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Tax Debt and 10 Year Statute of Limitations

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Many taxpayers, and some practitioners, are unaware that the Internal Revenue Service (IRS) by law only has 10 years’ time to collect a tax debt.  This is referred to as the statute of limitations or in IRS speak, the Collection Statute Expiration Date or CSED for short. This post will talk about what the CSED is, how to obtain it, what can change its date and how to stop paying taxes once it expires.

How Long Can the IRS Collect a Debt?
Per Internal Revenue Code (IRC) Section 6502, the limit on the IRS’ ability to collect a debt is 10 years. However, as we discuss below, most of the “popular” legal methods used to deal with tax debt also stop the CSED “clock” from running. In some cases it actually makes more sense for the taxpayer to just let the clock run.

When Does the Clock Start?
The 10-year period begins to run with the date of the “assessment” of the tax, not the tax year for which taxes are due. For example, if a return for 2012 is not filed until 2014 and the tax is assessed in 2014, the 10-year period begins to run in 2014 and expires in 2024.

The date of assessment is the date the tax liability is assessed on a particular form at an IRS Service Center. When the applicable form is signed by an IRS official, the 10-year period for that tax liability starts to run. When interest and late payment penalties (as well as other penalties) related to that tax year are tacked onto the underlying tax debt, they too must be collected within the same 10-year period.

If you never filed a tax return, but the IRS filed one for you (i.e. using a Substitute for Return or SFR), then the statute of limitations began to run whenever that assessment was processed by the IRS on your behalf.

How Can I Find Out My CSED?
To determine when the CSED began for a particular liability, the best approach is to obtain a transcript of the taxpayer´s IRS account. Transcripts should exist for each tax year and provide basic information such as the date of assessment, date of filing, and tax liability.

Taxpayers can request account transcripts on their own behalf by filing IRS Form 4506-T or requesting them online.  You can then attempt to analyze the data, perform the necessary calculations and hope you arrive at the correct answer.

Another method of calculating the CSED is to look at the “Date of Assessment” for a particular tax period if you have received IRS Form 668 (Y)(c) – Notice of Federal Tax Lien.  You would then calculate out approximately 10 years from this date to see when the CSED expires.

My Tax Debt Is Older Than 10 Years But The CSED Hasn’t Elapsed. Why?
While the IRS only has ten years to collect a debt, there are certain factors that can extend or pause the CSED. This is known as “tolling the statute of limitations.” Events that stop or “toll” the statute of limitations include:

  • Filing Certain Appeals – in most cases, the statute also doesn’t run the entire time an IRS Appeal is pending.
  • Filing an Offer in Compromise (OIC) – the statute of limitations does not run the entire time your Offer is under review, including any Appeals that you exercise, plus an additional 30 days.
  • Filing a Lawsuit Against the IRS – the statute of limitations does not run while litigation against the IRS is pending.
  • Filing Bankruptcy – the statute of limitations does not run the entire time you are under the protection of the bankruptcy courts or for the six months following the discharge or dismissal of the bankruptcy.

If you exercised any of these options in the past, there was probably a period of time when the statute was not running.  Said another way, during any time period in which the IRS is legally unable to pursue you for collection of the debt, the statute of limitations is not running.  For a complete list of tolling events and the associated time, check out IRS Publication 594 and look at “How Long We Have To Collect Taxes.”

Will the IRS Notify Me Once the CSED Elapses?
No, the IRS is not required to notify you once the debt has expired.  However, they are not legally allowed to pursue collection of the debt.  Thus, you will usually just stop hearing from them if your debt has expired.

My CSED Has Elapsed – Now What?
If the CSED has elapsed, congratulations! All that remains is cleaning up the chaos that your tax problem left in your life. You will need to ensure that a TC 608 credit to zero out the debt has been entered into the IRS system. You should also ensure that a Release of Federal Tax Lien is filed so that you can begin the process of repairing your credit.

My CSED Has Not Elapsed – Now What?
If your CSED hasn’t elapsed, but it is getting close, the best thing to do might be to get a plan in place with the IRS to ensure you’re protected from aggressive collection action.  This may include entering into a monthly payment plan or negotiating for your account to be placed into currently not collectible status (a “temporarily” status where you aren’t required to pay the IRS).

