TaxSOS.com Tax Problems Blog

January 18, 2018

Offer in Compromise Program – Need for legislation to repeal the partial payment requirement.

Filed under: Offer In Compromise — Tags: , , — Administrator @ 9:57 am

January 18, 2018

An Offer in Compromise benefits the government by collecting money it would not otherwise collect. An accepted Offer concurrently provides the taxpayer a fresh start. A condition to the Offer is that the taxpayer must also file and pay their taxes for five years after an offer is accepted.

However, a current impediment to the offer program is the requirement that taxpayers who would like to consider a “lump sum” offer (payable in five or fewer installments), must include a non refundable partial payment of 20 percent of the amount of the offer. For “periodic payment” offers (an offer payable in six or more installments), a first proposed installment is required with the application, and continued monthly payments are to be made while the IRS is considering the proposal. Additionally, the IRS requires that a user fee be paid. The partial payment requirement and user fee can be waived for taxpayers with low incomes (less than 250 percent of the Federal poverty level).

The Treasury Department (report in 2017) has estimated that repealing the requirement of a partial payment would have a positive revenue impact since it may be substantially reducing access to the offer program. This is further supported by 2005 Treasury Inspector General for Tax Administration report finding that when the IRS first imposed a $150.00 Offer in compromise fee, offer submissions declined by more than 20 percent among taxpayers at every income level. Accordingly, the partial payment requirement is likely causing a decrease in collections by the government and increasing the costs of collection.

The Taxpayer Advocate has recommended that the Internal Revenue Code be amended to remove the requirement that taxpayers include a partial payment with “lump-sum” and “periodic payment” offers. [See National Taxpayer Advocate PURPLE BOOK, December, 2017].
20180118

January 16, 2018

IRS Urges Travelers Requiring Passports to Pay Their Back Taxes or Enter into Payment Agreements; People Owing $51,000 or More Covered

Filed under: IRS levy and wage garnishment — Tags: , — Administrator @ 1:21 pm

WASHINGTON ─ The Internal Revenue Service today strongly encouraged taxpayers who are seriously behind on their taxes to pay what they owe or enter into a payment agreement with the IRS to avoid putting their passports in jeopardy.

This month, the IRS will begin implementation of new procedures affecting individuals with “seriously delinquent tax debts.” These new procedures implement provisions of the Fixing America’s Surface Transportation (FAST) Act, signed into law in December 2015. The FAST Act requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt. See Notice 2018-1. The FAST Act also requires the State Department to deny their passport application or deny renewal of their passport. In some cases, the State Department may revoke their passport.

Taxpayers affected by this law are those with a seriously delinquent tax debt. A taxpayer with a seriously delinquent tax debt is generally someone who owes the IRS more than $51,000 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired or the IRS has issued a levy.

There are several ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. They include the following:

• Paying the tax debt in full
• Paying the tax debt timely under an approved installment agreement,
• Paying the tax debt timely under an accepted offer in compromise,
• Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice,
• Having requested or have a pending collection due process appeal with a levy, or
• Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

A passport won’t be at risk under this program for any taxpayer:

• Who is in bankruptcy
• Who is identified by the IRS as a victim of tax-related identity theft
• Whose account the IRS has determined is currently not collectible due to hardship
• Who is located within a federally declared disaster area
• Who has a request pending with the IRS for an installment agreement
• Who has a pending offer in compromise with the IRS
• Who has an IRS accepted adjustment that will satisfy the debt in full…

If you need assistance with your tax problems, please call 1-866-482-9707. The consultation is free.
Please visit my web sites: www.IRSLevyRelief.com or www.TaxSOS.com

January 12, 2018

Right to Tax Representation – a “Right” being gutted

Filed under: IRS Abuse, Misuse, and Taxpayer Rights Violations — Tags: , — Administrator @ 2:54 pm

The IRS is now demanding that tax practitioners provide their social security number and date of birth when contacting the IRS concerning a client. The Internal Revenue Manual (on IRS website) has not yet been updated as of January 11, 2018. This “requirement” is just now being imposed. This was demanded even in a situation where counsel had recently spoken to the IRS (without such requirement); faxed financial statement information and supporting documentation, discussed the financial information with two (2) ACS employees, faxed the power of attorney, and provided the routine CAF number together with taxpayer’s address and other information requested. Thus, the practitioner could answer any factual question presented in the volume of financial information just previously provided. However, in the cited case, during the requested “Manager” call back, legal counsel questioned the need to provide the social security number / DOB, as this has never been requested before. The IRS “Manager” hung up! End of discussion. Now call ACS again and wait on hold.

