Well, tomorrow is tax day. I have a rather interesting tax and IRS story that has permeated my life for about, oh, 17 years. I won’t go into it all right now, but with the deadline it’s a good time to start some back story, and give some advice from my past mistakes.
From the age of 20-31 I was basically an independent contractor. Actually I was a salesman and then a sales manager but I was paid the same way many contractors are paid. It is a way the direct sales business saves themselves tens of thousands of dollars a year so they don’t have to worry about or pay FICA and Medicare on certain workers that really should be employees. I have a lot to say on this subject as well, but not today.
Basically because of the way we were paid many of the successful people in this type of business can easily get themselves in tax trouble. You let it go, kind of hoping to get enough of a promotion to be able to pay off your tax debt the next year, and when it doesn’t happen the next year, you let it go again, and on, and on.
I finally got out of that business in 2001. Soon after, the IRS came knocking, wanting their money. Now, I do have some complaints about the IRS, but really most of my issues are with my original job, and my rant today is about the people that allow other good people to get themselves in a bad bind, and then the companies that claim “We can settle your tax debt for pennies on the dollar.” I went to such a company, who could remain nameless, but, because I despise them, won’t. I used a company called JK Harris.
My original tax debt was about $15,000. With penalties and interest, the IRS added another $30,000. JK Harris had a lot of testimonials saying they could settle debts like this for anywhere between $1,000 up to $3-4,000 for people that owed what I owed. They charged me $3,500 to do all this. Obviously at the time I couldn’t pay a lot, I was under a wage levy after all. They promised to get rid of the levy within two weeks, I paid $700 that I didn’t have down, and went on a payment plan to pay them $300 per month. They did get rid of the levy, but it took eight months, meanwhile I am still paying them their money even though I am getting half of my paycheck. They put in an Offer in Compromise a year after I first contacted them, and it was refused by the IRS. JK Harris then claims they will appeal. Meanwhile, I start getting the familiar “Intend to Levy” notices from the IRS. Knowing that when you get these the IRS means business, and as I couldn’t get a good response from JK Harris, I ended up going to a local attorney in my city. Now, he did let me know it would be a long difficult battle. And it was. And even he didn’t do everything perfect, but he did get my account settled. I did come into a little money and had to give all that up (about $25,000), but my case is settled and I no longer have to have sleepless nights wondering what the IRS is going to do to me. Because of the two year delay in trying to use JK Harris, the interest and penalties increased, and then I had to still go and pay an attorney to get my mess solved.
So, my message in this story, for the (ahem) thousands of readers I have, do not go to any of the “We will settle your IRS debt for cheap” notices you will get soon after the IRS starts putting liens on everything you own. Go to a local tax attorney with a good reputation, get a good accountant, and get your mess settled. It sucks, and there will be a lot of stress while it is going on, but once it is over you will feel 1000% better.
Lastly, there is currently a class action suit against JK Harris for making the claims I mentioned above and not delivering. If anyone stumbles across this and used JK Harris and got screwed like me go to www.oicsettlement.com. You only have until May 25, 2007 to get it filed so get some money back!