Do YOU Need Help With Your IRS Debt?
While you could go through the hassle of calculating your CSED, do you really want to?  For a flat $150 fee, and us filing a few forms with the IRS (with your consent), we’ll look at however many years you want to analyze, and provide you with a comprehensive report that will include:

  • Total tax assessment, penalty, interest and accrual amounts for each year (so you know how much you really owe)
  • CSED calculations for each year requested
  • Tolling events (if any) and the days your CSED has been extended
  • All IRS notices sent/received for each year
  • IRS account activity by year
  • And much, much more (we promise)

Call us at (773) 239-8850 or click our email address at the bottom of this screen to get started.

By the way, this post (the one you’r reading) is by far the most viewed on our site.  Why?  Because many people have tax issues that they want to resolve.  If you have old tax returns that need to be filed or want to learn how a professional can help you with your situation, why not visit our sister site File Old Tax Returns?  You might be surprised to learn that we may be able to help you out for less than you are thinking.  Plus, hear some valuable information on your taxpayer rights from the IRS Commissioner himself!

By |2024-07-03T09:03:31-06:00June 19, 2014|Categories: IRS Talk|Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , |Comments Off on Tax Debt and 10 Year Statute of Limitations
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Understanding IRS Collection Procedures

The U.S. Internal Revenue Service is the single largest collections agency in the world.  According to the most recent statistics available, in 2013 the IRS spent $11.6 billion and employed just under 87,000 to collect more than $2.8 trillion in tax revenue.  Of those 87,000 personnel, over 19,000 are directly involved in enforced collections against taxpayers that owe back taxes.

While the IRS is one bill collector that can have a serious impact on your life, it’s important to understand just how they work.  So the first thing to realize is that the IRS is a slow moving bureaucracy.  It is highly driven by forms, written procedures and is resistant to change.  Their playbook is public record and they are required to follow it.  While this may not bode well for you resolving your tax matters expeditiously, it does give you some comfort in that you can figure out what is coming next.  Below we break the IRS collections process down into the 1040 notice sequence and the collections system.

1040 Notice Sequence
The IRS doesn’t start collections against you simply because you file a return with a balance due.  The process actually begins when they issue a letter called a Statutory Notice of Deficiency or SNOD.  This letter informs you of the IRS’ intent to assess a tax deficiency and informs you of your rights to dispute the proposed adjustment.  From here, the notice sequence progresses like this if you fail to respond at each stage:

  • Request For Payment
  • Form 668 – Notice of Federal Tax Lien Filing (for balances over $10,000)
  • CP501 – Reminder Notice
  • CP503 – Immediate Action Required
  • CP504 – Notice of Intent to Levy
  • Letter 1058 – Finial Notice of Intent to Levy

The CP503 typically comes about 4-5 weeks after the first notice.  The remaining notices will each come around 30 days after one another so it can take about 4 months from the initial letter until it culminates with a Letter 1058.  While the CP504 language sounds nasty, one may choose to ignore it.  However, there are two things to note about the Letter 1058:

  1. It is the first opportunity you have to file an appeal
  2. Thirty days after the letter, the IRS can levy you.

Does this mean that the IRS will levy you?  Not necessarily; especially if they don’t know where your assets are.  However, it would be wise to pick up the phone at this point and call the IRS as well as file Form 12153, Request for Collection Due Process Hearing (i.e. appeal).

Collections System
Now you may ask why understanding the “system” is even important to this discussion.  Well, it’s because some of the notices you get aren’t being generated by humans.  They are done on an automated schedule.  Thus, until your case winds up with a dedicated “human” at some point (i.e. a Revenue Officer) it can be hard/frustrating trying to get the notices to stop.  Thus, collections enter into the following levels of the system at varying stages:

  1. Collection efforts on each account begin with computer notices from a Regional Compliance Center.
  2.  If the efforts of the Compliance Center  don’t yield payment, the account is then assigned to the Automated Collection System (ACS). ACS attempts to collect the tax liability by initiating telephone calls to the taxpayer and others. Unless your case has special circumstances, you will usually stay assigned to ACS even if you accumulate 2-3 years worth of tax debt as an individual or 3-4 quarters of payroll liability as a business.  But once you reach these levels or you simply fail to respond…
  3.  The account is eventually assigned to a Revenue Officer for a field investigation.

When you are assigned to a Revenue Officer, the course of your tax case can take a sudden shift. Having an experienced, trained human being looking at your tax case, and passing judgment on you based on what’s in a file and thereby determining how they are going to handle your tax case, means a lot.  Unfortunately, due to current economic times, the waiting line for assignment to an RO is many areas of the country is growing longer and longer.

