IRS Tax lien Resolution Help

[DaddyO]

On 1/25/2023 at 6:09 PM, Flyingifr said:

Before you waste a LOT of money on a Tax Resolution company, I suggest you talk with an IRS licensed Enrolled Agent (EA) who specializes in Tax Resolution matters.  I happen to be one, and have doing Tax Resolution for over 30 years. My intake interview is usually 2 hours or so in length, and I am certain Rush Tax didn't spend anywhere near 2 hours with you just to see if you qualify for tax resolution. The fact that you haven't filed in 3 years tells me that it is possible that the IRS simply filed 2 or 3 years of SFR's (Substitutes For Returns) where they give you the benefit of NOTHING and then assess the highest tax possible and proceed to try to collect it. In that instance, you may be able to eliminate most if not all of the problem by simply filing the missing tax returns.  If the problem is more complex, then you certainly need a professional who can advise you.

Hello,

 

wondering if you can help or offer any suggestions.  Long story made shorter, I took a loan from my 401K to pay  college tuition for my daughter.  The retirement company changed hands with my employer.  as a result, the terms of the loan changed....my payments increased and was no longer to be taken out of my paycheck.   I received a letter from the IRS saying the funds are now considered a withdrawal.   I have not called the IRS about this yet.  Like the Original poster, I was going to call to solicit help from someone more knowledgeable to see if there are any options here.   thanks in advance.   

[hdporter]

16 minutes ago, DaddyO said:

Hello,

 

wondering if you can help or offer any suggestions.  Long story made shorter, I took a loan from my 401K to pay  college tuition for my daughter.  The retirement company changed hands with my employer.  as a result, the terms of the loan changed....my payments increased and was no longer to be taken out of my paycheck.   I received a letter from the IRS saying the funds are now considered a withdrawal.   I have not called the IRS about this yet.  Like the Original poster, I was going to call to solicit help from someone more knowledgeable to see if there are any options here.   thanks in advance.   

 

This deserves its own thread, so as not to infringe on replies to the original post.  (I'll alert @MarvBear, by reference).

 

Based on my own IRS contact experience, I favor just dealing with the IRS directly on this.  The issues are simple and relatively straight-forward to address:

 

The IRS rules are that if you default on payments on a 401-k loan (or you separate from your sponsoring employer prior to full repayment), any residual balance is attributed as a withdrawal in the current year.  If you haven't attained age at which such a withdrawal is permitted penalty free, a 10% penalty is assessed, in addition to tax on the additional amount.

 

If the default occurred in a prior tax year, you'll need to refile that year, recalculating your liability and remit payment.  (Interest and underpayment penalties may attach, but safe-harbor provisions protect most filers from penalties).  You can file and pay the tax due and request that the IRS calculate interest and penalty, if you're uncomfortable doing the calculations yourself.

 

If the default is deemed to have occurred this year, there's no immediate action necessary.  You simply include the default balance as added miscellaneous income. 

[DaddyO]

Thank you for the reply my friend.   I was in the midst of fighting the increased payment.   since there are no designated HR offices, we leave a message and wait for return calls.   everything is done at a snail pace.   I was actually surprised to receive the letter from the IRS.  I was not told that the process has started and my loan will be considered a Withdrawl.  

 

again, thank you for your reply.