Quote:
Originally Posted by sweeps
So does the tax attorney just help reduce/eliminate the penalties, or does he help reduce/eliminate the actual taxes owed?
If OP owes $10,000 in back taxes, he should have to pay them.
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In my case the IRS said we owed 5k based on taxes and penalites of some stock I sold but did not report.
As I stated- the 1099 for this did not get mailed to me because we moved twice from when we sold it (in April of 05) to when we filed (February of 06). The IRS was correct that I did not pay taxes on the sale. They did not calculate the correct tax though.
I went back and checked Turbo tax- no 1099 from Solomon Smith Barney
I then called Solomon Smith Barney and asked them to send me an account history.
I took that history and the old return to a tax attorney.
The IRS assumed $0 cost basis in my situation. So we were taxed on the entire sale, not the capital gain. And because we filed everything within the deadlines of the letters sent, the attorney got all fees and penalties waived. In a portion of the case, I had a short term capital loss on my more recent purchases, so it is possible the IRS would have OWED me more money had I had more short term losses (because I had other 1099's which were gains on the return already, so that would have meant I paid too much in taxes).
The check my wife wrote was for $500 and it covered the attorney fee and the IRS payment.
I do not know what OP did wrong with his taxes. In my case I computed a similar cost basis, but wanted the peace of mind if the audit escalated, the person which prepared the adjusted return would be sitting next to me in my meeting with the IRS. That and my wife wanted a professional to do the amended return (there are extra forms to file for this etc...).
So the OP needs to decide- just pay what the IRS wants, or do work and lower it the payment. There is a reason those TV commercials can advertise they get 100k IRS liens knocked down to 10k debts. Consult a tax attorney when working with the IRS is my advice.