I recommend you make a copy of the check when you pay that $58k and keep proof of payment forever. The IRS systems don't always talk to each other, and I've seen cases where one department doesn't know what the other is doing. The lock-in letter may have been processed before they knew you were about to pay.

Just went through this exact situation last month. The lock-in letter and your $58k tax bill are definitely connected - the IRS issued the lock-in because they see a pattern of underpayment and want to prevent it from continuing while you're resolving the existing debt. Here's what you need to know: paying off that $58k won't automatically remove the lock-in letter. These typically stay in effect for at least 12 months regardless of whether you've paid your back taxes. However, once you've paid the debt and can demonstrate compliance, you can appeal the lock-in or request a review. My advice - pay that $58k as planned (keep all documentation!), then immediately call the IRS number on the lock-in letter to discuss your situation. Explain that you've now paid the full debt and want to work with them on the withholding issue. Sometimes they're more willing to work with you once they see you've taken care of the outstanding balance. Also, double-check that your wife's employer received and processed the lock-in letter correctly. Some employers mess up the implementation, which can cause additional headaches down the road.

Has anyone mentioned the tax benefits of leasing vs buying for a corporation? We lease our company vehicles and it simplifies the deduction process significantly. No depreciation calculations, just deduct the lease payments (with some adjustments for luxury vehicles).

Just want to emphasize something important that hasn't been fully addressed - the IRS scrutinizes vehicle deductions very closely, especially for expensive cars like a Porsche. Your dad needs rock-solid documentation if he goes this route. If the corporation buys the vehicle, he'll need to maintain a detailed mileage log showing business vs. personal use for every trip. This means recording the odometer reading, date, destination, and business purpose for each use. The IRS can and will audit vehicle deductions, and without proper documentation, they'll disallow the entire deduction plus penalties. Also, if he's using the car for both his W2 job commute AND legitimate corporation business, he needs to be very clear about which trips qualify for deduction. The corporation can only deduct mileage/expenses for actual business purposes - client visits, business meetings, etc. Regular commuting to his W2 job is never deductible. Given the complexity and audit risk, especially with a high-value vehicle, I'd strongly recommend getting a tax professional involved before making any purchase decisions. The potential tax savings need to be weighed against the compliance burden and audit risk.

One thing nobody's mentioning - many banks won't let you open a business account for an out-of-state LLC without proof of foreign qualification in your home state. I tried to do exactly what ur suggesting last year & Bank of America, Chase & even my local credit union all asked for my Statement of Foreign Qualification when I tried opening the account. Had to go back & register in my home state anyway lol

I went through this exact same dilemma when I started my consulting business last year. After doing extensive research and talking to a business attorney, I can tell you that trying to "fly under the radar" with an out-of-state LLC is definitely not worth the risk. Here's what I learned: California has some of the most aggressive enforcement when it comes to tracking down businesses operating within their borders. They have automated systems that cross-reference federal tax filings with state business registrations, and they actively pursue businesses trying to avoid registration requirements. The penalties can be severe - not just back fees, but also interest, penalties, and potential loss of your liability protection. Even worse, if you're ever involved in a legal dispute, opposing counsel could argue that your LLC isn't properly registered and therefore your personal assets aren't protected. I ended up registering in my home state and it wasn't nearly as complicated or expensive as I initially thought. The peace of mind knowing everything is above board is worth the extra cost. Don't risk your business and personal assets to save a few hundred dollars in fees.

Another option to consider: many credit unions and community organizations offer free or low-cost tax preparation services through IRS-certified volunteers. I used my local credit union last year for a return with W2 and some 1099 income, and they did a great job. Might be worth checking if there's something like this in your area?

For what it's worth, I paid $650 for tax prep last year with a similar situation (self-employment, W2, and investment income). That was with a local CPA, not a chain. The way I look at it - yes it's expensive, but the peace of mind knowing it's done right and I'm not leaving money on the table is worth it to me.

I understand the anxiety you're feeling - I went through something very similar a couple years ago when I couldn't make my final payment due to unexpected car repairs. The stress was overwhelming, but it worked out much better than I expected. Here's what actually happened in my case: I called the IRS about 3 weeks before my deadline and explained my situation. The representative was surprisingly understanding and offered me a few options right on the phone. I ended up extending my payment plan by 4 months with just a $89 fee since I applied for the modification online afterward. The key things that helped my case were: 1) I had made every single monthly payment on time up until that point, 2) I was honest about the unexpected expense, and 3) I called BEFORE missing the deadline rather than after. One tip I wish someone had told me - when you call, ask specifically if you qualify for a "streamlined modification" since you've been compliant with payments. This is faster than a full financial review and often has lower fees. The penalties and interest do continue accruing, but at least for me, the peace of mind of having an approved extension was worth it. And honestly, the IRS representative I spoke with said they much prefer working with people who communicate proactively rather than just disappearing when they can't pay. You've got this - the fact that you're thinking ahead and asking for advice shows you're handling this responsibly!

I've been helping people with IRS payment plan issues for years, and the most important thing to remember is that you have rights and options when you can't meet your deadline. Since you've been making consistent payments, you're already in a strong position. Here's my step-by-step recommendation: 1. **Call immediately** - Don't wait until November. Call the IRS practitioner priority line at 1-866-860-4259 (even as an individual, you can sometimes get through faster here) or the main line at 1-800-829-1040. Call early morning (7-8 AM) for shorter wait times. 2. **Ask for a "payment plan modification"** - Specifically mention that you've been compliant with all payments and need to extend due to medical hardship. Have your payment plan agreement number ready. 3. **Document everything** - Keep records of medical bills and any correspondence with the IRS. If they approve a modification over the phone, ask for written confirmation. 4. **Consider partial payment** - If you can pay anything toward the $3,800 by November (even $500-1000), it shows good faith and may help with the modification approval. The penalties you mentioned are real but manageable - about 0.5% per month plus current interest rates. This is much better than defaulting and facing potential liens or levies down the road. One last tip: if you have trouble getting through by phone, you can also submit Form 9465 (Installment Agreement Request) to formally request the modification. The IRS typically responds within 30 days. You're handling this responsibly by planning ahead. Medical expenses are considered legitimate hardship, so be honest about your situation - they work with people in similar circumstances all the time.