TaxSOS.com Tax Problems Blog

January 29, 2018

IRS infringing on Taxpayer Due Process Rights. The Taxpayer Advocate has issued a Taxpayer Assistance Order concerning the passport certification program.

On Jan. 22, 2018, the IRS began implementation of the passport certification program. Under this program (IRC § 7345) the IRS is authorized to certify a taxpayer’s seriously delinquent tax debt to the Department of State for the purposes of passport denial, limitation, or revocation. A seriously delinquent tax debt is an assessed, individual tax liability exceeding $51,000 for which either a notice of federal tax lien has been filed and the administrative rights under section 6320 with respect to such filing have been exhausted or have lapsed, or a levy has been made. Exceptions include: current installment agreements (IAs), offers in compromise (OICs), and Collection Due Process (CDP) hearings.

The Taxpayer Advocate has advised that the IRS planned procedures for implementing this program is a Most Serious Problem in its Annual Report to Congress.

The Most Serious Problem includes the lack of prior notice to taxpayers and the potential for this lack of notice to infringe on U.S. Constitutional due process protections. Research estimates that over three-quarters of the individual taxpayers potentially eligible to be certified will not have received any notice at all prior to certification because they received their CDP notices prior to the IRS including passport information in these notices.

One of the major issues which the Taxpayer Advocate has focused upon is the REFUSAL OF THE IRS to exclude from the passport certification program taxpayers with already open Taxpayer Advocate cases. Moreover, the IRS has ignored the legislative history, which reflects Congress’s intent that taxpayers not be certified until their administrative rights have been exhausted or lapsed. In addition, the IRS also ignores its own guidelines. Further, the IRS has refused to exclude taxpayers who have come to the Taxpayer Advocate for help in trying to resolve their tax debts, either because they have economic difficulties or because IRS processes have failed the taxpayer.

Because the IRS has denied the repeated requests by the Taxpayer Advocate for the IRS to exclude already open Taxpayer Advocate cases from certification, the Taxpayer Advocate has taken action to protect these taxpayers.

On Jan. 16, 2018, the Taxpayer Advocate issued Taxpayer Assistance Orders (TAOs) for every one of almost 800 taxpayers, ordering the IRS not to certify their seriously delinquent tax debts to the Department of State. By operation of law, the IRS must refrain from certifying any of these taxpayers until these Taxpayer Advocate Orders are rescinded or modified.

The action was necessary due to the imminent, irreparable harm that taxpayers may face by the loss of their passports and the right to travel internationally, such constituting a clearly compelling public policy for assisting any taxpayer subject to passport certification.

Taxpayer Advocate posting at this link – HERE

January 28, 2018

IRS Accountability at the top – can we hope for “change”?

Do you have a tax problem? Do you find yourself hitting the concrete wall of bureaucracy? A new IRS Commissioner is on the Horizon and it’s time to correct the business management model for the Office of the Commissioner.

There was a time, before the prior administration, that a one could actually reach the Office of the IRS Commissioner without too much difficulty. Attempt to locate the telephone number for the Office of the IRS Commissioner and you will be referred to the IRS web site.

In the past, a FAX could be sent to the Office of the IRS Commissioner detailing a problem and an actual response would be received. There was previously, as I recall, an Executive Services Office. Also, the IRS had a Collection Due Process Coordinator and ACS support staff which you could contact. Many times, excellent assistance was obtained using these resources. For example, at one time, I had written the Commissioner’s Office with a very troubling collection case. Shortly thereafter, I received a call and was advised (along these words) – “…you wrote the Commissioner, stuff rolls down hill, and it is on my desk, what can I do for you?” The result was a very professional individual who worked with me on the case and helped resolve it!

