Real Life IRS Tax Nightmare: IRS Penalties Accrue at a Frightening Pace
IRS tax disputes impact thousands of taxpayers each year. While some taxpayers are fortunate enough to escape the process with only minor damages, many more taxpayers find themselves in a black hole of tax debt, penalties, and interest that seems impossible to escape.
One major problem with IRS penalties is that they are punitive in nature. Rather than providing encouragement for a taxpayer to learn from his or her mistakes, they instead overwhelm taxpayers with debt and can literally ruin their lives. IRS penalties accrue at an incredible rate, and no taxpayer is exempt. This story was recently driven home yet again as a well-known and wealthy lawyer found himself in the midst of a costly tax controversy.
A recent Boston Herald article reports:
Famed Hub lawyer Jeffrey Denner was sued in federal civil court yesterday for failure to pay $2.7 million in taxes and penalties, dating back to 2002, according to court filings.
The complaint filed in U.S. District Court in Boston states Denner is liable for federal income tax for seven years dating back to 2002 for a total of $2.7 million.
But Denner’s tax lawyer Bill Greenberg said the lawsuit is purely an administrative tool that the Internal Revenue Service is using to keep its claim to taxes from the early 2000s, which otherwise runs out after 10 years. He said the actual amount is much less.
Greenberg said this is a debt that Denner has been working to pay down for years. He said the original bill stems from 2003, when Denner suffered an aneurysm followed by an infection and nearly died. He said Denner spent two years recovering from his illness and could not pay his taxes during that time.
“Its been growing by 40 percent a year once he got behind,” Greenberg said. “I’ve been working with the IRS to get this under control. At this point we plan to try to compromise.”
Denner said he intends to pay what is owed, but has been attempting to negotiate the penalties and fees.
“I thought this was resolved years ago,” he said.
The complaint states Denner had a payment plan worked out for his 2002 taxes but did not keep up with the payments.
Did you catch the number at which Denner’s IRS tax debt increased? Nearly 40%! It’s illegal for credit card companies to charge interest rates that high, but the IRS can get away with it. And when you consider that many taxpayers who are in IRS trouble are already facing financial difficulties, you can see why excessive interest and penalties can seem like a black hole.
If you are facing an IRS dispute, it’s important that you take immediate action to get your situation under control. A tax attorney can help you fight for a fair settlement, preventing you from paying the IRS any more than you are legally required to. Please contact us today if you’d like to learn more about how we can help you resolve your IRS dispute!