Want to re-negotiate monthly payment with IRS, but protect 401k too.


K

kohlrabicroce

My significant other owes the IRS $21,000. He's been making payments for 20 years, and it's down to $21,000. now.

He was forced to retire in June of 2013 due to having had a stroke. His pension is nothing, so he's still working until he reaches full retirement age. He's now working for himself, and not doing so well at getting work. His savings are going. He's paying the IRS $800 a month.

He has $70,000 in a 401k, and does not want to touch that, or take any chance the IRS might take it. So he wants to avoid re-negotiating his monthly payment amount, or asking for "currently not collectible" status.

He also needs to avoid paying a lot of money to a tax professional right now, as the savings are going, and the prospects are not good. They might get better if his health gets better, but right now he's struggling.

If he re-negotiates his monthly payment because he's now making a lot less, how likely is it the IRS will just take the money out of his 401k?

Thanks for your thoughts.

PS: This debt is over 10 years old.
 
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P

paultry

My significant other owes the IRS $21,000. He's been making payments for 20 years, and it's down to $21,000. now.

He was forced to retire in June of 2013 due to having had a stroke. His pension is nothing, so he's still working until he reaches full retirement age. He's now working for himself, and not doing so well at getting work. His savings are going. He's paying the IRS $800 a month.

He has $70,000 in a 401k, and does not want to touch that, or take any chance the IRS might take it. So he wants to avoid re-negotiating his monthly payment amount, or asking for "currently not collectible" status.

He also needs to avoid paying a lot of money to a tax professional right now, as the savings are going, and the prospects are not good. They might get better if his health gets better, but right now he's struggling.

If he re-negotiates his monthly payment because he's now making a lot less, how likely is it the IRS will just take the money out of his 401k?

Thanks for your thoughts.

PS: This debt is over 10 years old.
Collection statutes run for 10 years from date of assessment
but can be extended for various reasons. While his tax debt
may have accrued more than 10 years ago, it's unlikely that
the IRS is collecting on blown statutes. Transcripts of the
balance due periods should be reviewed by someone qualified
to read and interpret them to verify the liabilities. Given
his long history of delinquency (20 years?) there is a good
chance the IRS will want him to tap his 401(k)if he defaults
on his current agreement. Guidelines which IRS Collection
employees must follow when considering levy of retirement
funds are outlined here:
http://www.irs.gov/irm/part5/irm_05-011-006.html#d0e387
 

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