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Did you know that over 20 million people owe back taxes? So, let's see...if each one owes $1000 average, that's $20 billion in revenue for Uncle Sam which seems like a bunch, but consider this - the federal government gave $99B to Fannie Mae, $70B to AIG, they even gave $10B to Goldman. Now you can't tell me that Goldman used all that money for the benefit of their poor clients...oh wait, they don't have any of those (check out Where's the Money to see where it all went.)

If the government decided to declare a tax amnesty, they would have in essence put $20B in the hands of people like us who have been eating mac and cheese and ramen noodles for years. What would we have done with it - put it right back into the economy, for sure.  Talk about a stimulus package.

But that's not what happened, and here I sit with over $300,000 in back taxes.

I'm not a rich man, never have been. I've never been a big business big shot, or owned anything more than a small consulting business. Now I'm a salaried employ, I make a modest 6 figure income and live like a pauper because I make too much money to get any relief. I often think that I'd be better off if joining the peace corps.

How did I get this way? What have I tried to do about it? And most importantly what does this have to do with you? 

• First, I didn't pay taxes as a 1099 consultant for 4 year. Stupid? Yes! Should my chances of retirement be ruined because of it? God I hope not, but Uncle S disagrees.
• Second, I spent 3 years and over $15,000 on accountants and lawyers trying to solve my problems. At the time it seemed like a good investment as I at least figured I'd break even. Nothing doing. I should have done it all myself and paid the money against my taxes.
• Why should you care? Because I'm going to systematically write here about all the things I learned while chasing tax relief phantoms. I want you to understand the system. It's a system designed to squeeze every spare penny out of those that make any money at all, and, while a very few may have miracle circumstances, chances are you don't and your stuck like me.

I'm not a tax pro and not trying to sell anything here - I'm simply trying to put some good back into the universe in the hope that at some point, some of that goodness funnels back to me and provides a way out of this tax debt.

I promise future posts will be more fact filled, but I wanted to let you get a chance to know me. And, lest you think I'm all sour grapes and stuff, I'm not. Owing this much money to the government gives you a certain Zen-like peace because their is nothing I can do about it.

Here is one fun little tax tidbit until next time - the Offer In Compromise (OIC) system, which is that thing that tax pros claim can resolve your debt for pennies on the dollar, is a scam. Why? Because it's based on a formula that takes into account all your available assets and adds those to the lump sum they expect you to pay. Let's say their formula figures you can pay off a $100,000 tax debt for $10,000 and you happen to have $10,000 in the bank. Great! Nope.

The IRS is going to want $20,000 because they add the $10,000 you have in the bank to the $10,000 your income says you can pay. Now where are you going to get the money? If you are like me, your credit stinks because of a tax lien. Obviously there is a lot more than this simple example and there are some circumstances were it can work out but those are the very few exceptions, not the rule.  So don't believe the tax pro advertisements. 

If you found this and you can identify with it, let me know. I'll write more soon. I'd also like to know there are more like me out there. Maybe we can get congress to so something about this.

- BurT

P.S. - please don't contact me if your a tax pro. You can't solve my problem and I may know more than you anyway.