With the well documented abusive tactics by the IRS (historical and current), it is clear that this new “requirement” will have a National Chilling Effect on a taxpayer’s representative and his or her ability or desire to aggressively represent taxpayers. The ruthless and many times illegal actions of IRS Collections personnel are well documented.

Even the Office of the Director of Collections was not aware of this new “requirement”, and was surprised, appeared shocked and responded “what?” when the procedure was explained.

Moreover, the procedure is not needed. This is overkill. Moreover, it will be used for illegal and wrongful purposes by the IRS and whoever else they release the information to (either intentionally or through IRS incompetence).

Reflect on some case examples:

* A case wherein multiple IRS collection managers lied during case representation. It was not until the case reached the Head of the IRS National Office that tax counsel was able to cut through the IRS Managers lying and targeting of the taxpayer.

* The IRS previously released e-mail contact information of tax representatives on the internet. Tax professionals had argued against such, but the IRS did it anyway. The result, tax representatives were then targeted by perpetrators of ID theft. The IRS caused the problem.

* The documented illegal targeting done by the IRS (Lois Lerner). “Former IRS tax-exempt chief Lois Lerner has refused to testify about targeting conservative groups / A formal apology and reported $3.5 million settlement by the IRS with tea party and other conservative organizations the federal agency targeted during the 2012 election may not be the end of the story.”(WND). “Lerner / IRS deliberately targeted political opponents … FBI, Justice Dept. Collaborated with IRS to prosecute groups illegally …” (WND)

* Tax Court case involving taxes and penalties in excess of $28,500.00. The case was successfully brought to resolution with zero owing by the taxpayer. Yet, the taxpayer advised that the IRS has audited her every year since.

* In a collection case the IRS Field Revenue Officers seized random books from a professional out of the library (essential for production of income). They laughed about how his books were now worthless to him and he couldn’t work. The seizure didn’t result in any revenue to the government.

* ACS collection case wherein the IRS was refusing to allow legal fees as an allowable cash flow item for representation before the IRS.

* Just within this last week, ACS employee who advised legal counsel he was like a “2 year old child” because legal counsel was disagreeing with the ACS employee and wouldn’t agree to the ACS employee disregarding the taxpayer’s particular facts and circumstances (which is required under the law).

* The TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION issued its July, 2017 report findings: including IRS rehiring of former employees previously terminated from the IRS … while under investigation for a substantiated conduct or performance issue. … separated while under investigation for unauthorized accesses to taxpayer information; … separated while under investigation for absences and leave, workplace disruption, or failure to follow instructions. This includes positions with access to sensitive taxpayer information, such as contact representatives….” A Table of Examples of Significant Prior IRS Conduct Issues for Rehired Former Employees shows multiple categories, including the rehiring of former IRS employees who had Falsified Employment Forms, Official Documents, or Unofficial Documents. Two rehired employees had repetitively falsified employment forms by omitting prior convictions or terminations. One rehired employee had several misdemeanors for theft and a felony for possession of a forgery device, and another rehired employee had threatened his or her co-workers.

This new mandate is NOT needed and should be stricken.

The right to proper legal representation is threatened. The legislative history of the Taxpayer Bill of Rights is full of documented abuses. Human nature hasn’t changed. IRS employees will seek revenge. This will be a means to accomplish such vendetta and revenge more “discreetly” (whatever rationale is provided).

I have advised the National Taxpayer Rights Advocate of this “new” collection procedure and its direct chilling and harmful impact on taxpayer’s rights. It has been requested that the Taxpayer Advocate issue an immediate order prohibiting this provision from being instituted.

Posted: 20180112

January 9, 2018

Don’t pay taxes you don’t owe. Does your accountant really know?

Filed under: Trust Fund Recovery Penalty — Tags: , , , — Administrator @ 10:47 am

The Taxpayer Advocate Service has posted case results in which a widow’s social security payments were being levied for employment taxes owed by her deceased husband’s business, which had closed. The business was a Corporation and the deceased husband’s accountant had told the widow to pay the outstanding payroll taxes. She had sold her home and paid as much as she could. She kept paying until she had sold her assets, didn’t have anything else to sell, and no money to pay with. Then the IRS levied her Social Security Payments, causing undue hardship.

