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 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

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

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

September 20, 2017

IRS Allowable Living Expense Standards Do Not Provide Taxpayers With a Sustainable Standard of Living

The Taxpayer Advocate (August, 2017) has made findings as to the method the IRS uses to determine the amount of basic living expenses it should take into account concerning payment of tax debt over time. The following are the key points:

1. Congress directed the IRS to make sure taxpayers who enter into offers in compromise still have enough money to cover their basic expenses.

2. Congress told the IRS to “develop and publish schedules of national and local allowances designed to provide that taxpayers entering into a compromise have an adequate means to provide for basic living expenses.”

3. The IRS Allowable Living Expenses (ALE) standards have come to play a large role in many types of collection cases (e.g., non-streamlined installment agreements, claiming economic hardship… ).

4. ALE standards are used by the IRS to calculate a taxpayer’s monthly expenses, which in turn affects the resolution of the taxpayer’s case because it reflects how much he or she can afford to pay the IRS. ALEs cover common expenses such as food, clothing, transportation, housing, and utilities.

5. The Taxpayer Advocate identified the following problems with the current ALE standards:

a. “The standards are based on what taxpayers pay, not what it costs to live. And since many of the IRS standards are based on average expenditures, there is a chance the taxpayer’s expense is greater than the survey average.”

b. “Spending habits are not consistent over income levels. For instance, while housing costs now account for about 25 percent of a family’s pre-tax income, among low income renters, some may spend up to half of their pre-tax income on rent.”

c. “The ALE standards are outdated and should include all expenses necessary to maintain the health and welfare of households today, including an allocation for digital technology access, child care, and retirement savings.”

d. “The IRS decreased the amounts for some of the expenses in 2016 based on its belief that expenses are going down. This was done despite the fact that the IRS and TAS reached a joint agreement in 2007 saying “the allowance amount for any ALE category cannot be decreased unless something economic changes significantly, such as a major sustained recession or depression.” Even with TAS’s concerns with the IRS decision last year, the IRS again decreased ALE standards in 2017. All of our research shows that costs are going up. More importantly, the average taxpayer is facing more financial strain.”

e. “Until there is improvement, the ALE standards won’t truly capture what it costs for a taxpayer to pay for basic expenses. And any taxpayer who is unable to resolve their tax debt will be vulnerable to IRS collection action otherwise prohibited by Congress.”

Read More HERE

September 14, 2017

Government Corruption – ATF

Filed under: IRS Abuse, Misuse, and Taxpayer Rights Violations — Administrator @ 10:38 pm

ATF got raided – slush fund – government corruption.
Read here

September 13, 2017

Only the “little” people get prosecuted

Filed under: IRS Abuse, Misuse, and Taxpayer Rights Violations — Administrator @ 9:59 am

Top IRS Official not prosecuted for crimes. Listen to Judge Nepolitano:

http://video.foxbusiness.com/v/5571976724001/?#sp=show-clips

September 6, 2017

Federal Payment Levy Program: The New IRS Automated Levies on Military Retirement Payments May Be Harming Veterans Experiencing Economic Hardship.

Federal Payment Levy Program: The New IRS Automated Levies on Military Retirement Payments May Be Harming Veterans Experiencing Economic Hardship.

The Taxpayer Advocate has reported on the above in a two part series.

The Taxpayer Advocate expressed concerned about a recent IRS change in its policy regarding adding military retirement payments as a payment stream to the Federal Payment Levy Program. Under this program, an automated system identifies taxpayers with unpaid tax liabilities who receive certain payments from the federal government. A continuous levy for up to 15% of federal payments due these taxpayers can be made for the unpaid federal liabilities.

This IRS policy change has not been widely publicized.

The Taxpayer Advocate states, in part:

“I am deeply concerned that the IRS has decided to target retired service members, not long after recent military engagements in Iraq and Afghanistan have decreased in intensity. Serving in the United States Armed Forces requires years of tremendous sacrifice, challenging and dangerous assignments, frequent moves across the country, long separations from family, and fairly meager pay. Whether viewed as the sole means of income or a reward from the U.S government for serving 20 years in the Armed Forces, a service member’s retirement pay should not be considered another automatic FPLP funding stream.”

The Taxpayer Advocate advises that the IRS’s data provided as justification for its actions are inaccurate and misleading.

The Taxpayer Advocate concludes in stating:

“…I therefore find it baffling that he IRS refuses to apply the LIF [Low Income Filter] to military retirees who may be experiencing economic hardship.

… I am disappointed the IRS has refused to adopt the recommendation to run all military retirees through the LIF [Low Income Filter] and believe its failure to do so will cause the agency to issue a significant number of levies it will be required by law to release because of the taxpayer’s economic hardship.

… military retirees are an easy target for the IRS because retirement benefits are an easily identifiable levy source. By cherry-picking retired service members’ pensions for automated levies without taking into consideration individual taxpayers’ facts and circumstances, the IRS violates these taxpayers’ right to fair and just tax system, right to be informed, and right to quality service. (See Taxpayer Bill of Rights (TBOR)).”

You can read the Taxpayer Advocate two part series HERE.

August 22, 2017

IRS Targeting of Groups …

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

Source: The Washington Times – Thursday, August 17, 2017

A federal judge on Thursday ordered the IRS to name the specific employees the agency blames for targeting tea party groups for intrusive scrutiny and said the government must prove it has ceased the targeting.

Judge Reggie B. Walton also said the IRS must explain the reasons for the delays for 38 groups that are part of a lawsuit in the District of Columbia, where they are still looking for a full accounting of their treatment.

Judge Walton approved another round of limited discovery in the case and laid out six questions that the IRS must answer, including the employees’ names, why the groups were targeted and how the IRS has tried to prevent a repeat.

At a hearing earlier this week, Judge Walton said it was time to get everything on the table.

“Lay it on the line. Put it out there,” he told attorneys for the IRS, who are continuing to fight some tea party groups’ demands for full disclosure.

The targeting scandal burst open in May 2013 when the IRS admitted it had been pulling conservative-leaning groups’ nonprofit status applications out of the usual processing queue and subjecting them to extra scrutiny and extraordinary delays because of perceived political activity. [read more here]

See Judicial Watch Press Release regarding filing suit here

Judicial Watch Obtains 695 Pages of Obama IRS Scandal Documents – Records Not Produced in Initial Congressional Investigation (here)

Here

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