Similar to above, having a trained representative on your side working the case with the IRS can mean a world of difference.  If you are interested in assistance or just want to discuss your situation, we’d be happy to speak with you.  Simply shoot us an email or give us a call.

Until next time…

By |2020-09-21T12:41:32-06:00May 16, 2014|Categories: IRS Talk|Tags: , , , , , , , |Comments Off on Understanding IRS Collection Procedures
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Innocent Spouses and Relief from Taxes

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So picture this; you and your spouse ended on some “not so great” terms.   You didn’t handle the finances and believed that everything was okay.   Well, then this little letter from the IRS shows up saying that you owe tons of money in back taxes.   Your heart sinks and you start contacting the IRS to find out what’s going on.   That’s when you find out that your spouse didn’t file any of your tax returns for the past three years!  What do you do?

When spouses file a joint tax return, they both sign that the information contained in it is true and accurate.    If the information turns out to be false or inaccurate, the IRS has historically viewed both spouses as liable for the resulting assessments.  If the associated taxes were not paid, the IRS would also look to both spouses to pay the delinquent amount.  In worse case scenarios, this can include criminal charges for tax evasion.

Fortunately, the IRS has modified its view of the liability of joint filers.  The IRS now recognizes that innocent spouses can’t control their deadbeat former spouses.  Thus, it allows such innocent spouses to claim three types of tax relief:

1.  Innocent Spouse Relief
2.  Relief by Separation of Liability
3.  Equitable Relief

If the IRS comes after you for the tax liability of a former spouse, you can seek tax relief under one of these three provisions if you meet all the following requirements.  First, you filed a joint return with inaccurate information.  Second, you didn’t know of the inaccuracies and didn’t have any reason to.  Finally, taking into consideration the situation, holding you liable for the tax would be unfair.

The IRS will evaluate your application and render a ruling on it once all the facts and circumstances have been considered.  The IRS may agree to simply waive any tax claim against you and go after the deadbeat spouse as the sole debtor.  Alternatively, the IRS may split the tax liability into two separate accounts, only requiring you to pay one half of the amount due.  While this may not sound great, it will immediately cut your tax debt in half.

In rare cases, you can seek equitable relief from the IRS.  Equitable relief simply is another way of saying that  making you pay the tax would be manifestly unfair.  You must show you and the spouse did not transfer assets as part of an fraudulent scheme, didn’t transfer assets with the intention of evading taxes, didn’t intend to commit fraud, didn’t pay the taxes due and you didn’t know what your spouse was up to.  Equitable relief claims need to be handled very carefully as the IRS views them with a very cynical eye.  Nonetheless, they are a last step that can be taken when all else has failed.

By |2020-09-18T12:12:23-06:00February 16, 2014|Categories: IRS Talk|Tags: , , , , , , |Comments Off on Innocent Spouses and Relief from Taxes
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Can You Stop The IRS From Garnishing Your Wages?

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Sometimes, no matter how careful you are about filing your taxes and paying what you owe, the time may come when you have a bill that you can’t pay.   Like all creditors, the Internal Revenue Service will try to collect what you owe using several different means.  One of those methods is via a wage garnishment.

Employers are prohibited from letting you go because of a wage garnishment issue, a protection extended under the Consumer Credit Protection Act.  However, you get only one “get out of garnishment jail free card.” A second garnishment isn’t protected by Uncle Sam, and an employer who views an employee with a second garnishment as a mark on his or her character has every right to fire them.

What is Wage Garnishment?

Simply put, a wage garnishment is when the IRS locates a debtor’s employer and takes their wages during each pay period until the debt is paid in full.  A wage garnishment can be used to collect a debt that you owe due to a late filing.  It can also be used when you file your return correctly but do not pay the full balance of your debt.

A wage garnishment is most commonly levied by the IRS or via a court ruling.  To implement the garnishment, the IRS obtains a judgment and sends it to the debtor’s employer.  The employer is then required to withhold a certain amount of the individual’s paycheck each pay period and send it to the IRS until the debt has been fully paid.  Depending on state laws, a garnishment may take anywhere from 30 percent to 70 percent of your paycheck to cover your unpaid debts.

Furthermore, the IRS is particularly tough; it can garnish both your income and, if you’re retired and collecting government benefits, can take your Social Security checks, too.  The levy usually isn’t lifted until the debt is paid off in full.  However, you do have some options, though, as outlined by the IRS.