The accountant was wrong! The surviving spouse was not a Responsible Person. She was not liable! The levy was released. It is not known whether the Taxpayer Advocate Service, inter-alia, filed claims for refund and sought abatement of the erroneous assessment (which is beyond merely obtaining a stay based on Currently Not Collectible). Such would have been recommended by me.

If you have a tax problem, please call me at 1-866-482-9707. The consultation is free.

December 26, 2017

Owe Back Taxes? No retirement savings for you.

Filed under: IRS Allowable Living Expense Standards — Tags: , — Administrator @ 1:21 pm

The IRS Allowable Living Expense standards do not provide for a minimal retirement savings allowance in computing a taxpayer’s ability to pay. However, retirement savings are in actuality necessary for maintaining the health and welfare of today’s families. The IRS position is that “discretionary retirement savings” are not a necessary current living expenses while the taxpayer is repaying past due taxes. Instead, the IRS views such a provision as an amount which can be paid to them. Of course, for example, if you work for a State or a City which “requires” retirement savings, then such is “allowable”. This IRS “double speak” is absurd.

The Taxpayer Advocate in its Fiscal Year 2018 Objectives Report to Congress has clearly stated that the current Allowable Living standards are not based upon “an amount of money that allows for a basic standard of living”. Contrary to the IRS position, providing for retirement is necessary for a family’s health and welfare. The Taxpayer Advocate has advised in its Objectives Report that it will be issuing a Taxpayer Advocacy Directive ordering the IRS to expand the categories available in the Allowable Living Expenses. Hopefully, this will include minimal retirement savings.

December 21, 2017

Your basic standard of living and determining “ability to pay”. Is the IRS not following the law?

Filed under: IRS Abuse, Misuse, and Taxpayer Rights Violations — Administrator @ 5:04 pm

When a taxpayer owes back taxes, a financial analysis is done. Question: what expenses are you “allowed” to claim? Despite the IRS publications about “taxpayer rights”, the reality is that in many cases, such is merely “for publication”. The IRS is not actually respecting your “rights”.

The Internal Revenue Code mandates that the IRS national and local allowances for taxpayer’s living expenses are to provide for an adequate means to provide for basic living expenses. These “allowances” play a major role in collection cases (for example, Offers in Compromise, installment agreements, undue hardship, etc… ).

The problem is that the IRS computational basis for its allowances is what people spend to live, not what goods or services actually cost to live. Moreover, the IRS excludes some essential expenses from its category of “necessary” (thus the IRS prevents you from claiming them).

As stated by the Taxpayer Advocate – “By focusing on what expenses are allowable instead of adequate, the IRS has exercised its discretion in a way that does not meet congressional intent, since “allowable” is not synonymous with “adequate” or “basic”. Instead, the IRS should adopt standards that allow for a sufficient or adequate standard of living”. [See Taxpayer Advocate Service – Fiscal Year 2018 Objectives Report to Congress – Volume One – Area of Focus #8].

The Taxpayer Advocate concluded in its report that the current IRS allowable expense standard “is not based on an amount of money that allows for a basic standard of living. It also does not take into account all expenses that are necessary for a basic standard of living today”. [See Taxpayer Advocate Service – Fiscal Year 2018 Objectives Report to Congress – Volume One – Area of Focus #8].

When you need assistance with an IRS problem, please call me. The consultation is free. My toll free number is 1-866-482-9707. Visit me on the web at: www.TaxSOS.com

December 19, 2017

IRS – Private Debt Collectors

Filed under: IRS Levy and Tax News — Administrator @ 12:31 pm

The Internal Revenue Service is again using Private Debt Collectors to collect outstanding inactive tax receivables. The Internal Revenue Service Advisory Council (2017 Report) has raised a number of issues regarding the use of Private Debt Collectors, discussed below.

1. Taxpayers and their representatives have dealt solely with the IRS concerning the collection of outstanding tax debts. The use of Private Debt Collectors introduces another layer of complexity with the potential for diminishing transparency.

2. Increased opportunities for Identity Theft, Fraud and Scamming of taxpayers.

3. The Private Debt Collectors will have access to confidential taxpayer information, increasing the potential abuse of taxpayer confidential information. Further, since taxpayer data will now reside on additional databases, there is an increase in the taxpayer’s exposure to potential identity theft by hackers.

4. Concerns about fraudsters claiming to be the IRS demanding immediate payments to fraudulent accounts.

5. The Private Debt Collectors may be motivated to use aggressive tactics since their compensation is based on a percentage of their collections.

