Among other things, having the IRS after you for a tax bill can affect your ability to use funds awarded to you in a lawsuit verdict or settlement. Such money is meant to compensate you for some wrong done to you by another party, not enrich you. Being deprived of that money can put a serious strain on your finances.
A couple dealing with the IRS over some business taxes has filed suit against the agency, saying it has abused its power and vastly overestimated how much they owe. The agency’s actions have prevented the couple from touching a $4.9 million judgment they received in a 2013 personal injury lawsuit.
According to WWL-TV, the couple ran a home-demolishing business until 2010, when the husband was badly injured in a motorcycle accident. That accident led to a lawsuit, which the couple won and was awarded nearly $5 million in damages.
But the couple has yet to see virtually any of that money, which is currently being held by their state court system, except for $80,000 which has been given to them. That is because the IRS issued a jeopardy assessment that originally claimed the couple owed $1.9 million in back taxes on their business.
The couple admitted during the trial that some of the money they claimed as business expenses had been for personal use, and filed an amended tax return in 2013. The IRS later reduced the alleged bill to about $920,000, but the couple says the amount is “unreasonable.” So they are fighting it in court.
Hopefully, something like this will never happen to you or your business. But if it does, you will need a tax lawyer to handle the matter a quickly and easily as possible.