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This chapter addresses the special issues of people in recovery. Plus, it has a fantastic feature: a sample penalty abatement letter written to the IRS. If you have suffered the disease of alcoholism and have incurred late tax penalties, this special letter can be used to have certain penalties removed, which could possibly save you thousands of dollars. I have used it successfully for clients in the past, now you can use it, too

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Chapter 13:
Taxes, Alcoholism and Drug Addiction

A large number of my clients are in recovery. It is a brave and difficult path and I have been happy to be of service to the many who are rebuilding their lives. I used to say that the 1980s was the party and the 1990s was the hangover. For some, the party was the 1990s and the 2000s is the hangover! And one heck of a hangover it can be. Some of you are not only grappling with health, legal, marital and family problems, but tax problems, too. There can be big tax problems, especially if your drug of choice was expensive. So, when you are making amends to your family you might have to include your Uncle Sam.

The 12-Step programs—AA, CA, NA—and all the other support programs, both volunteer and for-profit have done and are continuing to do a great job in bringing well-ness to our society. No matter how bad or difficult your addiction is, someone out there has climbed out of as deep a pit and is ready to help you out right now. You just have to be willing to ask for help. This is one more thing that is great about our country: There is recovery assistance everywhere. This is not the case in many countries with epidemic alcoholism, such as those in Eastern Europe.

Typically, I have found that it takes about two years on average after your first day of sobriety to begin to handle the accumulated tax problems associated with addiction. You see, climbing out of addiction is so difficult that adding tax recovery at the beginning is just too much. Almost everyone takes about two years, so there is no need to feel guilty if you are in recovery and you have yet to deal with your tax issues. Two years. I bet that is longer than most people would think.

Here are some of the real people whose tax issues I have helped handle:

• G. was HIV+ and a drug addict. He hadn’t filed in four years and owed over $30,000 in back taxes. He achieved sobriety, filed his taxes, left the state and declared bankruptcy.
• R. was HIV+ and a heroin addict. He hadn’t filed taxes in four years when I first met him. He cleaned up his taxes and later married an HIV+ woman who gave birth to an HIV- baby girl.
• B. was an alcoholic and had not filed taxes in over 12 years. About two years after he began recovery, we worked together to get him back in the tax system and straightened everything out. He kept his house, his marriage and his sanity. He is still sober today.
• R. was a “functional” cocaine addict and an alcoholic. We cleaned up his back taxes after he had been sober about two years. Today, he is still sober and more prosperous than ever.
• S. was HIV+ and an amphetamine addict. He hadn’t filed in ten years. We cleaned up his taxes, but he passed away two years later at age 42 from complications due to AlDS.

The list could go on and on. I learned many things from working with my clients who were struggling with addiction issues. First: I saw that everybody’s tax problem had a solution.

Many years ago lobbyists worked very hard to make your Uncle Sam understand recovery. They probably succeeded, because a number of people who worked for him in the Senate and Congress were in recovery themselves! What does this mean to you? Under the right circumstances, late filing penalties can be eliminated if the late filing was caused by the disease of alcoholism or if you had a serious drug addiction. If you are planning to pay off your tax debt in full, having penalties abated can be very important. It can mean thousands and thousands of dollars to you. I have worked with this problem and seen the benefits. At the end of this chapter is a sample letter that you can adapt for your own use if you would like the IRS to abate late filing and late paying penalties.