If you owe the IRS, contact me. The consultation if free.

October 18, 2017

California Department of Tax and Fee Administration – New

Filed under: California Department of Tax and Fee Administration — Administrator @ 1:43 pm

California Department of Tax and Fee Administration (CDTFA)

Beginning July 1, 2017, the CDTFA will assume all previous statutory tasks of the State Board of Equalization, and will perform administrative functions for the Board. The CDTFA will report to the California Government Operations Agency.

The Taxpayer Transparency and Fairness Act of 2017, which took effect July 1, 2017, restructured the State Board of Equalization and separated its functions among three separate entities to guarantee impartiality, equity, and efficiency in tax appeals, protect civil service employees, ensure fair tax collection statewide, and uphold the California Taxpayers’ Bill of Rights.

The State Board of Equalization (Board, BOE) will continue to perform the duties assigned to it by the state Constitution, while all other duties will be transferred to the newly established California Department of Tax and Fee Administration and the Office of Tax Appeals.

The California Government Operations Agency is coordinating the transition of the restructure of the BOE and the establishment of the California Department of Tax and Fee Administration.

See the CDTFA organizational chart effective July 1, 2017

THE STATE BOARD OF EQUALIZATION:

The Board, which is headed by a five-member board, will remain independent from any agency, and will retain its constitutional responsibilities, including reviewing, equalizing, or adjusting property tax assessments, assessing taxes on insurers, and assessing/collecting excise taxes on alcoholic beverages. The administration over all other tax and fee programs will be transferred to the California Department of Tax and Fee Administration.

Read more HERE

September 21, 2017

Installment Agreements and streamlined installment agreements – Taxpayers are entering into agreements they cannot afford

Filed under: IRS Abuse, Misuse, and Taxpayer Rights Violations — Administrator @ 1:46 pm

The Taxpayer Advocate (September, 2017) has posted concerns about the disturbing long term effects on taxpayers entering into installment agreements that prevent them paying basic living expenses. The following are key points:

1. Taxpayers are routinely entering into and making payments on installment agreements despite having monthly income lower than their Allowable living Expenses.

2. Collection alternatives (e.g., Offer in Compromise, installment agreement, currently not collectible), should be designed to set a taxpayer up for success in meeting tax obligations. This includes paying current taxes.

3. The IRS Allowable Living Expenses do not adequately capture all necessary expenses.

4. Installment agreements are the most common collection alternative for taxpayers.

5. Installment agreements that disregard the taxpayer’s ability to pay AND meet basic living expenses, is an agreement set up for failure.

6. The “streamlined” installment agreement is the most frequently used form of installment agreement (in fiscal year 2014, 94.9 percent of installment agreements were streamlined; in fiscal year 2016, 84.4 percent of installment agreements were streamlined).

7. Using a Streamlined installment agreement means that there is NO financial analysis and NO application of the Allowable Living Expense “standards”. The IRS simply divides the balance due by 72 or even 84 months. As a consequence, the required monthly payment bears no relationship to what the taxpayer can actually afford to pay.

8. Disturbing long term effects – study found that 40 percent of all taxpayers who entered into installment agreements in 2014 had income levels below their Allowable Living Expenses – meaning those taxpayers could not meet their basic living expenses.

9. Over 400,000 taxpayer accounts in the study qualified for Currently Not Collectible. Thus, payments to the IRS created economic hardship. The taxpayer making payments were thus foregoing basic living expenses (such as utilities, food and a place to live).

10. The study found that taxpayers who had gone through a financial analysis (through the Advocates Office) to determine if the taxpayer could actually afford the streamline installment agreement payments (without foregoing basic living expenses) had a lower default rate than taxpayers who had not. During this financial analysis, consideration wass given to: the ability to pay basic living expenses, whether there is sufficient withholding to make sure current taxes are full paid, and that self-employed persons have sufficient income to make their estimated tax payments. Read More Here

IRS Corruption – Deep State

Filed under: IRS Abuse, Misuse, and Taxpayer Rights Violations — Administrator @ 10:31 am

Justice Dept refuses to open IRS Corruption Criminal Conduct investigation – Lerner / IRS deliberately targeted political opponents .. FBI, Justice Dept. Collaborated with IRS to prosecute groups illegally …

in video approx 7:48
Inside Judicial Watch: JW’s Battles Against the Deep State

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