Tax Debt
Many crime victims face financial hardship as a direct result of the crime. This can mean trouble paying bills, including tax bills from the Internal Revenue Service (IRS) or the state tax department. Below is some information that can help.
I can’t pay my tax bill. What can I do?
If you owe the IRS, and you can’t pay, there are several ways to deal with the debt.
- Installment Agreement: This is a payment plan. The IRS might let you pay off your tax debt over several months or years.
- Currently Not Collectible: If you can’t pay anything right now but could probably start paying later, the IRS might place you in a special hardship status called “currently not collectible.” If they put you in this status, the debt doesn’t go away, but it temporarily delays the IRS collecting what you owe. Know that:
- Penalties and interest keep building up
- The IRS will take your future refunds to help pay down your debt.
- When you start earning enough money to make payments, the IRS will ask you to pay in full or set up an installment agreement.
- Offer in Compromise – If you don’t think you’ll ever be able to pay off the whole debt, and if you can show the IRS that your finances are really bad, they might agree to settle your tax debt for whatever it is you can actually pay. Telling them about your experience as a crime victim may help.
If you owe state income taxes, there may be similar ways of dealing with the debt. Go to the New York State Department of Taxation & Finance webpage for more information.
I am a victim of domestic violence. What if my spouse and I owe taxes together?
If you filed your taxes with your spouse, then you’re both responsible for paying whatever tax you owe.
But sometimes, if you ask, the IRS will give you innocent spouse relief and free you of the responsibility.
You might qualify for innocent spouse relief if:
- your spouse abused you;
- the tax debt comes from your spouse’s income, not yours;
- you felt pressured into filing your taxes jointly with your spouse; and
- you’re facing financial hardship.
If you want to ask for innocent spouse relief from the IRS, fill out Form 8857.
If you owe state income taxes with an abusive spouse, the state might free you of that tax debt. In New York State, you can ask for innocent spouse relief by filling out Form IT-285.
Where can I go for help?
If you don’t feel you can handle this on your own, you might be able to get help from a Low-Income Taxpayer Clinic or from a Tax Advocacy Program. You can use this list from the IRS to find a Low-Income Tax Clinic near you. In Monroe County, the Empire Justice Center Tax Advocacy Program is available to help you. There’s no charge for their services, if you qualify and if they can take you on as a client.
Low-Income Taxpayer Clinics and the Tax Advocacy Program at Empire Justice Center can also help with other kinds of tax problems. Here are some examples:
- Refund Delays: You thought you were getting a refund, but it hasn’t come yet. Here are some possible reasons:
- Lost, Stolen, or Misdirected Refund : Maybe the IRS sent out the refund, but you never got it. The refund might have been lost, stolen, or sent to the wrong address.
- Identity Verification: The IRS may want you to prove your identity. They might be worried someone stole your identity and filed a tax return using your name and social security number.
- Missing Income: The IRS may think you left off some income on your tax return. This could happen if you forgot to include a W-2 or 1099.
- Audit: The IRS might be questioning you about something on your tax return. Maybe they want proof that you have the right to claim the Earned Income Tax Credit for your children. Maybe they want you to show receipts for the expenses you listed for your self-employment work.
- Identity Theft: This is when someone uses your name and social security number to get a job or to file a tax return. This can make it look like you owe taxes when you really don’t, or make it hard for you to file your own tax return.
- Worker Misclassification: This is when the company you work for wrongly treats you as a self-employed independent contractor, rather than as an employee. If they wrongly give you a 1099 instead of a W-2, it will look like you owe more taxes than you should.
The IRS Taxpayer Advocate Service may also be able to help you. This is an independent part of the IRS that can sometimes help you when you’ve tried on your own and haven’t gotten anywhere.
What if I need help paying property taxes?
If you owe property taxes and live in New York State, you may qualify for free help from a local housing counseling organization or a legal services provider. For more information, go to HomeOwnerHelpNY.org.
Where can I go to get help filing taxes?
If your income is low and you’re looking for free, high-quality help doing your taxes, find your local VITA or TCE site. “VITA” stands for Volunteer Income Tax Assistance, and “TCE” stands for Tax Counseling for the Elderly.
Use the VITA and TCE Locator Tool on the NYS Department of Finance and Taxation website to find a site near you. For example, Empire Justice Center’s VITA program, which is part of CASH (Creating Assets, Savings & Hope) can help Monroe County residents; call (585) 900-1004 or apply online.