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Tax Relief: Working With Your Local Tax Office

June 30, 2010 By

Requesting Your File to Be Sent to a Local Tax Office

Reasons to deal with a local tax officer instead of an ACS collector:

  • Unable to reach an agreement with the collector
  • Incorrect bill
  • If collector knows your bank, employer, residence he can levy bank accounts or wages; assigned tax officers are more cautious.
  • Tax officers may offer longer payment plans and more options if you give more financial details

You must have exceptional reasons to get transferred from the Audit Collection Service to a local tax office such as, if you oppose the tax amount and want a full explanation from a tax officer. In such an instance, ACS collectors must transfer your file to a local tax office in order to determine accuracy.

As long as your reason is not completely untrue you may keep asking for a transfer even if you’re turned down. The more you owe, the better your chances are of transferring from the ACS to a local tax office. Put your reasons for objecting in writing and request a meeting with a local tax officer.

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Tax Relief: Installment Agreement- Getting Declined

June 29, 2010 By

When the IRS Declines an Installment Agreement

There are three reasons for the IRS to turn down an Installment Agreement (IA):

  • Not all living costs are deemed essential i.e., private schooling fees, high credit card purchases, charitable donations.
  • Information on Forms 433-A and -B are inaccurate or deceptive e.g., public records prove you own assets that you didn’t reveal or your income is higher than disclosed.
  • You failed to complete a previous Installment Agreement causing the IRS to regard you as unreliable.

If an IA is turned down, continue your request with the tax officer/manager, RS Appeals Office, and tax advocate.

Revoking an Installment Agreement

Once an IA is approved, you and the IRS are bound to it. However, there are exceptions to revoking your payment plan:

  • You don’t file tax returns or settle taxes subsequent to the IA; the IRS monitors your returns and payments.
  • Revocation is caused by non-payment or late payment; the IRS gives thirty to sixty days before sending a warning regarding revocation.
  • There’s a noticeable (positive or negative) change in your finances. If you keep silent they may not see it but, if the IRS notices, you must complete a new Form 433-A or -B.
  • If the IRS learns you didn’t fully disclose all assets and/or additional income(s) during your IA negotiations.

A Form 523 notifies you of the IRS’ intention to revoke your IA. You can appeal it by using Form 9423.

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Tax Relief: Contacting the Audit Collection Services (ACS)

June 28, 2010 By

Tax debt under $25,000 could qualify for a payment plan of up to sixty months. However, your request for a payment plan can be denied due to unfiled returns. Debt of more than $25,000 must be worked out with the ACS.

Have a strategy prior to contacting a collector:

  • In an event that a collector contacts you first, make an excuse not to speak with them- say you will get back to them. If you don’t have your facts and figures straight, don’t reply to any questions other than your name.
  • The collector may grill you regarding your home equity, other real estate, bank balance(s), and if you qualify for credit. The collector wants you to pay your tax debt in full and may request that you take a loan. If he/she thinks you can pay your debt in full, the payment will be expected within thirty days. If you have proved that you cannot make the full payment, you could get a monthly payment plan also called an installment agreement (IA), however, you may have to provide pay slips, rent receipts, etc.
  • The collector wants all tax money paid quickly. Your objective is to present an organized list of your finances for more time to pay off your debt. Have your income, living expenses, assets and debt data ready. The information is comparable to IRS Form 433-A & -B, Collection Information Statement for Businesses, Self-Employed Individuals and Wage Earners documents.
  • Be prepared to wait when calling the collector. Write down his/her name and ID number. Take notes; you could speak to a different collectors each time you call. Some collectors may be more sympathetic than others so emphasize why it’s difficult to meet your expenses e.g. low income.
  • Complete a Collection Information Statement. If you made a verbal agreement, follow through. Pay on time even if the IRS monthly billing is late.

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Tax Relief: Negotiating an Installment Agreement with the IRS

June 25, 2010 By

Negotiating an Installment Agreement (IA) When You Also Owe State Taxes

It’s common to owe taxes to your state and the IRS at the same time; however, you must discuss payment plans with both simultaneously. This is to prevent you from not having enough money to split between the two.

Offer in Compromise – Paying Taxes for Pennies on the Dollar

A lawful reason is not grounds to have a tax bill lessened; it is up to Uncle Sam if you qualify. In most cases the IRS is obliged to give most requests for OIC (Offer in Compromise) balanced consideration. If turned down you can go to the IRS Appeals Court.

It is possible for the IRS and tax payer to work out a deal. Find out at the onset if you qualify as it could save you time and money.

An offer to the IRS takes a long time and must be properly processed with all the required documentation and items such as car registrations, pay slips and accounts.

