How Can You Appeal IRS Decisions?

Today we’re talking about the IRS Office of Appeals.
We’ve got some information you need to know.

Many tax disputes are not resolved in favor of the taxpayer. Many times, the IRS is wrong in their conclusions. There are remedies if you feel you have a strong case and can support that case with the IRS.

The IRS Office of Appeals was formed in 1927. Their mission is, “To resolve tax controversies, without litigation, on a basis which is fair and impartial to both the government and the taxpayer in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the service.”

Tax controversies can involve proposed tax assessments, tax collection, or other IRS actions. Once the IRS issues a final notice, taxpayers can generally seek a remedy from the courts. However, the appeals process is less formal and less costly than court proceedings and is not subject to judicial rules of evidence or procedure. Historically, it has been able to settle the majority of the cases that have come before it. In addition, taxpayers do not give up judicial review by coming to the IRS Office of Appeals and can still go to court.

One very important aspect of the Office of Appeals is that the office is independent from IRS compliance functions and this is critical for it to accomplish its mission: to resolve disputes effectively.

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The office is independent from
IRS compliance functions.

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How do you know if the IRS Office of Appeals is the right place for you? To qualify for appeals, ALL of the following items must apply:

• You received a letter from the IRS explaining your right to appeal the IRS’s decision.
• You do not agree with the IRS’s decision.
• You are not signing an agreement form sent to you.

If all of the above are true, then you may be ready to request a conference or hearing.
This course of action is not for you if ANY of the following apply:

• The correspondence you received from the IRS was a bill and there was no mention of appeals.
• You did not provide all information to support your position to the examiner during the audit.
• Your only concern is that you cannot afford to pay the amount you owe.

If you cannot qualify for the IRS Office of Appeals, you should talk again with the person at the IRS you have been dealing with or contact taxpayer services for assistance. You can also contact the taxpayer advocate service if you feel your taxpayer rights have been violated.

If you have tax problems, you should protect yourself by hiring a qualified tax problem specialist. We have experience in strategies in negotiating with the IRS to get you the lowest amount that you have to pay.

If you have a tax problem or know someone with a tax problem, please share this video or contact me by giving me a call or sending me an email. I look forward to hearing from you soon.

The Taxpayer Bill of Rights (Part 2)

Today we're back to talk about the last five rights you have according to the Taxpayer Bill of Rights. It's important to be aware of these in case you ever find yourself in a tax dispute with the IRS.

Today, we’re back to talk about the second part of our series on the Taxpayer Bill of Rights.

You can see the first portion here.

Last time I talked about the first five rights under the Taxpayer Bill of Rights. Today, let's talk about the other five.

6. You have the right to finality. Taxpayers have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year. Taxpayers have the right to know when the IRS has finished an audit.

7. You have the right to privacy. Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections and a collection due process hearing where applicable.

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You have the right to privacy and confidentiality.

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8. You have the right to confidentiality. Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect the IRS to investigate and take appropriate action against its employees, return preparers, and others who wrongfully use or disclose taxpayer return information.

9. You have the right to retain representation. Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. Taxpayers have the right to be told that if they cannot afford to hire a representative they may be eligible for assistance from a Low Income Taxpayer Clinic.

10. You have the right to a fair and just tax system. Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

If you have tax problems, you should always protect yourself by hiring a qualified Tax Problem specialist. We have experience in strategies in negotiating with the IRS to get you the lowest amount that you have to pay. If you have a tax problem or know someone with a tax problem, give me a call or send me an email soon. I'd be happy to help.

What Is the Taxpayer Bill of Rights? (Part 1)

You have rights as a taxpayer.
We will be going over the first five items on the Taxpayer Bill of Rights today.

As U.S. citizens, we all have rights. We have rights as taxpayers, too, so the IRS has come up with the Taxpayer Bill of Rights. This is a list of 10 rights you have as a taxpayer that you should know about. Today, we’re discussing the first five:

1. You have the right to be informed. You have the right to know what you need to do to comply with certain tax laws. You are also entitled to clear explanations of laws and procedures in all tax forms and instructions. Finally, you have the right to be informed of IRS decisions on your tax accounts and to receive clear explanations of the outcome.

