need some tax advice, I think I'm so screwed

[PunchyPlay]

Thought I'd post this, maybe someone is familiar with this sort of situation. Basically I've been putting off paying taxes for the past 3 years because every time taxes come up I just can't afford it. The first couple of years I figured I was ok because I didn't make all that much and knew the chance I'd be audited would be very low. Now it really seems to be snowballing on me, I know I must owe a lot, and I just can't pay it, so I feel really stuck. I've really been agonizing over this for the past few months and once neteller got shutdown I got really depressed and apathetic about it all. I'm just now coming out of that so I've got like an inkling of hope I can somehow fix all this.

So here's the situation, in the past 3 years I've made 92k at poker. The first year I made 14k, 2nd year 30k, 3rd year 48k. The only records I've keept are in a stats web page I made that tracks my hours played and money won. Everything was cashed out through electronic funds transfers (a few paper checks when I first started) so it's possible I might be able to pull records from my bank but I'd guess they don't go back 3 years (hopefully wrong on that).

I've moved around a lot in those 3 years and have always been renting. I've got about 4k in the bank right now and like 9.7k online with monthly expenses of about 3k (will be lower once a couple loans get paid off). I could probably find some things to deduct like buying new computers and lcd monitors but honestly it doesn't seem like it would make a dent in 92k. I don't really have any assets that I could sell besides a couch and a 55" tv. I know my money magement for the past 3 years hasn't been very good for me to only have 14k and I made some poor life decisions but I've learned a lot (this is really the first money I ever had, I come from a poor family).

So is there any hope for someone in my situation? I've been scared to go to a CPA because I don't want him to say I owe XXX$ amount which I can't afford and then he reports me or something.

Anyways sorry for the long post and thanks for any advice.

[Skallagrim]

Why do otherwise seemingly intelligent people have an irrational fear of CPAs?

No repputible CPA will ever turn you in for not paying your taxes. And a CPA will inform you about programs the IRS has for dealing with back taxes and paying them off over time. This on top of accurately figuring what you owe rather than guessing.

The WORST thing you can do is what you have been doing: nothing. If you are found out by the IRS, they may charge you criminally for not filing. If you go to them first and make arrangements, they will still take your money but virtually never file criminal charges if you make the first move.

Skallagrim

[olieovie]

As Skallagrim says, go to a CPA. Your CPA cannot report you for not paying taxes for the same reason that your lawyer cannot report you if you confess a crime to them.

[RoundGuy]

Ditto Skallagrim. My $.02 -- if you are going to continue to play poker, remember that 35 - 40 cents of every dollar you make has to be set aside for state and federal taxes, period. You must remember this. Too many people withdraw, for example, $2000 and think it's all their's to spend. It isn't. You need to set aside nearly 1/2 of that, every time -- plus nearly 1/2 of what you've won, but don't withdraw.

[LotteryOrPoker]

[ QUOTE ]
As Skallagrim says, go to a CPA. Your CPA cannot report you for not paying taxes for the same reason that your lawyer cannot report you if you confess a crime to them.

[/ QUOTE ]

CPA's do not have privilege in the same way attorneys do. If you confess a crime to your CPA in many instances (depending on the state) he is required to report it and there is certainly nothing punitive that will happen if he reports it. In some cases (unpaid tax liability $2 million or more the IRS will give the person who reports/snitches on someone 15-30%) it is in the CPA's financial best interest of a CPA to rat out a client.

Privilege with an attorney is not always a guarantee either. For example, if you tell your attorney about a plan to commit a future crime they are obligated to report it. If they do not report it and even worse they go along with it, they become part of the crime.

[crashjr]

[ QUOTE ]
Privilege with an attorney is not always a guarantee either. For example, if you tell your attorney about a plan to commit a future crime they are obligated to report it. If they do not report it and even worse they go along with it, they become part of the crime.

