ABOUT THE IRS
The IRS is a Federal Agency that is divided
up into local Districts across the country, each of which solves standard IRS problems in a
slightly different manner. For example some IRS Districts
believe that seizing taxpayer assets is a desirable way to
collect taxes, while other districts would rather set up a
payment plan.
APPEALS
Filing an Appeal is a request by a taxpayer disagreeing
with an IRS decision and seeking to change an IRS
decision. Normally this involves an IRS Audit where the
taxpayer's tax liability has been increased, including
penalties and interest. The goal of the IRS Appeal
Division is to "settle" disputes between the IRS
and taxpayers.
AUDIT RECONSIDERATION
In most cases, when an audit is over it's usually over
because the IRS rules on audits are very clear. However,
it may be possible to reopen a closed audit under certain
circumstances. If the taxpayer feels that he did not get a
fair deal in the original audit, they may qualify for
Audit Reconsideration even in cases where time limits to
appeal for file a tax court petition have expired.
If the IRS agrees to audit reconsideration, the
taxpayer's case is assigned to an auditor to reopen the
audit and the taxpayer is then given the opportunity to
have the original audit amended.
BANKRUPTCY
Many IRS taxes, penalties and interest do qualify for
complete discharge in Bankruptcy. In order for a taxpayer
to use the Bankruptcy laws to avoid paying income taxes,
the taxpayer's income tax liabilities MUST QUALIFY. Many
taxpayers file bankruptcy without first understanding the
rules to qualify their own income tax liabilities. Old
individual income taxes are eligible for discharge in
bankruptcy but civil penalties for payroll taxes are not.
COLLECTION APPEALS
The IRS permits a taxpayer to file a
Collection Appeal if they have been threatened with an IRS
Levy or Seizure, either verbally or in writing, before
they follow through on their levy or seizure. On the
Collection Appeal, the taxpayer is given the opportunity
to explain how they think the situation could be solved
without the IRS levy or seizure and is then assigned to an
Appeals Officer who is required to make a decision on
their Appeal in five days.
EXPIRATION OF STATUE
Normally, taxpayer does not owe the IRS anything after
the 10-year date has passed, since the IRS has 10 years
from the date of assessment to collect all taxes,
penalties and interest from the taxpayer. However, there
are exceptions to this rule, which include when the
taxpayer agrees in writing to allow the IRS more time to
collect from them or when the taxpayer files bankruptcy
during the 10 year period. The taxpayer must send written
notification to the IRS indicating that they no longer
have the right to collect this tax liability, in which
case the IRS must write off the tax liabilities which have
expired if the taxpayer is correct.
FREEDOM OF INFORMATION REQUESTS
Any taxpayer having difficulty in sorting out what the
IRS is doing to them should consider using the FREEDOM TO
INFORMATION ACT to obtain their IRS files. Many taxpayers
just want to know what type of information is in their IRS
file without drawing a lot of attention to themselves.
Congress passed legislation (FREEDOM OF INFORMATION ACT)
that requires government agencies, including the IRS, to
disclose such information when requested. Freedom of
Information documents can also be used to explain why,
how, when and where a taxpayer's IRS problems started as
they disclose the IRS information used to assess taxes,
penalties and interest against the taxpayer. |
IRS PAYMENT PLANS
The IRS will always accept some type of payment
arrangement for past due taxes. In order to qualify for a
payment plan with the IRS, you must meet the following rules
and provide the IRS with this information:
-
You must have filed all tax returns, even if you
owe money.
-
You must disclose all assets owned, including
all cash and bank accounts.
-
You must not have adequate cash available in a
checking, savings, money market, or brokerage account to
pay the IRS.
-
You must not have the capacity to borrow the amount
owed to the IRS from other sources (i.e., a second
mortgage on your home).
-
You must not have adequate equity in a retirement
account from which you can borrow or liquidate; for
example, IRA's or 401K's.
The negotiation for repayment of taxes with the IRS will either take
place over the phone with ACS (Automated Collection System)
or in person with an IRS Revenue Officer. The total dollar amount
owed usually
dictates with whom the negotiations will be handled.
Typically, IRS Revenue Officers are not involved in cases
where the amounts owed are less than $20,000. The IRS will
ask you to complete a personal financial statement and if a
business is involved, then you will need a business
financial statement. The IRS has determined allowable
monthly expenses for individuals, which will be matched
against your actual monthly expenses. The difference between
your monthly income and your allowable monthly expenses will
be the amount that the IRS will require you to pay on a
monthly basis. These monthly payments will continue until
your outstanding tax liabilities are paid in full. Be aware
that the IRS continues to add penalties and interest while you
are making monthly payments.
OFFERS IN COMPROMISE
The Offer in Compromise program allows
taxpayers provides taxpayers that owe the IRS more than
they could ever afford a chance to pay a small amount as a
full and final settlement and get a fresh start. All back
tax liabilities are settled with the amount of the offer
and all federal tax liens are released upon IRS acceptance
of an Offer in Compromise and payment of the amount
offered. The Offer amount is determined by the taxpayers
inability to pay the IRS based on the taxpayer's current
financial position and takes into account the equity in
assets as well as their ability to pay. The IRS accepts
approximately 50% of all Offers filed with the average
amount accepted is 14 cents on every dollar owed.
PENALTY ABATEMENT
If you have a good reason to request
penalty abatement, depending on the circumstances in your
particular situation, taxpayers who are faced with IRS penalties can
request the penalties to be completely or partially abated
(removed). |
