Lee Tanner's troubles with the Internal Revenue Service began with a common mistake. While working for a dot-com, he earned money from the sale of stock options in addition to his salary and didn't have the proper amount of taxes taken out.
"I didn't know any better to correct the problem," said Tanner, 40, of Ashburn, VA.
After three years of not paying enough in taxes, in June 2004 he received a bill from the IRS for $764,000, swollen by interest and penalties.
He didn't have the money. His accountant urged him to fight the bill.
He did for more than two years, during which the penalties and interest kept adding up. "I was just completely lost," he said.
Most Americans will receive tax refunds this year. But for those who get tax bills instead, figuring out how to deal with the IRS can be stressful and sometimes scary.
Local tax lawyers, accountants and financial planners said avoidance is a common reaction among people who owe the IRS and don’t have the cash to pay.
This article further explains some of the things that can happen and all of them are bad and features input from David Strege.
PDF Article from the Washington Post.
– David Strege, CFA, CFP®