[/ QUOTE ]

At least in California, the first claim - that "if you tell your attorney about a plan to commit a future crime they are obligated to report it" is false. The second part of your claim, that "even worse they go along with it, they become part of the crime" is true, but has nothing to do with knowledge of the intent to commit the crime.

[Poker CPA]

Absolutely no "privilege" for CPAs. Been on that witness stand and its a "no win" situation. In addition, if you're not a client, he could care less about your tax problems. You are forgotten once the the door closes. You just never know who ownes a gun, and who doesn't.

[Skallagrim]

Great, lets scare him some more ... while its true there is no CPA privilege like an attorney/client one, there is no "duty" for him to report you either. No CPA who wants to continue his practice wants to be known as one who turns in prospective clients. And at the numbers the OP gave, no one is going to care that much anyway - except for the IRS agent who somehow discovers the OP and his winnings and lack of filings, that agent will be more than happy to **** him.

If you are that worried about criminal charges (which this OP shouldnt be if he reports himself) there are a number of attorneys who specialize in dealing with back taxes and the IRS, use your yellow pages. Attorneys cost a bit more than CPAs - but you get your privilege. And failing to file back taxes is NOT exempted from the privilege.

Skallagrim

[Poker CPA]

If you really want to scare him, explain the penalites to him. He's looking at 30K plus tax bill. You're worried about scaring him, I'm thinking how stupid he is. He's not a kid.

[Skallagrim]

Well you are right PokerCPA, but I am also hoping to convince him to take his medicine and move on because in the long run that is the least -EV thing he can do at this point.

No one can hide forever. /images/graemlins/frown.gif

[mpethybridge]

OP, here's what you should do:

1. Go to a CPA and have him figure your tax liability for each year.

2. File taxes for each year.

3. Go to the IRS webiste, www.irs.gov (http://www.irs.gov), and download the application for settlement of tax debt and instructions. Read the instructions and fill it out.

Basically, you are offering a settlement to the IRS. You may or may not have to pay the entire amount you owe, but if you can demonstrate current inability to pay the entireamount, there's a good chance they will let you pay just a portion.

[steel108]

OP: is poker your only source of income... are u a pro?

[Poker CPA]

Dear OP:

Your best approach is to pay your 2006 taxes now, before addressing your other years. The IRS is much easier to deal with, if you have paid your current year and have made a token estimated payment toward 2007. Get current and deal with the monster under your bed.

Any one who tells you different is full of crap. Nothing makes a collection agent angrier than someone who is behind and continues to be the same "fick-up" on his current taxes. The collection agent will show no mercy. An IRS auditor is a pussycat compared to an IRS collection agent. The collection guy is your worst nightmare, so get current first. The penalites on the prior years have pretty much "maxed out", so file 2006 and at least stop penalites on the current year. Good Luck

[Poker CPA]

Does the settlement work? Not in your case, so don't get you hopes up.

[PoorLawyer]

[ QUOTE ]
[ QUOTE ]
As Skallagrim says, go to a CPA. Your CPA cannot report you for not paying taxes for the same reason that your lawyer cannot report you if you confess a crime to them.

[/ QUOTE ]

CPA's do not have privilege in the same way attorneys do. If you confess a crime to your CPA in many instances (depending on the state) he is required to report it and there is certainly nothing punitive that will happen if he reports it. In some cases (unpaid tax liability $2 million or more the IRS will give the person who reports/snitches on someone 15-30%) it is in the CPA's financial best interest of a CPA to rat out a client.

Privilege with an attorney is not always a guarantee either. For example, if you tell your attorney about a plan to commit a future crime they are obligated to report it. If they do not report it and even worse they go along with it, they become part of the crime.

[/ QUOTE ]

This is why you should not take advice from random message boards...the only time an attorney has to report it is if a client tells you about an intent to cause imminent physical harm to someone I believe. Just go to a reputable CPA...you can even ask him/her if they are required to report wrongdoing before you give them any details.