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A friend's brother is totally disabled, in a nursing home for life, aged about 50. He has no money whatsoever. Years ago the IRS was sending letters saying he owed $3K in taxes. The letters were ignored for years. Now he is getting letters from a collection agency. And calls. He himself doesn't get the letters or calls, since he is not able to talk, think, or anything. His brother gets the letters.

No ones for sure if he even really owes the money. It would be a very difficult audit to figure that out.

Any suggestions?
Thanks,
RB
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I'd say you need to hire a tax attorney to represent him, determine what his responsibility is, present the evidence to the IRS if you're disputing the taxes and fines, and negotiate a settlement if necessary.

Fuskie
Who encourages anyone who runs afoul of the IRS to not try and resolve things themselves but hire a professional to advise and represent them...

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They would probably just end up paying as much to the attorney as to the IRS! And then may end up having to pay the IRS anyway!
That's the problem with small change like $3K. Lawyers cost too much. The number of hours, hassle, and cost of a lawyer could easily be worse than the $3K. Seems to me.
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My read was that it was $3k before the fines. But if a tax attorney is out of the question, then maybe a consult at least will be feasible.

The Taxpayer Advocate Service is also a resource:

https://taxpayeradvocate.irs.gov/

Also check out the Low Income Tax Clinic:

https://taxpayeradvocate.irs.gov/about/litc

There may also be orginizations that serve the mentally disabled who have resources that can help families in your situation.

Fuskie
Who notes there may also be local nonprofits or community organizations that offer tax advice services...

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Thanks, I'll pass on those resources to my acquaintance.
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Why not demand that the collection agency only contact through mail and continue to ignore the mail? He has no assets. What can they collect?

If the debt is personal income tax, it is old enought that it maybe possible to write it off it bankruptcy which would likely be easier and cheaper than trying to determine the tax bill.
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vkg,

You wrote, If the debt is personal income tax, it is old enought that it maybe possible to write it off it bankruptcy which would likely be easier and cheaper than trying to determine the tax bill.

But if he has no income to protect, why file BK?

I have to ask, Is the person that's worrying about this the disabled person's legal guardian? If not, it's really not their problem. If they are, they can contact the IRS on that person's behalf. In fact it seems they should have done that long ago.

Also as guardian it would seem they should respond to the collection agency with a request for validation of debt letter...

- Joel
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Also as guardian it would seem they should respond to the collection agency with a request for validation of debt letter...

And if the debt cannot be proved, insist that it not be sold off.

IP,
who had to deal with numerous collection agencies for 15 years after her identity was stolen
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But if he has no income to protect, why file BK?

I would assume the person is receiving disability benefits. Wouldn't put it past the IRS to place a lien against the monthly check. Or at least threaten.

JLC
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JLC,

I wrote, But if he has no income to protect, why file BK?

To which you replied, I would assume the person is receiving disability benefits. Wouldn't put it past the IRS to place a lien against the monthly check. Or at least threaten.

You have to have real assets for a lien to have any effect. For instance if there is a trust or house in this person's name, then yes this might be a problem. If Social Security and Medicaid are paying the bills, I don't think the IRS or a collection agency could garnish them.

So let me rephrase my statement: But if he has no assets or income to protect, why file BK?

Even if he gets a judgement or lien filed, it should be uncollectible. But of course I don't know the specifics about this person - that's a decision their guardian should be making.

- Joel
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A friend's brother is totally disabled, in a nursing home for life, aged about 50. He has no money whatsoever. Years ago the IRS was sending letters saying he owed $3K in taxes. The letters were ignored for years. Now he is getting letters from a collection agency. And calls. He himself doesn't get the letters or calls, since he is not able to talk, think, or anything. His brother gets the letters.

If the letters are coming from a collection agency, they're either bogus or not a federal debt. The IRS's permission to use private collection agencies doesn't begin until the Spring of 2018.

You (that is, an authorized representative) can request information about his tax account. Any assessed tax usually ages out after 10 years (there are various events that can extend this time). Given the info you provided, any tax liability should have been marked CNC, currently not collectible, in the IRS records.

