A Maryland couple filed their 2017 tax return but did not pay the tax due. By December 2018, they owed $1.1 million in unpaid taxes and interest. The couple asked the IRS for an installment plan to pay off their tax debt over six years. However, an IRS investigator discovered the couple had cryptocurrency accounts, more than enough to pay their taxes. The investigator told the couple they didn’t qualify for the installment plan, but the couple refused to liquidate their digital assets to pay the debt and instead appealed to the U.S. Tax Court. What did the court decide?
The Verdict
The six-year repayment rule applies only if a taxpayer is unable to pay the tax due in full. Since the couple had the ability to pay their entire tax liability, the court sided with the IRS, upholding the investigator’s decision to deny their request for an installment plan.
Copied from Edelman Financial Engines newsletter July, 2020.