Stopping A Wage Garnishment

Pay off the debt in full.  Once that’s done, the garnishment is automatically lifted.  This is the quickest and least painful way to get the IRS off your back.

Offer a lower bulk payment as compromise.  If you can negotiate a “payoff” sum with the IRS, you can also avoid a wage garnishment.  This one’s tricky though, and you’re better off checking in with a tax professional before you climb into the ring with the IRS.

Ask the IRS for a payment plan.  Uncle Sam may be willing to negotiate regular monthly payments to erase your debts and avoid the need to garnish your wages at all.  However, just note that this is typically only granted if you demonstrate that the levy is causing you financial hardship.  Thus, if you are receiving notices of tax debt owed, but have yet to have your wages garnished, it’s best to try and set up a payment plan BEFORE this IRS begins garnishments.  Once the garnishment is in place, the IRS has little impetus (other than the hardship situation) to revert to a payment plan if it’s collecting money from you.

Quit your job and dodge the IRS for a while.  If you quit your job, it will probably take the IRS a few months to track you down at your new job.  They won’t like it, but at least your wages won’t be garnished in your new job (for the short term, anyway).  That might buy you some time to come up with the money to settle your debt.

File for bankruptcy.  This option should not be used lightly, but if it’s “last resort” time, bankruptcy can at least help you avoid wage garnishment, or have it released if the garnishment is already in place.

Don’t create a garnishment to begin with.   The best way to avoid a wage garnishment may be old-fashioned, but it works all the time.  Pay your bills on time, save some money for emergencies and spend less than you earn.  Do that and neither your employer nor the IRS will be dogging you about wage garnishments ever again.

 

By |2020-09-18T12:05:02-06:00December 25, 2013|Categories: IRS Talk|Tags: , , , , |Comments Off on Can You Stop The IRS From Garnishing Your Wages?
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IRS Operations During The Government Shutdown

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So, the IRS is closed during the current government shutdown.  Does that mean that you get a free pass on paying your taxes, especially if you extended to the October 15th deadline?  Not exactly.  Per the IRS, here is a brief summary of questions taxpayers have raised as well as their response.

What is the state of current operations?

Current IRS operations are limited. However, the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal.

Individuals and businesses should keep filing their tax returns and making deposits with the IRS, as they are required to do so by law. The IRS will accept and process all tax returns with payments, but will be unable to issue refunds during this time. Taxpayers are urged to file electronically, because most of these returns will be processed automatically.

No live telephone customer service assistance will be available, however most automated toll-free telephone applications will remain operational. IRS walk-in taxpayer assistance centers will be closed.

While the government is closed, people with appointments related to examinations (audits), collection, Appeals or Taxpayer Advocate cases should assume their meetings are cancelled. IRS personnel will reschedule those meetings at a later date.

Automated IRS notices will continue to be mailed.  The IRS will not be working any paper correspondence during this period. Here are some basic steps for taxpayers to follow during this period.

How does this affect me?

You should continue to file and pay taxes as normal. Individuals who requested an extension of time to file should file their returns by Oct. 15, 2013.

All other tax deadlines remain in effect, including those covering individuals, corporations, partnerships and employers. The regular payroll tax deadlines remain in effect as well.

You can file your tax return electronically or on paper –– although the processing of paper returns will be delayed until full government operations resume. Payments accompanying paper tax returns will still be accepted as the IRS receives them.

Tax refunds will not be issued until normal government operations resume.

Is the Oct 15 due date still in effect and should people still file?  

Taxpayers should continue to file and pay taxes during a lapse in appropriations as they would under normal government operations. Individuals who requested an extension of time to file should file their returns by Oct. 15, 2013.

Will paper tax returns be considered timely filed even though the IRS is not processing paper returns?

Yes. the United States Postal Service  is operating during the shutdown, and they will postmark and deliver mail to the IRS.  Any return postmarked by the due date will be considered timely filed by the IRS even though processing of the return may not occur until after the return due date depending on the length of the lapse in appropriations.

Is the IRS continuing to issue levies or liens during this period?

