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They are coming after her now. She has some savings which is mostly from Social Security, and all the rest of her money is in her retirement account. Will they be able to take her retirement account? She needs that to pay for memory care. I'm her daughter & POA.
There was absolutely no criminal neglect here. She was very meticulous about everything up until about 2015 when everything started falling away and nobody knew what was going on until all the damage was done. When I found out, I stepped in and shut down her business.
I know I need to see a lawyer with her but just wanted to bounce this off of you all and see if anybody's been in a similar situation or if you know if the tax agencies will be able to take her retirement account to satisfy the debt.

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Retired IRS Revenue Officer (tax collector) here answering your question. The bottom line answer is yes, they can take her assets to pay her debts. It's more detailed though. The IRS can take her assets like her bank accounts, and other property, even her home and car. It can also levy (garnish or seize) her Social Security income. She will get to keep part of the SS income but they can take it. The taxes that generally go unpaid to the IRS from a business are the taxes withheld from the employees wages (the Social Security and income that the employees get credit for, maybe never even knowing the company they worked for messed up and didn't turn in their money). Also, when a business owner doesn't turn in the withheld taxes, and the business portion of the SS tax, it is typical that they haven't filed or paid their own income taxes. That's on the federal side of things. For state and local taxes each state would have it's own laws on what assets or income can be reached, but they are not going to be able to reach her SS. The types of taxes involved here are more likely to be sales taxes, unemployment or labor & industries disability taxes, or state and local income taxes. With any of the agencies, try filing an appeal to waive some of the penalties and interest due on the unpaid taxes based on her mental incapacity, and provide some documentation. Chances are slim to get some relief, but maybe. There are also programs that allow the agency to legally compromise (reduce)the taxes owed. Laws vary, but the concept is that if the agency is shown that the delinquent taxpayer cannot fully pay the debt (taxes, penalties and interest) by the end of the statute of limitations (which also varies) they may settle for an upfront payment of what they think they can get. This requires a formal application and complete disclosure of income and assets for the agency to consider making a deal to give up the rest of what is legally owed to collect now. Ask the agencies about how to make An Offer in Compromise.
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Debster Aug 2019
This board is really a great place to get valid information and direction! We're really blessed to have many retired or currently working, professionals who hang out here and provide assistance.
Many thanks to you, the social workers, the psychologists and the many other people who help just because they can!
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Nobody is going to jail for this...this is a civil matter, with no criminal intent. The demented taxpayer will not be going to jail for anything. Stop scaring people with uninformed speculation.
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Penalties and interest can be huge amounts but may be negotiable. I've been through a business tax audit. If I were in your shoes I'd spend the money to consult with a good tax attorney. Don't talk to the IRS without representation.
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here is a lot of scare stuff here that doesn’t help. In cases where there is no deliberate fault, the tax authorities here and in most places still want the tax that wasn’t paid, but they don’t necessarily use their powers for fines, penalties, or (with luck) interest. It is often possible to amend or lodge past returns, which can help too.

Tacy’s advice is great. Collect up all the information you can, before you start incurring bills from accountants or lawyers. My suggestion mirrors Tacy’s about building a relationship with an individual in the Tax Department. Start while you are flustered, worried, at a loss about what to do etc – you want them to feel sorry for you, which is fully justified. I messed up our farm tax for about four years (in spite of being an accountant, though not a tax specialist). I was distraught. The wonderful lady in the Tax Office sorted out all my old returns and explained it to me. It cost me nothing besides the amount we should have paid in the first place. I hope that you have good luck too!
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OurOldHouse Aug 2019
Thank you <3
It helps so much to know that there are people here who are so understanding of this situation and willing to help - it really makes me feel like there might be a light at the end of the tunnel!
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More than a decade ago, I had to take care of my parents’ tax return after my father’s death. He had been using an accountant in his small town who was not a CPA. In reviewing the return, I thought some of the numbers just didn’t seem right. It involved a property that my father had sold on contract a few years earlier. It turned out that the accountant had made a mistake converting a fraction to a percentage, resulting in the taxable portion of the sale being calculated at only one percent of the correct figure. I went back to the accountant who admitted his mistake and went back and corrected the current return and several previous returns. It resulted in a pretty big bill and the IRS and state both added interest, but there were no penalties assessed. It was a mistake, not fraud, and we corrected it as soon as it was discovered. I agree that you should gather up whatever records you have and follow Tacy’s advice. Show the tax people that you are making an honest effort to clear up this mess.
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robinr Aug 2019
The preparer made the error and should have been held responsible for the interest!!!
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Pure and simple, it is Lawyer time. They may advise you make an appointment with the IRS with all the info you have. This is not going to be the first time this has happened and they will likely appreciate that it is not "on you" and that you are doing all you can to provide what you can. Bring all records you have of what she DID file, if anything, of what she kept records of, or anything you know. Yikes! Please update us how it goes.
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OurOldHouse Jul 2019
Luckily most of the recent stuff she did was being stored at her house so I did manage to snag a lot of paperwork that could probably help. And I will most certainly keep you guys updated because I bet this is an issue that other people would like to know how to deal with! I've been lurking on this site ever since last year when she was finally diagnosed and I cannot express how helpful this site has been for me; you guys are a great community and I really appreciate all of the answers!!
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IRS can seize any funds in her name. Taxes are considered super debts and they take the money however they can. Get a lawyer to try to negotiate a better deal. Owing taxes can impact many things.
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I agree with others who have said that the IRS can be reasonable to work with as long as you are making a good faith effort to resolve the issue. I would make an appointment asap with a CPA and bring all of the financials, your POA documentation, and any other necessary info with you. They can help negotiate with the IRS on your behalf and help you sort out all of the financial info and determine what paperwork needs to be filed, etc.
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I want to thank everybody for their wonderful, helpful responses. This is just a brief update: I managed to get complete tax and wage reports for all the years in question from ADP and sent them to the Ohio Unemployment people. They have worked through them and now want me to call for an "exit conference" so at least that's one thing that will be squared away. As far as the IRS goes, I still haven't heard anything from them thank goodness, but I will be making an appointment with an elder law attorney this week and also following up on some of the suggestions from Tacy022. I will keep you all posted. Thanks again, and hugs to all! <3
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OurOldHouse Aug 21, 2019
Reply to Tacy022: Yes, basically they just gave me the final calculation for the debt. ...just over $30,000. $20k principal, the rest penalties and interest. I told the lady they could try to get a judgement against her but she's basically insolvent. She said she would talk to their lawyer and find out what the process would be for this situation before she sends the audit letter. I won't sign anything!
My next step is to get on the Ohio Business Gateway portal. I do have her login information, I know you told me to set up my own but my financial POA includes all business stuff too; would that give me the ability to log on with her credentials legally?
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Of course it may be different with the IRS, but in my experience tax officials can tell the difference between a habitual chancer/rogue and a person who has always been a most meticulous, compliant record keeper but through untoward circumstances, such as ill health, has dropped all her plates.

They will want their money, but they won't be vile about it. Lawyer or accountant...? Other posters know better than I do whose assistance it's best to seek.
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cwillie Jul 2019
Her Majesty's Revenue and Customs officers sure sound different than Canadian ones, it seem like the evil b--tards like to go after the little ones and have been known to appeal if a judgment goes against them.
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