5 ms·

Didn't pay taxes for a few years. It's not terribly difficult to get into this situation if you bootstrap a business over a relatively high personal expense ba

Didn't pay taxes for a few years. It's not terribly difficult to get into this situation if you bootstrap a business over a relatively high personal expense base with no savings and no capital. "I swear, I'mma totally save money for quarterly SE taxes this time. Gonna get straight with Jesus." But a bad month or two and crappy cash flow later, paying the mortgage and buying groceries win out once again, as do certain strategic investments like hiring people (which don't pan out because all you can afford is entry-level folk in a business model tailored to the exact opposite). And again. And before you know it, a few years have gone by like that. Later, you make more money, but make more dumb decisions that get you even further away from getting straight with Jesus. Marriage and child, followed by expensive divorce (note to self: mid-high five-figure legal fees are not tax deductible and the IRS could give two craps about your divorce). File separately to protect your wife from your own tax liabilities like some sort of overly proud Walter White, getting smacked with massive penalties because you didn't file jointly. On top of that, be sure to do some even crappier tax planning on the business side, like having an LLC without an S-corp election, and paying 15.3% SEP tax on everything net of business expenses because you're too lazy to do a little paperwork or to hire accountants who can properly quantify the issue and educate you. Do some other stupid shit that a 21 year-old would do, like buy a condo at the top of the bubble and get stuck with a -48% underwater value (even in 2015!). Have a foreclosure and a deficiency lawsuit while you're at it. It's pretty easy to compound the problem. Hindsight is all 20/20, but I went out on my own when I was 22 and had little to no business experience. It took some time to learn to drive the chariot right and not fly it into the Sun, and by that point I was up to my ears in tax issues. Man, what I'd give for the student loan problems typical of my late-20s/early-30s compatriots... I've been thinking about expanding this sordid tale into a blog post, but need to find a way to avoid it sounding like a sob story and focus instead on educational and actionable takeaways for other precocious young entrepreneurs who get in over their head. That's challenging from a rhetorical point of view; the optics of this situation scream "feel sorry for me" more than "here are a few stupid mistakes to avoid which carry big consequences".

cheez 9y ago
That sounds like a tough situation, but you know what, you're not in jail. Eventually you'll pay it off and if you get to retirement age and you haven't, just quietly move your assets offshore and keep up the bare minimum to avoid arrest.
- abalashov 9y ago
  but you know what, you're not in jail. I suppose there is always that upside. There's a 10-year statute of limitations on collection of tax debt. But the IRS know that too, and usually make spirited efforts to get theirs sometime before then. The only thing that works in my favour, if you can call it that, is that there's nothing to take. My net worth is negative even without the tax debt, and cash flow abysmal besides. I don't know whether to be grateful or not. If I had a house, a yacht, a retirement account, a stock portfolio or something else I could give them to make this go away, I'd much prefer to do that than pay monstrous debt + interest for a reasonable approximation of forever. Obviously, I am making efforts to settle it and enter into a long-term installment agreement. The first thing that has to happen is to contain the damage and be current on the current year. That's been impossible to do while being prostrated by legal expenses associated with the ongoing divorce, but would otherwise have been quite doable. Besides that, it's a process that involves catching up on some not-yet-filed returns (money) and getting tax attorneys to lift a few fingers (lots of money). I just need some more time to get the other obstacles in life squared away before I can afford to enter a full-time live-to-serve-the-IRS regime. In principle I have no objection to doing this. It's my problem to own. Unfortunately, state agencies don't necessarily operate on one's preferred schedule. They'll ignore/stonewall you when you want to talk to them and make a deal, and come levy bank accounts when you're at your lowest point and most need cash. Commonly, some computer is doing this to you and there isn't even a lot of human agency behind the collections process, and thus few places to cry uncle.
  - cheez 9y ago
    yeah... that's why I keep my money in multiple countries.
    - 9y ago
Mz 9y ago
Sounds like you could devote an ongoing blog to the subject. Call it something like "How to Royally Muck Up Your Finances." It could be educational and therapeutic. And, if you figure out how to monetize it well, might help you dig out of this hole. If you start a blog, shoot me an email. I will promote it on at least one of my sites.
- abalashov 9y ago
  Thank you, I appreciate that. I'm not sure there's much promise in the monetisation; it's at once sufficiently niche (of interest largely to other businesspeople), and yet banally commonplace (I'm certainly not the only one to have dug himself into a huge hole, with tax authorities or otherwise), that serious ad revenue is likely off the table. Moreover, I don't think blogging compares favourably to the economic efficiency of doing what I actually do professionally. All the same, I do have a blog already: www.likewise.am.
  - Mz 9y ago
    I have a BUNCH of different blogs. I mostly talk about me and my life, but each has a different focus. This has been vastly more successful than having an Everything blog. Ad money is generally going down the tubes. Many places that historically were successful have seen revenues plummet in the last couple of years or so in the face of what I call The Adblocker Wars. I have had more success with tip jars than ads: http://micheleincalifornia.blogspot.com/2015/11/how-to-make-paypal-tip-jar.html http://micheleincalifornia.blogspot.com/2015/11/how-to-make-... Anyway, you can do whatever you want. If you don't want to, no big. But if you put out specific objections, people will tend to engage those points. Coming from me, that isn't intended to strong arm you into implementing my one off idea tossed out on the internet. I'm just here to talk with people. Take care.
    - abalashov 9y ago
      Don't get me wrong, it's an interesting idea and one I'd like to explore further, as I like writing. I do it infrequently, but as you can see from my blog, I do do it, and I'll keep doing it whether I get paid for it or not. But there's no such thing as a side-hustle blog that pays hundreds of thousands of dollars. One would have to be in the top 0.1% of bloggers, and it would certainly be a more than full-time job in itself.