Years ago, on collection cases and dealing with Field Revenue Officers, a Manager advised me (along these words) “ … when you write these faxes to the Commissioner, this results in our having conference calls lasting many hours between the east coast and the west coast…” . Typically those cases had involved abusive collection matters and resulting lengthy faxes by legal counsel with support and argument. But, this actually allowed log jams to be cleared and move forward. This was because someone at the “top”, with more “in the trenches” experience and knowledge, could see the larger picture and cut to the chase. But, today, the IRS publishes information about your “bill of rights”; however, as the Taxpayer Advocate reports, the actions by the IRS violate your rights.

In the arena, the Office of the Commissioner remains “missing in action”, as it has for years. The Mission of the IRS is to provide “top quality service”, but taxpayer’s and representatives are left to deal with an institution whose training budget has been reduced by nearly 75% since FYE 2009. Moreover, IRS employees receive training in the form of “virtual training”. The shift has been away from in-person, face-to-face training.

As stated by the Taxpayer Advocate, “The downstream consequences to the IRS and taxpayers, including rework, misleading or incomplete advice, improper
compliance actions, and distrust in the IRS serve to further degrade the relationship between the IRS and taxpayers and violate the taxpayer rights to be informed, to quality service, and to a fair and just tax system.”

A common concern, of taxpayers and practitioners alike, is that they are not receiving accurate advice in order to resolve their issues when they contact the IRS. One consequence to an “out of control” IRS Collection situation is that you may have to file for a Taxpayer Assistance Order (through the Taxpayer Advocate). However, this can serve to reward the IRS for its abusive conduct, by extending the statute of limitations for collection on the matter you are seeking to resolve. Thus, with one hand, you are trying to restrain the attack dog, while at the same time enticing him with a juicy, bloody bone in the other.

Do you ever call the IRS and feel you are speaking to a robot? Well, the IRS employee may merely be in fact reading from a script! To compound the situation, you will find that if you disagree with the scripted text that the IRS employee is robotically reading from, he or she may “resolve” the issue by hanging up on you!

On the other hand, you may have spent time on the phone with IRS/ACS and faxed in financial information. Then during your next follow up call you find out that the prior IRS employee didn’t enter the information into the computer at all, or entered erroneous information. Sometimes you find out that the IRS/ACS employee actually tossed in the trash the documentation provided. Another situation is that the subsequent IRS/ACS employee reverses the IRS position on a matter previously already worked out by the prior IRS/ACS employee. It would appear that resolution of calls and “taxpayer service” is not the actual objective.

Request a Manager call back? What a joke! You end up with a low level call back (if you even get one at all), with a big Rubber Stamp on it. If a voice message is left for you, no direct manager telephone number is provided – you are to call the 800 number and start over. At times, the purported manager leaves a message but doesn’t even mention the case name. The system is not designed to resolve matters!

With new leadership, it is recommended that the Office of the IRS Commissioner be made available and be proactive in working with the taxpayers the IRS is to serve. In the past, procedures were in place that allowed interface with tax practitioners. It facilitated case resolution. A new IRS Commissioner is going to be appointed. Now is the time to correct the business management model for the Office of the Commissioner.

January 23, 2018

Trump picks tax lawyer as next IRS commissioner, sources say

Filed under: IRS levy and wage garnishment, irs commissioner — Administrator @ 9:59 pm

President Donald Trump will nominate tax lawyer Charles “Chuck” Rettig to head the IRS, multiple sources with knowledge of the White House selection process told POLITICO on Tuesday night. … Read more HERE

Rettig, who’s considered a tax controversy specialist, has for more than three decades represented clients before the IRS, Justice Department, state tax authorities and other jurisdictions. He’s with the firm Hochman, Salkin, Rettig, Toscher & Perez PC, in California. Read Here

January 22, 2018

Government Shutdown – January 2018

Filed under: IRS levy and wage garnishment — Tags: — Administrator @ 8:16 am

As of January 22, 2018, there is a “government shutdown”; however, limited staffing by the IRS/ACS is still available on the phone. During a prior shutdown, such was not the case.

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.

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