever heard of, that went to jail for tax evasion, and his case was tantamount to being thrown in jail for life for jay walking (I'm that happens too).
From personal experience, the IRS's best tool is intimidation. Fear. They use the post office to impliment this. They send letters (certified and non certified). If you respond, you get more letters (they know you exist). Its a typical bait and hook strategy.
I wonder if the crack whores walking up and down the Strip are worried about the IRS throwing them in jail for tax debt? They make more money than my friend does.
Irrational Fears...sheesh!