Ira
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Thanks Ira. I'll let them know.

About the CNC, I think "years" is like 4 to 5, not 10. So maybe it's not CNC yet?
Thanks,
RB
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If Social Security and Medicaid are paying the bills, I don't think the IRS or a collection agency could garnish them.

Actually, your thinking is incorrect. The IRS does have the ability to garnish both retirement and disability SS payments for debts owed to the federal government, like federal taxes or federally guaranteed student loans. SS payments can also be garnished for alimony and child support, and some civil penalties. https://faq.ssa.gov/link/portal/34011/34019/Article/3812/Wha...

That said, as Ira pointed out, if the debt was incurred long enough ago, it should be considered uncollectible now.

AJ
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That said, as Ira pointed out, if the debt was incurred long enough ago, it should be considered uncollectible now.

That doesn't stop debt collectors from continuing to pursue it. Something about a clock reset if you all the sudden admit it was your debt. Have to be real careful about what you say. I was stunned that it took me so long to stop getting calls from debt collectors over a fraudulent debt.

IP
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That doesn't stop debt collectors from continuing to pursue it. Something about a clock reset if you all the sudden admit it was your debt.

Nothing ever stops debt collectors from continuing to pursue a debt, at least not until the debt is paid off or settled. Debt collectors can buy old 'zombie' debt for less than pennies on the dollar - so if they only manage to get a few people to pay them something, the purchase will probably be a profitable one for them. However, debt collectors have limited options to threaten/harm you with once some time has passed. (Plus, as already pointed out in this thread, you can request that they contact you only by mail.)

The most common way for debt collectors to harm you is to place a derogatory mark on your credit report. For the first 7 years and 180 days after the delinquency occurred they are allowed to do so. However, the technique of re-aging the debt to keep it on your credit report longer than that time frame is no longer legally allowed. If collectors attempt to do so by doing things like changing the account number to make it appear that it's a new debt, the debtor can sue them in court for $1000 per violation plus attorney fees, and potentially even more if the debtor can show they were damaged by the illegal reporting. Here is an example of a large verdict against a debt collector trying to collect illegally (although this is not a 're-aging' case): http://www.abajournal.com/news/article/federal_jury_says_law...

The other way that debt collectors can potentially harm you that has a time limit is to get a lien/judgment against you. The time limit here is based on your state's statute of limitations, which generally runs between 2 and 6 years, although there are some states that have statute of limitations as long as 30 years under some circumstances.

Unlike re-aging a debt on your credit report, the statute of limitations can be restarted, if you confirm to the debt collector that the debt is yours. To prevent this, you should never tell a debt collector that the debt was yours. Rather, you should tell them that they need to provide you with a validation of the debt - make them prove that you are the one who incurred the debt.

AJ
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That said, as Ira pointed out, if the debt was incurred long enough ago, it should be considered uncollectible now.

That doesn't stop debt collectors from continuing to pursue it.

You're ignoring the most important part of my reply - the IRS does NOT use private debt collectors (at least not for several more months).

Ira
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You're ignoring the most important part of my reply - the IRS does NOT use private debt collectors (at least not for several more months).

I'm confused. How come the IRS says that they've already started using private debt collectors, while you say that they can't use them for several more months? https://www.irs.gov/businesses/small-businesses-self-employe...

The Internal Revenue Service began a new private collection program of certain overdue federal tax debts selecting four contractors to implement it.
The new program, authorized under a federal law enacted by Congress, enables these designated contractors to collect, on the government’s behalf, outstanding inactive tax receivables. Authorized under a federal law enacted by Congress in December 2015, Section 32102 of the Fixing America’s Surface Transportation Act (FAST Act) requires the IRS to use private collection agencies for the collection of outstanding inactive tax receivables.


AJ
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The Internal Revenue Service began a new private collection program ...

My bad. I was sure the start of the private debt collection program was delayed a year to 2018, but I seem to be mistaken. The program began in April 2017.

Ira
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