During the lapse in appropriations, the IRS is not sending out levies or liens – either those generated systemically or those manually generated by employees. The IRS notes that taxpayers may still receive levy or lien correspondence with October mailing dates, but those notices were printed before IRS shut down operations were fully complete. (It is standard practice for these notices to be printed with a future date to allow for mailing time to reach taxpayers.) In addition, the IRS notes that other letters related to liens and levies – such as notifications that a taxpayer could potentially be subject to a lien or a levy at a future date – continue to be automatically generated by IRS systems during the appropriations lapse. However, the IRS emphasizes that these notices are not actual levies or liens; just a notification of potential future action.

By |2013-10-10T12:51:00-06:00October 10, 2013|Categories: IRS Talk|Tags: , , , , , |Comments Off on IRS Operations During The Government Shutdown
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Understanding IRS Debt and Allowable Expenses

When an individual is facing IRS debt and is working to get it resolved, they’re often required to fill out a Collection Information Statement.   The Revenue Officer assigned to the case is allowed to (and often does) question any expenses that look fishy.   However, what expenses are considered allowable can sometimes perplex a taxpayer.

For example, the IRS sets very specific limits on what a household can claim as an expense.  These are often referred to as the National Standards.   However, IRS simultaneously explicitly prohibits the claiming of certain expenses for collection purposes, including expenses that are deductible or create tax credits on a tax return.  Many taxpayers are confused by this fact, and it’s just one of the numerous inconsistencies across the tax code.

When it comes to the dollar amounts which are considered allowable per the National Standards, many people are shocked at how low some of the numbers are.  Conversely, there are other people that are shocked at how large some of the numbers are.  Keep in mind that the IRS National Standards reflect the government’s calculation regarding a precisely middle class existence.  For example, the allowable housing expense will vary geographically, because housing is cheaper in some parts of the United States, and much, much more expensive in other parts.  However, the allowable expense for any area represents the median housing cost for that geographical area.

The National Standards for other expenses, such as public transportation and out of pocket health care costs, are the same for everybody nationwide, and are updated every couple years.  For food, clothing, and other miscellaneous expenses, the IRS allows a set amount based on the number of family members in the household.

Historically, the IRS has not allowed expenses for unsecured obligations, such as your minimum monthly credit card bills and student loan payments.  However, as part of the 2012 “Fresh Start” program, the IRS now gives collections personnel discretion on these items.  Your Revenue Officer may permit you to claim these items, and it is therefore better if you do so up front, and let them tell you later that you can’t.

Hopefully this gives you a little more insight into why some expenses are allowed and how they are calculated.  In the end, the most important fact is to ensure that  that you claim every allowable expense on your Form 433.  Doing so will ultimately minimize the amount you end up paying the IRS on your back tax liabilities.

By |2013-10-05T18:44:00-06:00October 5, 2013|Categories: IRS Talk|Tags: , , , , , |Comments Off on Understanding IRS Debt and Allowable Expenses
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How To Get IRS Currently Not Collectible Status

If you are facing IRS debt issues, a great tool for getting them momentarily off your back is a status known as Currently Not Collectible (CNC).   The IRS recognizes that you may be in a financial condition that renders you unable to pay anything on your taxes.  When we represent taxpayers that are either insolvent or are having major cash flow issues, the Currently Not Collectible Status is the option that we attempt to obtain most often.

If you have negligible assets (e.g. bank accounts, home, cars) that the IRS can seize, and you have no income beyond what is absolutely necessary for you to live, the IRS may determine that your liability is currently uncollectible.  CNC status defers collection action under the undue hardship rule.  If you are one of these uncollectible cases, the Revenue Officer assigned to your case will remove your case from active inventory until your financial condition improves.  CNC status is generally maintained for about one year. Keep in mind that if you are in CNC status, penalties and interest will continue to accrue on your tax liabilities.

There are many reasons the IRS may consider your case as uncollectible.  These include:

  1. The creation of undo hardship for you, leaving you unable to meet necessary living expenses
  2. The inability to locate any of your assets
  3. The inability to contact you
  4. You die with no significant estate left behind
  5. Bankruptcy or suspension of business activities with no remaining assets
  6. Special circumstances such as tax accounts of military personnel serving in a combat zone

Before closing your case for the reason of undue hardship, we can guarantee that the IRS will request a financial statement from you so that they can review your finances.  The review is similar to the review for an Installment Agreement request; both of which are similar to a mortgage application.  You will be required to provide financial documentation such as bank statements, copies of mortgage statements, car payments, pay stubs, etc.  If your assets are negligible and your net disposable income is negligible, you’ll most likely to be able to obtain CNC status.

