3/21/2005

Advice from Nashville's leading Financial Aid Advisor Dave Ramsey

 
Dave Says
By Dave Ramsey
Author of:
Financial Peace and
The Total Money Makeover

"Found out new husband has $20,000 in back taxes!"

Dear Dave,

My husband and I married 10 years ago. At the time he was a single father with four children – I have two of my own – and he was running his own business. Needless to say, he was a bit overwhelmed and he told me that he hadn’t filed his income taxes for a couple of years.

We went to the IRS and they told us he owed $20,000 in back taxes and penalties. That was way more money than we had, but we wanted to clear this up. We took them our budget and they noted that we spent a lot of money on groceries. They suggested we get food stamps and use our grocery money to pay them. We didn’t feel that was right. So, we avoided the food stamp scenario and just stretched ourselves to pay them $4,400 a month. However, the balance kept growing instead of shrinking. We knew we needed help and some friends of ours put us in touch with a man in Hawaii. We paid him $2,000 and he gave us information that the income tax is based on voluntary compliance and citizens are not required to pay them. We bought into this hook, line and sinker and I sent all of the letters that this man gave us to use.

About three years after we stopped paying the IRS, they visited our house. I challenged them to show us a law that stated that the tax is not voluntary. The lady who visited us said she didn’t have the law book. I told her I had one and asked her to show me in my book. She said she couldn’t. Since then, we haven’t heard anything from them at all, but we’re beginning to get worried that this may come back to haunt us.

Mary in Knoxville, TN



Dear Mary,

RUN, don’t walk, to an attorney who specializes in taxes. Hire them to represent you, get on a plan and start to work this out. Be warned that it may take you several years to get this straightened out. You may be eligible for an Offer In Compromise – OIC – which basically means that you have pauper status, no money, because everything you have is spent to feed and shelter your family. If you can show that, there is a basis for a pennies-on-the-dollar settlement on your tax bill which, by this time, will be huge. This voluntary compliance scam is bogus. Irwin Schiff was arrested and indicted last year for teaching and using these techniques – again.

I hate taxes. I think they’re too high and government spending is out of control, but those taxes are legal. They’re the law and they put 2,700 people in jail last year for tax evasion.

If you “come in out of the cold” on your own and work out a payment arrangement or an OIC, that will be your best chance to avoid a criminal prosecution here. In all the years I’ve been doing this counseling, I’m not personally aware of anyone who was jailed after they went to the IRS to clean up their mess – as opposed to ducking and hiding and forcing the IRS to find them.

You need an attorney to help you work this out and get a fresh start because, at this point, you’ve got no future and no reason to build a future because the government can come take it away at any time.

-Dave

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