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The thing that got my brother-in-law caught was lifestyle vs reported income. He ran a small electronics repair shop, reported about $50k income, but somehow afforded a $70k truck and a boat. Someone (probably his ex-wife lol) reported him. Audit found about $120k in unreported income over 3 years. Ended up with $46k in taxes, $35k in penalties, and $22k in interest. Plus he had to pay his accountant and lawyer another $15k to handle everything. His shop went under from all this. Now he works for someone else making half what he used to. Definitely not worth the risk.
This is why I tell all my clients - you can either afford your lifestyle honestly or you can't. The IRS isn't stupid. They see this pattern all day every day.
As a small business owner who went through this exact dilemma a few years ago, I want to echo what others have said - the risk is absolutely not worth it. I run a cash-heavy service business (HVAC repair) and was tempted to skim some cash sales when things got tight. What changed my mind was talking to my insurance agent about an unrelated claim. He mentioned that during their investigation, they pulled my business bank statements, credit card records, AND requested copies of service invoices to verify my reported income levels. That's when I realized how many different ways your actual business activity can be tracked and cross-referenced. The IRS has access to all the same records, plus more. They can subpoena your suppliers, cross-check your material purchases against reported jobs, and even analyze your utility usage patterns to estimate actual business activity levels. Instead of hiding income, I invested in better bookkeeping software and found a tax preparer who specializes in service businesses. Turns out I was missing tons of legitimate deductions - vehicle expenses, tools, even a portion of my home internet since I handle scheduling from home. Ended up saving almost as much as I would have by hiding cash, but completely legally. The peace of mind alone is worth doing things the right way.
This is really helpful to hear from someone in a similar situation. I'm curious - what kind of bookkeeping software did you end up using? And how did you find a tax preparer who specializes in service businesses? I feel like most of the ones in my area just do basic returns and don't really understand the specific challenges cash businesses face with tracking expenses and maximizing deductions.
I'm so sorry for your loss and the additional stress this tax situation is adding during an already difficult time. Given everything you've described, an OIC for the estate sounds very promising. The key factors working in your favor are: 1. **Property condition documentation**: The severe damage, pest infestation, and structural issues you described significantly reduce the actual marketable value of these assets, regardless of their assessed values. 2. **Estate-only liability**: As others mentioned, you won't be personally liable for your father's tax debt - this is strictly an estate matter. 3. **Reasonable collection potential**: The IRS will evaluate what the estate could realistically generate in cash, not theoretical values. I'd recommend taking these immediate steps: - Document everything with photos and get written assessments of repair/cleanup costs - Obtain current appraisals that reflect the actual condition and marketability - Calculate all selling costs (realtor fees, closing costs, outstanding property taxes) - File the OIC using Form 656-L specifically for estates Given the condition you've described, there's a real possibility the mobile home has negative net value once cleanup and disposal costs are factored in. This could actually strengthen your OIC position significantly. The fact that your father struggled with addiction issues is also relevant for the hardship narrative - the IRS does consider circumstances that led to the tax situation when evaluating offers. Don't lose hope. Many estates in similar situations have successfully negotiated reasonable settlements that allow heirs to retain some assets while satisfying the IRS's collection requirements.
This is such a comprehensive and compassionate response. I especially appreciate how you've laid out the immediate action steps so clearly. One thing I'd add is that when documenting the property conditions for the OIC, it might be worth having a qualified environmental inspector check for any potential hazards (asbestos, mold, lead paint, etc.) given the age and neglected condition of the mobile home. If any are found, the remediation costs could be substantial and would further support the argument that the property has little to no net value. Also, @Amina Sow, when you're preparing the hardship narrative about your father's addiction struggles, frame it in terms of how these circumstances directly impacted his ability to maintain proper financial records and meet tax obligations. The IRS is more receptive when they can see a clear connection between the personal circumstances and the tax compliance issues. The timeline really is crucial here - getting your OIC submitted before the IRS completes their own asset evaluation puts you in a much stronger negotiating position.