Are You Eligible for OIC Consideration?

You must do more than request a deal with the IRS: you must not be bankrupt, must complete Form 656 and prove one of the following:

  • Doubt as to Collectibility- It’s not a sure thing the IRS can collect your tax money owed.
  • Doubt as to Liability- It’s not a sure thing your tax bill is correct (this is unusual).
  • If you have enough assets to settle but extraordinary conditions initiating ‘economic hardship’ or ‘unfairness’ or ‘inequality’.

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Tax Relief: IRS Front Line Collectors – Revenue Officers

June 16, 2010 By

If you asked for your case to be sent to your local tax office or your bill is higher than $25,000 and the ACS and IRS campus has not received payment from you, a revenue officer takes over. He can do the following:

  • a possible surprise call or visit at your residence or work
  • question you on the spot or stipulate a review date at the tax office
  • get you a payment plan if you owe under $25,000 and can afford to pay it with interest and fines within sixty months
  • if more than $25,000 your signature must confirm comprehensive financial information recorded on IRS forms

Collection by revenue officers takes place as follows:

  • Demand immediate settlement
  • Request you get bank loan
  • Request you sell assets
  • Suggest installment payment agreement
  • Suggest Offer in Compromise
  • Imposed collection i.e. seize accounts, wages and other assets
  • Describe your case as presently uncontrollable

Revenue officers often catch negligent tax payers unaware by making personal calls at work or residence between 8am and 6pm. If you are out a card is left asking you to call back shortly. When with you the revenue officer will either question you on the spot or set up an interview at the IRS office. Evade providing financial information until you are fully prepared. If you have not filed tax returns he will not comply with your request. Do not lie.

Acknowledge you owe money and be cooperative. Do not complain about the IRS or your financial problems. Even when an appointment is organized the revenue officer may call or see you beforehand. Remember to ask for the IRS form prior to the interview and complete it before you meet so you are prepared.

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Tax Relief: ACS Collectors and Installment Payments

June 15, 2010 By

Tax debt under $25,000 could qualify you for a payment plan of up to sixty months. You request it but it can be withheld due to unfiled returns. Debt of more than $25,000 must be worked out with the ACS.

Have a strategy prior to contacting a collector. Make any excuse not to talk if they contact you first. Say you’ll get back to them. If you don’t have facts and figures don’t reply to any questions except your name.

When you contact a collector have your income, living expenses, assets and debt data. The information is akin to IRS Form 433-A & -B, Collection Information Statement for Businesses, Self-Employed Individuals and Wage Earners. Your objective is to present an organized list of your finances for more time to pay. The collector wants all tax money paid quickly.

When you call the collector, be prepared to wait. Take down his name and ID. Write down notes. You could speak to a different collector each time you call. Some may be more sympathetic than others. You must emphasize why it’s difficult to meet your expenses e.g. a low income. Be truthful regarding assets. Cut short tricky questions such as a second income with a plausible excuse. Rather promise to call back later.

The collector may grill you regarding home equity, other real estate, bank balances and if you qualify for credit. He wants to get you to pay your tax debt in full but may not force you to take a loan. If he thinks you can pay, he will expect payment within thirty days. If not, you could get a monthly payment plan also called an installment agreement (IA). You may have to give over pay slips, rent receipts etc to back it up. Complete a Collection Information Statement. If you made a verbal agreement, follow through. Pay on time even if the IRS monthly billing is late.

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Tax Relief: Stimulus Tax Credit Slows Down and Not Stimulates

June 14, 2010 By

One of the most common grievances of tax payers is their bewilderment when they file a “Making Work Pay” credit. The ordinary man (or woman) can rest assured this state of confusion is also felt by tax professionals. It shows what was supposed to benefit the tax payer, is not working out as the lawmakers intended.

The point of the Making Work Pay credit is to benefit both single and jointly filing married couples. This tax credit should get to you faster. To achieve this, payroll withholding tables were adapted to lessen the quantity of federal taxes deducted from employees’ paychecks. The real result is pay per check decreases were so small, they went unheeded by the majority of tax payers. Lawmakers did not see any improvement in the economy due to spending of the few additional dollars each payday.

People are accustomed to and take more note of the rebate checks system because the amounts involved are bigger and worth more to the tax payer. It seems tax payers prefer Uncle Sam’s rebate checks. Most tax payers don’t know they must include the previous year’s paycheck credits.

It is necessary to file Schedule M to get the Making Work Pay credit. If you refrain from filing Schedule M it slows down the IRS’ processing of all tax returns and this results in a holdup of refunds to you.

