The IRS took over $9,000 of our money...can we get it back? (Tax withholding)?

My husband had intentions of started his own construction company 6 years ago but decided against it after becoming incorporated as a company (we live in Indiana). He never made any money and only bought supplies to start the company. He never filed taxes on anything cause he didn't make any money (he assumed he didn't need to report it because he didn't make anything). Long story short...the IRS just took over $9,000 from us from a personal injury case (we still don't have our personal injury check in hand....so its out of our control...they have the money). Since my husband never filed taxes are we pretty much screwed or can we get our money back somehow? The business was never 'officially' closed but has never done any construction jobs nor has he made any money under his 'construction company'. Can you give me any good advice on what our next step would be? SERIOUS PEOPLE and ANSWERS ONLY PLEASE!!!

Public Comments

  1. Sorry but your husband did everything wrong. When you create a corporation your corporation becomes a "Business Entity" and has to file tax report even if there was no profit, failing to do so has some penalties. As long as the "Business Entity" is alive he will be required to file a tax report year after year. He needs to close this corporation as soon as possible. He can try to fight back but is gonna be very difficult since he never closed the corporation. Since there was never a tax report, the IRS wont take the word of your husband about not making any money. IRS is very strict with unclosed corporations because many "ghost" corporations are used for fraud or money laundry. Things could be worst, at least they don't want to send him to jail for tax evasion.
  2. If your husband's construction company was incorporated, the $9k that the IRS took from you has nothing to do with the corporation. Yours is a complicated situation. I would recommend you contact an Enrolled Agent (you can search on the web at www.naea.org for one in your area) who is experienced at IRS representation. You should be able to get a few minutes, at no cost, to state your problem and get a recommended solution. I'm not sure why the IRS took the money but your issue is fairly easily resolved with competent assistance.
  3. It seems to me that there is information missing from your question that you need to find out about. What correspondence preceded the IRS taking your personal injury check? The IRS is required to provide written notice before seizing your assets, and give you the right to a hearing to appeal the decision to seize your assets. You state that your husband didn't think the corporation needed to file taxes. Anyone who incorporates is required to have that tax entity file a return every year. If no returns have been filed for six years, he has received notices about it. If the IRS had no indication the corporation had income, then the tax deficiency may be coming from your personal tax returns. Are your personal tax returns in order? You need to find out. Until you find out what the IRS says is owed, you cannot address the problem of recovering any money from them. If you are not a party to the corporation, then you may not be able to find out. This is far too serious a problem to not use a professional tax person. That person will probably have the corporation file all back years, review your personal returns for errors, and respond to the IRS notices. Don't waste any time, retain someone who can help you right away.
  4. Your husband should have filed taxes on the business, this would have been a loss for the business that could have been deducted in the future for taxes, whether the business survived or not.
  5. The first step that you need to take is to call the IRS and have them mail you a copy of all of the correspondence related to this matter. It is there, the IRS does not blindly seize assets from people. However, if you are not a party to the corporation, then the IRS will not talk to you. Then it is up to your husband to get the information. Then, find a good tax lawyer to help you out. My opinion of what happened is that your husband received letters from the IRS that were ignored or thrown out becuase he didn't think that they were important or he didn't understand what was in the letters.
  6. If it is 6 years ago then the time for getting any money back is long gone. The IRS will only refund back for returns that are less than 2 years old.
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