Posted by LWM Team on Fri, Sep 03, 2010
Don't break your deal with the IRS!
When you set up an installment agreement, you are making a deal with the IRS by which you are telling them you will be making monthly payments towards paying off your tax debt within a certain time period. However, if you do not fulfill your agreement, you will end up with an IA (Installment Agreement) default.
When the IA default occurs, you will receive a notice of default from the IRS (entitled as a ‘Notice of Levy’). Once you have received this, you are given exactly 30 days to make an appeal against it so you can negotiate with the IRS about an installment agreement. Otherwise, the IA default will be enforced and your installment agreement with the IRS will end after the 30-day period and they will try to collect what you owe!
So long as you file the appeal within the 30-day period, your installment agreement will be valid until your case has been heard and a decision has been made, in accordance with the law.
If you win your case, your negotiations with the IRS will protect your assets, your income, and your bank account from being levied while they are taking place. During this time, you should ensure you give the IRS up-to-date information about your financial situation, which hopefully will stop the IA default from being enforced.
If you have no ability to pay the IRS back and your appeal is rejected, you should consider other options, such as an offer in compromise, filing for uncollectible status or declaring yourself bankrupt. These can be effective alternatives however; the best option depends entirely on your personal situation.
Posted by LWM Team on Tue, Aug 03, 2010
You Can Pay Off Your Taxes with an Installment Plan
When paying off IRS debts, Uncle Sam has a system in place allowing taxpayers to pay off tax debts in installments. Over time, the IRS modified its installment plans. Some bode well for you, while others not so well.
A good improvement for you is the introduction of electronic online application for an IRS installment plan. More than 75 percent of filers are entitled. Since the October launch, approximately 3,000 applied. You may apply online if you owe $25,000 or less. If you owe less and can’t pay in full by the April cut-off date, consider an installment plan.
A 120 days extension is regarded as a short-term option and is most worthwhile. You will get extra penalties and interest will accumulate but you won’t pay a fee.
The other option is monthly payments with a user fee that could rise to $105 if not paid by direct debit from a bank account. This fee lowers to $52 if paid by direct debit. Lower income taxpayers may qualify for $43. Previously, all installment plan taxpayers across-the-board paid $43. This fee rose from 2007. It seems, credit card companies showed the IRS there’s profit from increasing service fees.
Your outstanding tax bill keeps incurring penalties and interest. IRS interest is less than credit card interest. It’s the federal short-term tariff plus 3 percentage points. It results in 8 percent for tax shortfalls for the quarter starting 1 April.
For those owing more than $25,000, a payment plan is possible. Complete a paper form 9465. You may be asked to also complete a form 433F to disclose your assets.
An IRS installment plan is an agreement. Be sure you understand what you sign. You will be in default if you don’t pay or don’t pay on time. This also applies if you get a past-due tax bill in the future. It gives the IRS the right to begin levy or tax lien procedures against you.
Posted by LWM Team on Sat, Jul 03, 2010
Safeguarding Yourself after Disclosing Finances to the IRS
After your interview, the IRS will know where you live, work, bank etc. They can easily confiscate assets and wages so be sure to safeguard yourself. You don’t have to let them know if you change employers, banks or sell assets the day after verbal or oral disclosure but, you must give information that is presently accurate. Switching banks is a lawful short term option. Leave a small amount in an account and move the surplus to a different bank.
Only interest bearing accounts are conveyed to the IRS at the end of the year. Open an account in a different location or state from where you reside. Only pay the IRS with money orders or through your old account. Each payment’s account is recorded by the IRS so don’t supply you new account number(s). However, if you are asked to complete Forms 433-A or –B, you must disclose new accounts.
Collector’s Next Move
After assessing forms 433-A and –B the IRS could:
- Demand payment immediately if there is proof that you can pay
- Request that you get a loan from a bank, finance company, or relative company or relative
- Request you sell assets in order to pay the IRS
- Recommend an Offer in Compromise
- Suggest a payment plan
- Advise you of bankruptcy alternatives
- Start imposed collection i.e. levy accounts, other assets and wages
- Describe your case as presently uncollectible
Revenue Officers check information supplied by you. If you transfer your assets or ask family members to hold your assets they will act severely. Fake transfers are unlawful and the IRS can seize them.
Posted by LWM Team on Thu, Jul 01, 2010
IRS Front Line Collectors - Revenue Officers
If you asked for your case to be sent to your local tax office, your bill is higher than $25,000, or the ACS and IRS campus is unable to collect payment from you, a revenue officer takes over. They can do the following:
• A possible surprise call or visit at your residence or work
• On-the-spot questions or stipulate a review date at the tax office
• If you owe under $25,000 and can afford a payment plan with interest and fines within sixty months, you may qualify to get a payment plan
• If more than $25,000 is owed, 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
• Impose collection i.e. seize accounts, wages and other assets
Visit from a Revenue Officer
Revenue officers catch negligent tax payers off guard by making visits or calls to your work or residence between 8am and 6pm. If you are out, a note is left asking you to call back. Once the officer meets or speaks with you, he will question you on-the-spot rather than set-up an interview in the IRS office. Avoid providing financial information until you are fully prepared. If you haven't filed tax returns he won't comply with your request(s).
Remember, do not lie. Acknowledge you owe money and be cooperative. Don't complain about the IRS or your financial problems. Even when an appointment is organized he may call or see you beforehand. Ask for the IRS forms prior to the interview; complete them before your interview. Last but not least, be fully prepared.
Posted by LWM Team on Tue, Jun 29, 2010
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.