Taxation & Estate Planning

IRS taking too long to decide your offer in compromise? After two years, its accepted.

Posted on October 10, 2009
The IRS is generally known to be prompt in processing offers in compromise. But the IRS is also known for losing files and not processing claims. Sometimes, things get washed into the big bureacracy. So, what if the IRS takes its time on your offer, or it slips through the cracks unattended without an answer?  Time can [...

Who?s afraid of an IRS letter? 5 reasons not to be.

Posted on October 06, 2009
A funny thing happened to me on the way to my mailbox today.  There was a letter from the IRS.  Sure, I get plenty of IRS mail everyday – I am an IRS defense attorney.   But this one had my name on it. I put myself in my clients’ shoes.  I understood their fears...

Real example: When can my taxes be discharged in bankruptcy?

Posted on September 27, 2009
I do alot of IRS and bankruptcy work for my clients, and receive many questions about  it works.  Bankruptcy is a valuable tool to eliminate IRS liabilities. To help in understanding taxes and bankruptcy, I thought it would be helpful to provide real life examples, starting here with a “bankruptcy timing” question I recieved from an enrolled agent [...

IRS auditor giving you trouble? Where else can you turn?

Posted on September 22, 2009
It is common to feel like you are not getting a fair shake from an IRS auditor.   Frustration mounts with perceptions that the auditor is unreasonable.  No matter what you do, the auditor cannot be satisfied.  You are told you owe money to the IRS, and you know you don’t...

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Face to face with IRS agents: Who?s who?

Posted on September 18, 2009
If you find yourself in an IRS pickle, there are three IRS employees you are most likely to come face to face with.  Those are Revenue Officers, Revenue Agents and Special Agents.  Here is what to expect from each: An IRS Revenue Officer is in collection enforcement...

When does a Federal tax lien expire and become unenforceable?

Posted on September 13, 2009
IRS tax liens are not forever.  They do expire – here is an overview of when: For starters, the IRS has 10 years to pursue you for the unpaid taxes that caused the lien to be filed.  The 10 years starts on the date you began owing the IRS money...

Non-filers with mortgages: The IRS might be watching

Posted on September 02, 2009
I received a call from a Wall Street Journal reporter on a story he was writing on an IRS announcement that they might use mortgage interest payments to identify non-filers. It goes like this:  You have not filed tax returns.  You are self-employed and your income is not reported to the IRS...

Get ready ? 2,000 new IRS collection Revenue Officers are coming

Posted on August 25, 2009
In an unprecedented hiring move, the IRS is bringing on board almost 2.000 new Revenue Officers, starting this fall (2009).  This is a 35% increase in high level IRS collection enforcement staffing. The ramp up will entail over 1,000 new Revenue Officers in the fall, with another 350 coming on board in 2010 and then 500 [...

The first step to ending IRS collection problems: Finding the money for estimated taxes

Posted on August 22, 2009
If you have had trouble paying taxes to the IRS in the past and would like to settle up, the first step is to ensure that you are paying your taxes now.  The IRS will not negotiate unless it sees that you are current on your taxes. And any solution that is negotiated will quickly [...

Trust Fund Interview and Form 4180

Posted on July 06, 2009
In today?s difficult economic environment, expect more businesses to resort to using payroll tax money to stay afloat and a corresponding increase in IRS enforcement measures. With bank lending tight, employee tax withholding is a ready ?but dangerous?source of immediate operating capital...

Who do you pay first - IRS debt vs. credit cards?

Posted on July 05, 2009
It is not unusual for my clients to find themselves indebted to two masters - the IRS and credit card companies.  Both want a piece of the pie, but there is not enough to go around.  So who do you pay first? How do you make both go away? The IRS comes first...

How common are IRS mistakes in property seizures?

Posted on June 20, 2009
The IRS appears to be human, and it makes legal and administrative errors when seizing property, says the Treasury Inspector General for Tax Administration (TIGTA). TIGTA just completed a review of 50 IRS property seizures to determine if they complied with the requirements of Internal Revenue Code sections 6330 to 6344 and Internal Revenue Manual guidelines...

Reopening IRS audits - are they really final?

Posted on June 14, 2009
I have seen a stream of new calls from readers who went through an IRS audit and are receiving IRS collection notices for amounts they probably do not owe. Although they disagreed with the audit, they did not understand the need to take the dispute to IRS appeals or Tax Court...

Why does the IRS ask on Form 433A if you have lived out of the country six months in last 10 years?

Posted on June 07, 2009
It is always important to understand what the IRS is asking, and why. Resolution of most collection cases involves providing answers to IRS questions about you.  The questions are asked on an IRS financial statement, known as Form 433A.     One question the IRS asks:  Have you lived out of the country for more than six [...

IRS is hiring auditors and collection agents - enforcement to increase

Posted on June 06, 2009
The IRS is hiring revenue agents (auditors), revenue officers (collectors), and special agents (criminal investigators).  This has been made public by the IRS, but I attended a joint conference with the IRS last week in which every IRS panelist - from IRS auditor managers to taxpayer advocates to senior IRS attorneys - confirmed the trend [...