cheez 9y ago

That sounds like a tough situation, but you know what, you're not in jail. Eventually you'll pay it off and if you get to retirement age and you haven't, just quietly move your assets offshore and keep up the bare minimum to avoid arrest.

abalashov 9y ago
but you know what, you're not in jail. I suppose there is always that upside. There's a 10-year statute of limitations on collection of tax debt. But the IRS know that too, and usually make spirited efforts to get theirs sometime before then. The only thing that works in my favour, if you can call it that, is that there's nothing to take. My net worth is negative even without the tax debt, and cash flow abysmal besides. I don't know whether to be grateful or not. If I had a house, a yacht, a retirement account, a stock portfolio or something else I could give them to make this go away, I'd much prefer to do that than pay monstrous debt + interest for a reasonable approximation of forever. Obviously, I am making efforts to settle it and enter into a long-term installment agreement. The first thing that has to happen is to contain the damage and be current on the current year. That's been impossible to do while being prostrated by legal expenses associated with the ongoing divorce, but would otherwise have been quite doable. Besides that, it's a process that involves catching up on some not-yet-filed returns (money) and getting tax attorneys to lift a few fingers (lots of money). I just need some more time to get the other obstacles in life squared away before I can afford to enter a full-time live-to-serve-the-IRS regime. In principle I have no objection to doing this. It's my problem to own. Unfortunately, state agencies don't necessarily operate on one's preferred schedule. They'll ignore/stonewall you when you want to talk to them and make a deal, and come levy bank accounts when you're at your lowest point and most need cash. Commonly, some computer is doing this to you and there isn't even a lot of human agency behind the collections process, and thus few places to cry uncle.
- cheez 9y ago
  yeah... that's why I keep my money in multiple countries.
  - 9y ago

Mz 9y ago

Sounds like you could devote an ongoing blog to the subject. Call it something like "How to Royally Muck Up Your Finances." It could be educational and therapeutic. And, if you figure out how to monetize it well, might help you dig out of this hole. If you start a blog, shoot me an email. I will promote it on at least one of my sites.

abalashov 9y ago
Thank you, I appreciate that. I'm not sure there's much promise in the monetisation; it's at once sufficiently niche (of interest largely to other businesspeople), and yet banally commonplace (I'm certainly not the only one to have dug himself into a huge hole, with tax authorities or otherwise), that serious ad revenue is likely off the table. Moreover, I don't think blogging compares favourably to the economic efficiency of doing what I actually do professionally. All the same, I do have a blog already: www.likewise.am.
- Mz 9y ago
  I have a BUNCH of different blogs. I mostly talk about me and my life, but each has a different focus. This has been vastly more successful than having an Everything blog. Ad money is generally going down the tubes. Many places that historically were successful have seen revenues plummet in the last couple of years or so in the face of what I call The Adblocker Wars. I have had more success with tip jars than ads: http://micheleincalifornia.blogspot.com/2015/11/how-to-make-paypal-tip-jar.html http://micheleincalifornia.blogspot.com/2015/11/how-to-make-... Anyway, you can do whatever you want. If you don't want to, no big. But if you put out specific objections, people will tend to engage those points. Coming from me, that isn't intended to strong arm you into implementing my one off idea tossed out on the internet. I'm just here to talk with people. Take care.
  - abalashov 9y ago
    Don't get me wrong, it's an interesting idea and one I'd like to explore further, as I like writing. I do it infrequently, but as you can see from my blog, I do do it, and I'll keep doing it whether I get paid for it or not. But there's no such thing as a side-hustle blog that pays hundreds of thousands of dollars. One would have to be in the top 0.1% of bloggers, and it would certainly be a more than full-time job in itself.