We got into a similar situation at one point.
When the letters started taking a threatening tone in the form of confiscation, etc. I took some advice from someone in the know.
I started doing the exact same thing that they were doing to us. I bombarded them with letters, questions, proposals and so on. If you will notice when you send the IRS a letter or try to get a call through pertaining to a situation like this that you will rarely receive a reply from the same dept. They shuffle problems like dominoes.
It took very little time to get the right hand into not knowing what the left hand was doing and we started receiving diferent options and proposals from about four or five different places. I saved all of them.
At that point i requested a face to face meeting with them.
I took all of the letters and propsals in, layed them in front of the IRS rep and told him "You figure it out".
After about an hour of confusion he broke out a calculator and went into action.
He came up with a monthly figure that was to be paid. I said "Nope, unacceptable". he looked like someone had just hit him with a handfull of cockleburs.
He asked what I meant by unacceptable. I explained that I fully intended for my family to have a roof over their head, clothes on their back and food in their stomach and that with the figure he had came up with this was impossible. He said "Sorry, that`s what has to be paid monthly" We were in a conference room in a justice center right below the jail. I told him "Nope, not gonna happen. You can call a deputy down now and we can get the ball rolling". He had a blank look on his face and came out with a "Huh?"
I told him I could set out the time for the penalty and in the meantime my wife and kids could survive in an acceptable manner. I explained that I had no intentions of working my rear off, giving the majority of money to them while my family suffered, especialy since the most of the amounts were in penalties.
Before the meeting was over he had knocked off about 75 to 80 % of the penalties and came up with a figure that was reasonable.
I asked him to send tax forms for one year that had to be refigured. Imagine that. They had made a huge mistake on the year in question and actualy owed me money for the year. He said that he couldn`t get the tax forms, that I could get them at the library. I told him no, the library only kept forms for two years.
I then told him that I would like him to help go over the figures for that year.
He then told me that he wasn`t allowed to because he was only qualified to figure an EZ form.
Fight back and get things reasonable bud.