I'm so sorry for your loss, Amina. Dealing with a parent's tax debt on top of grief is incredibly overwhelming. The good news is that an OIC for your father's estate is definitely worth pursuing given what you've described. The IRS will evaluate the estate's "reasonable collection potential" - which is the actual cash the estate could generate, not just paper values. A few critical points for your situation: **Document everything immediately**: Take extensive photos of the mobile home's condition - the pest damage, structural issues, utility problems, debris piles. Get written estimates from contractors for cleanup, pest remediation, and repairs needed to make it marketable. These costs may actually exceed the property's value. **Professional appraisals**: Get current appraisals for both properties that account for their actual condition and marketability, not just theoretical values. **Consider environmental issues**: Given the neglected condition, there may be mold, asbestos, or other hazardous materials that would require expensive remediation before sale. **Calculate all selling costs**: Realtor fees, closing costs, outstanding property taxes, and cleanup costs all reduce what the estate would actually net from any sale. The fact that your father struggled with addiction is relevant for the hardship narrative - it helps explain how the tax situation developed. You mentioned already filing probate - this creates some time pressure since the IRS can file claims against the estate. I'd recommend moving quickly to get your OIC package together while you still have maximum negotiating flexibility. There's real hope here that you could settle for significantly less than the full amount owed.
I completely understand your anxiety about this - I went through the exact same panic last year when I realized I'd used Priority Mail instead of Certified for my tax return that included a significant balance due. Here's what helped put my mind at ease: Priority Mail does include tracking that shows proof of mailing date and delivery confirmation, which the IRS will generally accept as evidence of timely filing. While it's not as legally bulletproof as Certified Mail's return receipt, it's still legitimate documentation that you met the deadline. The key thing is to preserve all your evidence right now. Print your Priority Mail receipt, take screenshots of the complete tracking history, and save the delivery confirmation. USPS tracking data expires from their website after about 120 days, so don't wait on this. In my case, my return was processed normally and I never heard anything about delivery issues. The IRS processes millions of returns sent via Priority Mail without problems. Yes, Certified Mail is the gold standard for proof of mailing, but Priority Mail tracking is still solid evidence that will protect you in the unlikely event there's ever a question about whether you filed on time. Try not to stress too much - you took reasonable steps to file by the deadline, and the tracking will back that up if needed.
This is exactly the reassurance I needed to hear! It's so helpful to know that someone else went through the same panic and everything worked out fine. I've been losing sleep over this, but you're right that Priority Mail is still legitimate proof of timely filing. I'm going to take those screenshots of the tracking history right now before I forget. Thank you for sharing your experience - it really helps to know that the IRS processes millions of Priority Mail returns without issues. I feel much better about this situation now.
I work as a tax preparer and deal with this situation frequently. Priority Mail is actually accepted by the IRS as proof of timely filing - the tracking number serves as evidence that you mailed your return by the deadline. While Certified Mail provides stronger legal protection with its return receipt, Priority Mail tracking showing delivery to the IRS processing center is generally sufficient. The most important thing right now is to save all your documentation. Print your Priority Mail receipt and take screenshots of the complete tracking history, including the delivery confirmation. This tracking data will only be available on the USPS website for about 120 days, so don't delay in preserving this evidence. In my experience, the vast majority of Priority Mail tax returns are processed without any issues. The IRS receives millions of returns via Priority Mail each year. Your tracking confirmation showing timely delivery should protect you if there's ever a question about meeting the filing deadline. While I always recommend Certified Mail for high-stakes situations, you shouldn't lose sleep over using Priority Mail - just make sure to keep that proof of delivery safe.
This is really reassuring coming from a tax professional! I'm curious though - when you say Priority Mail is "accepted by the IRS as proof of timely filing," is this based on official IRS guidance or more from your practical experience? I want to make sure I understand exactly what level of protection the Priority Mail tracking provides versus just anecdotal evidence that it usually works out fine. Also, have you ever seen cases where someone had issues specifically because they used Priority Mail instead of Certified Mail for their returns?