The IRS will periodically re-examine your finances to see if your financial condition has improved to the point that some payment can be demanded.  This financial review will occur about once a year and you must then complete a new financial statement.  The IRS may question you by phone or in person about your updated financial information or they may simply send you the form and request that you return it by mail.

As with all information you give the IRS, make sure that what you say is absolutely truthful.  The IRS may also monitor your financial condition by computerized review of your tax returns.  For example, the IRS computers may flag your return if your reported gross income exceeds some pre-established amount.  Remember, the IRS only has 10 years from the date of assessment to collect delinquent taxes; once the statute expires, so does your liability.

Millions of Americans have remained in CNC for years and completely avoided having to pay their back taxes.  Obviously, these folks could not title assets in their own name or have significant income available for IRS levy.  Still, many of these uncollectible cases enjoyed relatively comfortable lifestyles.  If you maintain no assets in your own name, you have a small income, and expect your financial situation to continue as it currently stands, then remaining in CNC status may be your most practical remedy.

However, if you do not intend on remaining uncollectible until the statute of limitations expires or you don’t want the tax liability hanging over your head, then you may want to consider an Offer in Compromise while your financial situation isn’t so great.

Do YOU Need Help With Your IRS Debt?
This post (the one you’r reading) is one of the most viewed on our site.  Why?  Because many people have tax issues that they want to resolve.  If you have old tax returns that need to be filed or want to learn how a professional can help you with your situation, why not visit our sister site File Old Tax Returns?  You might be surprised to learn that we may be able to help you out for less than you are thinking.  Plus, hear some valuable information on your taxpayer rights from the IRS Commissioner himself!

By |2013-09-12T15:38:19-06:00September 12, 2013|Categories: IRS Talk|Tags: , , , |Comments Off on How To Get IRS Currently Not Collectible Status
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Remove Wage Garnishments With The Help of The Taxpayer Advocate Service

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The IRS is the only collections authority that can take significant actions that will make it hard for you to live.  One such situation is when they start to garnish your paychecks. A wage garnishment is one of the most-feared IRS collections tactics, and rightly so. Your employer is legally obligated to implement it.  If they don’t, they can face stiff penalties themselves.

The bright side in these situations is that an IRS wage garnishment does NOT follow you to another job. So, if you have a wage levy in place and decide to quit your job in order to get out of it, we would encourage you to seek employment to get back on your feet. The IRS won’t know where to send another wage levy to an employer until some sort of tax return information gets filed. For example, when your employer issues you a W-2 after the end of the year, they are required to file a copy of it with the IRS.  When this happens the IRS will then know where you work and may file a new wage levy at your new employer.

So, if an IRS wage levy or wage garnishment is creating a significant economic hardship for you, you are encouraged to do one of two things. One is to seek professional tax representation to assist you in resolving the matter. If your tax situation is fairly complex, you’re going to want to hire professional tax representation to resolve your situation. If your tax situation is otherwise simple, or you simply cannot afford to hire professional tax relief assistance, then by all means contact your Local Taxpayer Advocate.

There is a Local Taxpayer Advocate (LTA) office in all 50 states and very large cities will have a dedicated office (ex. Cleveland and Cincinnati OH). Contact these folks and tell them your situation; it’s their job to help out folks such as yourself, and it’s a service already paid for by your tax dollars (nice how that works, right?). The nice thing about the Taxpayer Advocate service is that they are an independent arm of the IRS, and they function OUTSIDE of the normal bureaucracy of that agency. In fact, the Taxpayer Advocate service reports directly to Congress, NOT to the Commissioner of the Internal Revenue Service.

If you’re seeking assistance from the LTA, you will most likely want to file the following form, which is IRS Form 911, Request for Taxpayer Advocate Assistance. Your LTA can provide you with this form.

So, again, don’t let an IRS wage garnishment make you think that you can’t go get a job. The wage levy from your previous job does NOT automatically follow you over. Also, either seek professional tax resolution assistance from a reputable firm, or contact your local Taxpayer Advocate office to get help.

As always, ignoring your IRS problem does NOT make it go away. It is always best to confront the problem head on, get it resolved, and then move on with your life.  If you would like us to help you with your situation, please give us a call at 773.239.8850.