Four ways to handle disagreements with IRS auditors

Posted on June 04, 2009
A common problem with IRS audits is not seeing eye to eye with the auditor. The auditor sees the case narrowly, while you see the big picture.  You know you incurred that expense or did not have unreported income, but the auditor’s criteria is difficult to satisfy...

Bankruptcy as leverage in an offer in compromise

Posted on May 27, 2009
On more than one occasion I have used the possibility of bankruptcy as leverage in reducing the value of a offer in compromise.  The possibility of bankruptcy can have a big impact on an IRS compromise.  Here’s why: 1.     A Chapter 7 bankruptcy can “discharge” a tax liability...

Can I make the IRS an offer to pay tax only?

Posted on May 23, 2009
I received this question about using an offer in compromise on interest and penalties: I owe $25,000 in tax, but the interest and penalties have made the amount I owe almost double.  Won?t the IRS be happy just to get the principal I owe back and forgive the interest and penalties? In an offer in compromise, the [...

A Tax Court win for the good guys

Posted on May 17, 2009
It really does happen - you can overturn an IRS audit in Tax Court. My client disagreed with an IRS audit that determined she should pay a 10% tax on early distributions from her retirement account.  She had taken early retirement, and wanted to start taking withdrawals from her retirement account...

The Tax Compromise Improvement Act of 2009

Posted on May 13, 2009
House Ways and Means Oversight Committe Chairperson Charles Lewis and Ranking Member Charles Boustany have introduced H.R. 2343, the Tax Compromise Improvement Act of 2009. The bill would eliminate the requirement of IRC 7122(c) that lump sum offers must be accompanied by an upfront payment equal to 20% of the value of the compromise...

All of it, or just 15% - IRS manual and automated levies on social security benefits

Posted on May 09, 2009
A reader asks the following regarding IRS levies on social security benefits: What is the difference between an automated federal levy on social security and a manual tax levy, and why does the IRS choose one over the other? Here is my response: 1.     Automated Levy (15%)...

Why a tax lawyer can make a difference

Posted on May 04, 2009
I am often asked by new clients how a tax lawyer can make a difference in an IRS dispute.  Here is my answer: Once you retain a tax lawyer, the IRS must stop calling you.  The IRS is required to conduct all negotiations - telephone calls, meetings, etc...

How much IRS debt is uncollectible?

Posted on April 27, 2009
The IRS Taxpayer Advocate, Nina Olsen, reported in her recent testimony to the House Ways and Means Committee that the IRS classified nearly $20 billion in tax debt as “currently not collectible” in 2008.   This is more than the amount the IRS collected on taxpayer delinquent accounts, including installment agreements and offers in compromise [...

Collection of IRS withholding taxes against business owners and managers

Posted on April 24, 2009
The IRS takes the decision to use employee tax withholdings to pay business operating expenses rather than the IRS quite seriously.  The owners and managers of the business who make these decisions will find the IRS coming not only to the business, but to them, to recover a portion of the withholdings...

IRS statute of limitations - without waking up the IRS

Posted on April 18, 2009
A client came in today with an older tax liability that appeared to have only two years left on the IRS statute of limitations on collection.  The client had not heard from the IRS in years. A statute of limitations is the time the IRS has to do something...

IRS Commissioner Douglas Shulman on IRS collections during recession

Posted on April 13, 2009
Today IRS Commissoner Douglas Shulman gave an interview on National Public Radio (NPR) about how the IRS will be dealing with hardship cases during these difficult economic times. Shulman did not addresss what is really holding up IRS collections - an offer in compromise system that accepts only 25% of the offers it receives...

Your budget vs. IRS expense allowances - How do you compare?

Posted on April 11, 2009
In determining whether you can repay a delinquent tax liability, the IRS uses its own expense allowances to arrive at your cash flow.  Just because you have the expense does not mean the IRS will allow it.   In most cases, your housing/utilities and auto operating expenses will exceed IRS guidelines...

IRS bank levy - how safe is my account?

Posted on April 08, 2009
An IRS levy on your bank account can be disastrous - checks not clearing, bank service charges, and concern over paying basic living expenses from the lost funds.   The good news is that tax law gives you a 21 day window to get the money back into your account before your bank sends it to [...

What an IRS criminal investigation for tax fraud looks like

Posted on April 03, 2009
With tax season in full bloom, a little reminder to avoid making false or fraudulent claims on your tax return is in order.    If you want to see what a criminal tax case looks like, the IRS makes it easy - here are the fact patterns and sentencing results of over 50 criminal tax cases [...

IRS updates collection due process handbook

Posted on March 30, 2009
The IRS has updated its handbook on Collection Due Process appeals (Chief Counsel Notice 2009-10). Included in the handbook is internal IRS guidance on issues such as disqualified employment tax levies, levies on single member limited liability companies, ex parte communications between appeals/collection and equivalent hearings...

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