You must look at line 63 for Making Work Pay credit (on page 2 of Form 1040 within the portion called ‘Payments’ from line 61 to 71). The figure is determined on Schedule M then moved to the return. You have your expected tax payments from the previous year and withholding on W-2. Form 1040A has a comparable section for a credit total.

If you want to receive the individual’s $400 or married filing jointly $800 you must fill in Schedule M and thereafter insert the amount on 1040.

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Tax Relief: Does the IRS Make Allowances for Hardship?

June 3, 2010 By

If you are experiencing financial hardship that results in you not paying your taxes the IRS can put off collection procedures. They will not waive your debt but they will delay collection by not taking your bank accounts or your salary. IRS accounts do allow hardship status and this is stated in the Internal Revenue Service Policy Statement 5-71. If restricted income or assets exist but it is established that levy action would cause hardship then liability can be described as presently not collectible. The levy action must stop the tax payer from maintaining living costs that are essential. Every situation must receive individual screening in order to determine if the levy would be the cause of serious financial hardship or only an inconvenience to the tax payer in question. Only after all the stages of the collection procedure are completed and it is established an account is presently not collectible should it be noted and detached from the register in force. The IRS refers to ‘hardship’ as ‘currently not collectible’. The IRS transaction cipher refers to it as a ’53 case’. This is the cipher placed in your account to show collective procedures have been postponed. Only a total admission of living costs and income and an assessment of liabilities and assets will gain a ’53 case’. Living costs made up of food, clothing, housing, utilities and car expenses will be compared to an IRS chart to determine if a hardship status exists. No flow of cash is proof of hardship. If the IRS believes you don’t have hardship and you are unable to change your budget to pay your taxes, you may have to think about bankruptcy to eradicate taxes.

You must compare whether a hardship status, submitting an offer in comparison or bankruptcy is the best means of resolving your tax debt. The money you owe doubles every five years due to penalties and interest. The IRS takes ten years for collection and then any money owing is waived and your balance is down to zero.

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Tax Relief: Does Closed for Business Mean Closed to IRS Collection?

June 2, 2010 By

The Internal Revenue Service does not overlook taxes owed by a business/ home business that closed its door. Even if the business has not been operating for several years it will not be free from the expectations of the Internal Revenue Service. You can be sure the Internal Revenue Service will make every effort to collect employment taxes and officers of that business will be held responsible. However, if the business closed down in a proper manner by following the correct tax procedures and none of its assets got transferred to third parties in order to continue operating in a fraudulent fashion it will be regarded as not collectible. In such an instance any Internal Revenue Service tax notices are being automatically produced by a computerized procedure.

A business that is regarded as truly not collectible will not have the attention of the Internal Revenue Service. The Internal Revenue Service can pursue any of those who made the decisions not to pay employment taxes to the Internal Revenue Service. They would be under the impression that officers of the business are liable to a lesser or greater degree. A penalty for trust fund recovery would have been evaluated by the Internal Revenue Service against officers responsible for the employment taxes withheld from workers’ salaries.

A business that is correctly closed and is not collectible will not be pursued by the Internal Revenue Service. As there are no assets, they will go after officers, owners and managers due to their personal liability. This is known as ‘joint’ and ‘several liability’. If the collection of one hundred percent by the Internal Revenue Service is from another person you no longer have a obligation to pay. The collection can be carried out in any way the Internal Revenue Service decides is best but may not be more than one hundred percent of what is owed.

According to the IRS Taxpayer Advocate 2002 to 2007, trust fund assessments amounting to 13.5% was carried out against owners, officers and managers. The Internal Revenue Service is not excessive in their pursuance of closed businesses.

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Tax Relief: An Effective Way to Pay Employment Tax Liability

June 1, 2010 By

A business must stipulate a request for payment of employment tax liability. If it does not, the IRS will take care of its own wellbeing by applying payment. First of all, such a payment will be applied to taxes that are non-trust fund taxes so the IRS has greater choices for collection. The IRS will also follow collection of the trust fund taxes via certain workers and owners. This will result in others being evaluated and non-trust funds being covered by the business in question.

Payments that are not selected must be applied according to the provisions of the Internal Revenue Manual 5.19.14.5. First, a non-trust fund liability for the most mature payroll tax quarter. Second, a trust fund liability for the most mature payroll tax quarter. Third, cost of collection and also of fees. Fourth, evaluate the penalty and then evaluate the asset. Fifth, accumulated penalty and then accumulated interest.

It is advisable to assign payments that are voluntary to trust funds. It is best done during a period when business is quiet. Deliberate and voluntary payments to trust funds will assist in the lowering of personal liability. A payment that is voluntary on an employment tax liability must be assigned in writing so it can be applied to the paying of trust fund taxes at the outset.

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