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By |2013-09-07T13:59:40-06:00September 7, 2013|Categories: IRS Talk|Tags: , , , |Comments Off on Remove Wage Garnishments With The Help of The Taxpayer Advocate Service
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Guaranteed Installment Agreements

Whenever you see tax resolution firms advertise, you’ll usually see a qualifier in their ad that says something to the effect of, “If you owe the IRS at least $10,000, then give us a call.” The reason for this is that if you owe the IRS less than $10,000, there is a provision in the tax code that REQUIRES them to accept your proposal to pay them in monthly installments if you meet certain requirements. In fact, you don’t even need to provide them with financial statements to qualify.

To qualify for a guaranteed installment agreement, you must:

  1. Owe only income tax, not any other types of tax.
  2. Have properly filed and paid all tax returns during the 5 years prior to accumulating the tax debt.
  3. Not be able to pay the tax immediately out of savings or other means.
  4. Pay the tax fully within 3 years (e.g., the payment plan cannot exceed 36 months).
  5. File and pay all tax returns on time during the period of the installment agreement.
  6. Not have had an active installment agreement during the past five years.
  7. Owe less than $10,000 in TAX, not including penalties and interest.

Another beautiful thing about guaranteed installment agreements is that the normal legal minimum monthly payment of $25 per month does not apply. Yes, you can actually offer payments of $10 per month, and as long as that will fully pay the debt within 36 months, they have to grant you the request!

Lastly, guaranteed installment agreements can be granted by the lowest level collections employees of the IRS without managerial approval. All you have to do is make one phone call to the Automated Collection System (ACS), wait on hold for an hour, talk to a human for 10 minutes, and you’re DONE.  If you’re not sure where to call, dial the number in the upper right hand corner of the notices you’ve been receiving and you’ll more than likely be connected to ACS.  If you don’t want to talk to anyone, you might be able to do it online.

Do keep in mind, however, that penalties and interest continue to accrue during these – and all other – Installment Agreements, although they are guaranteed by law. Because of this, you may decide it is in your best interest to fully pay any balances due as soon as you possibly can.

By |2013-08-19T12:17:10-06:00August 19, 2013|Categories: IRS Talk|Tags: , , , , |Comments Off on Guaranteed Installment Agreements
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Appeals Division: Your Best Friend At The IRS (Possibly)

Last week we negotiated a client’s back taxes into an IRS status referred to as Currently Not Collectible (CNC).   The conversation went rather smoothly as we had all the necessary paperwork and we worked with a representative who was fairly amicable.   But what happens when your experience isn’t so pleasant or doesn’t go in your favor?  Fortunately for many people with a tax debt, the IRS has an administrative Appeals Division (Appeals) to which most collections actions taken by the agency can be appealed.

Appeals is one of the IRS’ best kept secrets.   Why?  In our experience, Appeals personnel appear to be under less pressure to collect tax revenue than Revenue Officers.   This is likely due to different criteria for personnel reviews.  In addition, Appeals personnel are simply more pleasant to deal with in general, usually lacking the snappy attitude and air of arrogance that is unfortunately common amongst Revenue Officers.

So what is the primary purpose of Appeals?  Well, their functional mandate from on high is, effectively, to prevent cases from going to court (thus saving the government the expense of litigation).  This is done by offering a “fresh look” at situations that have already had some interaction with the IRS at another level.  Appeals, however, is still an administrative function and is not a court in any way itself.

Appeals works in a very formulaic manner, just like any other IRS division.  When you file any sort of IRS appeal, you’ll receive a letter notifying you that your case has been assigned to a Settlement Officer (SO).  Sometimes, this first letter will include your hearing date but sometimes it won’t.

The initial contact from appeals via mail will usually include a request for financial documentation, if this information wasn’t already in your file when it was passed to Appeals from Collections.  If your Appeal in any way mentions a “resolution alternative” (such as an Installment Agreement, CNC, or Offer in Compromise) then you will be requested to provide the financial documentation necessary to reach that resolution alternative.

Many different types of Collection actions taken against you can be appealed.  Aggressive collections actions such as bank account levies and wage garnishments are commonly appealed, but so are proposed garnishment actions, and even denials of payment plans.  If the IRS takes any adverse action against you, make sure to carefully review the notices they send you, which will always explain your appeals rights.  If you need assistance protecting your legal right to an appeal, such an action by the IRS, be sure to contact a tax professional experienced in representing taxpayers with such tax issues.

Until next time…

By |2013-07-29T12:15:29-06:00July 29, 2013|Categories: IRS Talk|Tags: , , , , , |Comments Off on Appeals Division: Your Best Friend At The IRS (Possibly)
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