Taxation & Estate Planning

A fight with the IRS

By Darrin Mish

Here's another story from a reader:

Well, I do not have a story with the IRS but my cousin does. It was long years ago when we were still young adults. He was out of work then for about 5 years and so he never paid taxes on his own or any known record from any employers for as long as he remembered.

When he got a new job and worked for a year, he was filing his taxes though he knew he won't have to pay anything for the past years that he didn't work and to his surprised, he was charged by the IRS a few thousand bucks! Of course he tried to dispute this with the IRS and at first the IRS was adamant to help him and he had to demand investigation on the whole case.

It was later found out that someone used his social security number and declared income. So stupid of that guy and we think the whole case was turned over to the FBI. My cousin of course was astonished with the whole thing and now he is very careful in giving his social security to just about anyone.

So it can be a lesson learned for all of us also. At least nowadays, there are many web-related services that can protect your identity… or at least monitor it before you get abused to the maximum level. For a small fee you can know immediately if someone else is trying to use your identity by their powerful software.

Lately though, I found some sites where you can pay the IRS online. It should be noted and advised that unless it is the IRS, one should not be paying anything whether online or offline.

Scams of the world are present in all aspects of life. And the IRS system can be targeted anytime. Make sure though that you pay your taxes on time so that you don't get into trouble anytime soonest if you don't.

I learned this lesson from my cousin. It does not mean that if you do not work you do not file your taxes. As a matter of fact, you can even get some money out of your refunds if you've been faithful to the government.

RESPONSE:

This story emphasizes the importance of using caution when giving your personal information to anyone, online or offline.  There are many scammers out there and some of them pretend to be from a government agency like the IRS.  This is yet another reason why it is important to retain a professional when there is even a hint of a problem with the IRS.  Once you hire an attorney, the IRS must contact them.  By using a Power of Attorney form, your Tax Attorney becomes your representative.  They will deal with all correspondence from the IRS.  This means that you don't have to talk to the IRS or in any way be bothered by them.  This also protects against the possibility that you will inadvertently give the wrong person your personal information.

Full post as published by IRS Problem Solver Blog on March 18, 2009 (boomark / email).