The Elder Law Forum By Michael Myers Sickness, death and taxes – to the very end
The final decades of a hard-lived life can be – in a word – "hard." They may contain sickness, death, and unpaid taxes – to the very end.
"I've had a stroke and I�m on oxygen. My wife is disabled and recovering from back surgery. The cat is sick. We�re all sick. And, now the IRS is after us."
Those were the circumstances described by a 73-year-old USD Senior Legal Helpline caller. He and his wife had received from the Internal Revenue Service a "Final Notice of Intent to Levy" to recover unpaid taxes.
Their tax obligation dates back to 1995, in the amount of $647. Now, with interest of $590 and penalties of $145, they owe $1,383. �Isn�t there a statute of limitations that stops them from going back that far? Can�t they only go back three years?� he asked
I advised that the three-year limitation pertains only to the time within which the IRS must �assess� the tax. However, if, as in this case, the tax is assessed in a timely manner, the agency has 10 years to levy upon it. The IRS is levying now because the statute will run on Dec. 31.
I suggested that he and his spouse personally visit their local IRS office and request a "hardship deferment." Their sole income is from Social Security. He receives $782 and she receives $551, for a total of $1,333 per month.
They are at high risk. Social Security payments are generally exempt from creditors; but not from the federal government. The IRS levy will be accomplished by having Social Security deduct $1,383 from their monthly payments.
To obtain a deferment, they will have to establish that payment of the amount owed would result in "undue or unreasonable hardship." If granted, the claim will be placed in an "uncollectible status." The IRS is generally pragmatic. It is not efficient for it to spend time and money trying to collect from persons without the capacity to pay.
If the hardship deferment is not granted, they should seek a payment plan that will avoid economic hardship. Once an installment plan is approved, the taxpayer is deemed once again to be in compliance and there will be no further efforts to levy.
"I've lived a hard life," confessed the caller. And, it is getting harder.