Don't Even Think of Ducking The IRS

by David Strege, CFP®, CFA, CKA®, Senior Financial Planner | March 16, 2008

The Washington Post logo

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®