Make sure to track your expenses too! Gas money driving to pickup/delivery, work gloves, tools etc. You can deduct all that stuff from your income
Just wanted to add - if your husband is collecting scrap metal regularly, the IRS might consider this a business rather than just occasional sales. Keep detailed records of everything: what you collected, when you sold it, expenses like gas and tools. If it becomes a regular thing, you might want to get a business license and set up a simple bookkeeping system. Better to be over-prepared than caught off guard!
This is really good advice! I'm new to all this tax stuff but that makes total sense about it potentially being considered a business. How much income would typically trigger the IRS to see it as a business vs just casual selling? My husband's been pretty consistent with it, maybe 2-3 trips to the scrapyard per month.
@Ethan Scott There s'no specific dollar threshold that automatically makes it a business, but the IRS looks at factors like: regularity 2-3 (trips monthly sounds pretty regular ,)profit motive, time and effort invested, and whether you re'trying to make it profitable. If your husband is actively seeking out scrap, has regular routes/contacts, and treats it seriously, they might classify it as a business regardless of income amount. The good news is business classification can actually help with deductions! You can write off vehicle expenses, tools, even part of your phone bill if you use it to coordinate pickups.
Isaiah Sanders
Yes! Check your old paystubs first - the payroll company name is usually printed somewhere on there, often in small text at the bottom or in a corner. Sometimes it's just their logo or website URL. If you don't have paystubs, look at your bank statements for the direct deposit descriptions. Many payroll companies include their name or abbreviation in the deposit reference (like "ADP PAYROLL" or "PAYCHEX DD"). You can also try looking up your old employer on sites like Glassdoor or Indeed - sometimes employees mention which payroll system their company used in reviews. If it was a larger payroll service, they might even have a "find your W2" feature on their website where you can search by company name or your personal info. Another option is to contact your state's unemployment office if you filed for benefits after the company closed - they sometimes have records of which payroll service employers used for wage reporting.
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Aurora Lacasse
ā¢This is really helpful advice! I never thought to check the direct deposit descriptions in my bank statements. I just looked back through my old statements and found "HEARTLAND PAYROLL" in the deposit references. I'm going to try contacting them directly tomorrow to see if they can help me get my W2. Fingers crossed this works out better than trying to deal with my former employer who keeps giving me the runaround. Thanks for the detailed suggestions!
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Giovanni Martello
Another thing to consider - if you do end up having to file Form 4852, make sure you also file Form SS-8 if there's any question about whether you were properly classified as an employee vs independent contractor. Some shady employers who are already failing to provide W2s might have also misclassified workers to avoid payroll taxes. Also, don't forget that you may be entitled to refunds of any overpaid taxes from that job. If they were withholding federal and state taxes but never properly reported your wages to the IRS, you could potentially get those withholdings back as a refund once you file with the substitute W2. Keep detailed records of every attempt you make to contact both the former employer and payroll company - dates, times, who you spoke with, what they said. The IRS appreciates good documentation when you're in situations like this, and it can help protect you if there are any questions about your filing later.
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Connor Gallagher
ā¢This is such valuable advice, especially about the potential refunds! I hadn't thought about the fact that if they withheld taxes but never reported my wages, I might actually get those withholdings back. That could be a decent amount of money depending on how much was withheld throughout the year. The documentation tip is spot on too. I've been keeping notes, but I should probably be more systematic about it - creating a timeline with exact dates and details of every conversation. It's frustrating that we have to jump through all these hoops when the employer is the one who messed up, but at least there are ways to protect ourselves and potentially recover what we're owed. Thanks for mentioning Form SS-8 as well. I'm pretty sure I was classified correctly as an employee, but it's good to know that's another option if there were any classification issues on top of the missing W2 problem.
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