IRS Controversy: If You’re Not Careful, Your Dispute Will Spiral Out of Control

You’ve probably heard the saying “don’t make a mountain out of a molehill.” It’s common sense, something most of us heard from our parents or our teachers—the idea that we shouldn’t take a small problem and blow it up into something huge. Well, somebody needs to explain this concept to the IRS. It’s amazing how often a minor error or a perfectly innocent mistake balloons into a huge problem. IRS penalties and interest add up and quickly become unrealistic.

And then, before you know it, the IRS is coming after your home or other assets. A recent article published in South Carolina’s Aiken Standard reports one such story:

An Aiken man who owes more than $1.7 million in taxes, interest and penalties could lose his home and the 150-acre property on which the Internal Revenue Service has a tax lien.

On Wednesday, the IRS and the U.S. Attorney General’s Office filed a civil lawsuit in federal court against Edward “Ed” F. Scanlon, his wife Debra J. Scanlon and the First Citizens Bank and Trust Company hoping to foreclose on that lien.

The suit alleges that the Scanlons failed jointly to fully pay federal income tax in 2002, 2003 and 2004; and that Ed Scanlon failed to pay individually in 1999 and 2000. The total debt, according to court documents, is $1,709,654.90.

First Citizens is named in the suit as it holds the mortgage on the Kitchings Mill area property which the IRS wishes to foreclose on.

“This is an ongoing, longstanding problem between me and the IRS, having to do with income I generated years ago,” Ed Scanlon said Thursday, who was unaware of the suit until contacted by the Aiken Standard. “I’m in the middle of changing my legal (and financial) representation. I hoped, I had hoped, they would defer any action for a month so I could get this worked out.”

Without knowing the details of the case, it’s impossible to comment on it specifically. But there are countless taxpayers and business owners in this country who could share similar stories of IRS over-aggression. And many times, it was simple mistakes that caused the problem to begin with.

If you’re in a similar situation, it’s important that you take steps to resolve it quickly while it is still manageable. If you’d like to learn more, or if you