Options to Settle $50,000 IRS Debt

[Dave2008]

The IRS has issued a tax lien and notice to levy for a $50,000 tax debt. Before this, I paid a "tax specialist" to file an Offer In Compromise. The IRS rejected the offer and the "specialist" told me I made too much money and I should try to set up an installment agreement with them. The more I read IRS documents and talk to IRS people the more confused I get. I contacted a tax attorney who wants $7,000 to file a penalty abatement. Once that "goes through" we will "go after the interest". If it doesn,t work we will "try something else", what ever that means.
Can someone tell me will a penalty abatement help my situation. Is it likey to be rejected like the OIC was? Is it wise to deal with the IRS directly? I estimate the penalty to be about $8,000. What other options do I have?

ALSO, There is a judgement against me from a car rental company. They filed an alias citation and turnover order. The lawyer I spoke with said I could file chapter 7 to discharge it but it would cancel or adversely affect the penalty abatement. I know this is another topic but I know I have to pay the IRS something and I dont think I can pay both. I just want the IRS debt as low as possible and payments spread out as long as possible. What options do I have?

 

[Michael Wechsler]

I don't know the details. The tax issues are specific to your situation. Why do you have a $50,000 tax debt? That's a great deal of money to have to pay and there might not be a way to just lower the amount you owe beyond a certain level. The IRS isn't in the business of giving you tax advice on how to lower your taxes. Why don't you discuss the details with the tax attorney that you spoke to and tell him "I need it in plain English." Here is some information about the abatement:

The IRS automatically adds penalties to a taxpayer's account as owed and they don't take into account his or her individual circumstances. IRS Tax Penalties can instantly make a small molehill into a mountain of responsibility. With an acceptable reason for being behind on your taxes, you may not have to pay the assessed penalties. If you've already paid off the tax debt and penalties, you might be eligible for a refund of the penalties you've paid. To avoid paying penalties on your tax debt or to get penalties paid back to you, a Penalty Abatement request needs to be made to the IRS.