2. You have the right to quality service. You also have the right to receive prompt, courteous, and professional assistance in your dealings with the IRS. You have the right to receive clear, easy, and understandable communication and a way to file complaints about inadequate service.

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We’ll go over the other five items next time.

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3. You have the right to pay no more than the correct amount of tax. Taxpayers have the right to pay only the amount of tax that is legally due and to have the IRS apply all tax payments properly.

4. You have a right to challenge the IRS position and be heard. Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions. You also have the right to expect that the IRS will consider your objections and document them promptly and fairly.

5. You have the right to appeal an IRS decision in an independent forum. You are entitled to a fair administrative appeal of most IRS decisions, including those on penalties, and you have the right to receive a written response regarding a decision.

Those are just the first five items on the Taxpayer Bill of Rights. Next time, I’ll cover the other five. If you have any tax problems or know someone who does, give us a call or send us an email. It’s always in your best interest to hire a qualified tax problem specialist. We have experience negotiating with the IRS to settle debts. We look forward to hearing from you soon.

Fake Tax Notices and Other Scams: Part II

There’s an ongoing scam out there involving fake call centers claiming to be the US tax authorities and demanding bogus unpaid taxes. How can you avoid falling victim to this scam?

Welcome to the second part of my two-part series dealing with fake tax notices and other scams you need to watch out for. First, I’m happy to report some good news about fake IRS collection scams.

Last week, authorities in India arrested about 70 people and are questioning hundreds more after uncovering a massive scam to cheat thousands of Americans out of millions of dollars by posing as US tax authorities and demanding unpaid taxes.

According to police in Mumbai, the year-long scam involved fake call centers which sent voicemail messages threatening US citizens with collection action because they supposedly owed back taxes. Those who called back believed the threats and would fork over thousands of dollars to “settle” the debt. The payment methods demanded were made by cashier’s checks, gift cards, and vouchers.

These scammers collected up to $150,000 per day and the estimated total collected is about $30 million. It is believed that up to 600 people in India were involved and they had a US-based partner providing names and telephone numbers of vulnerable US citizens. The IRS has received up to 900,000 complaints about similar scam calls since October 2013. More than 5,000 people have fallen for this scam, paying out over $26 million.

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Never give any information away to someone you don’t know.

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What can you do to avoid falling victim to a scam like this?

First, remember that the real IRS will never call and demand immediate payment. Neither will it ever require you to use a specific payment method for paying your taxes, such as a gift card or a prepaid debit card. The IRS will also never ask for credit card numbers over the phone.

If you receive a call from someone claiming to be from the IRS who is asking for money, don’t give out any personal information. Instead, report the call to the IRS using their IRS Impersonation Scam Reporting web page. You can also call (800)-366-4484.

Don’t simply say “OK” and send money. Not ever.

If you have a personal policy of never giving information to someone you don’t know, you can protect yourself from scammers. Don’t give any personal information, banking information, credit card numbers, or social security numbers to anyone that contacts you first.

If you have tax problems, hire a qualified tax problem specialist. We have experience in strategies in negotiating with the IRS to get you the lowest amount that you have to pay. If you have any questions, have a tax problem, or know someone who has a tax problem, feel free to call me or send me an email. I’d be happy to help!

Don’t Be Fooled by Fake Tax Notices

Unfortunately, tax scammers and thieves are still finding new ways to try and obtain our personal information. Look out for this recent IRS scam.

Scammers and thieves are descending on us now more frequently than ever. Last year we encountered a con in which scammers would call ordinary citizens and tell them that they were being sued by the IRS and that the only way to prevent it was to send them money. I personally received one of these calls and several of my clients contacted me about getting these calls. Don’t be duped into giving these thieves any information at all—just hang up the phone.

Remember, the IRS will never call you about a collection without first sending you frequent notices. These scam artists are counting on a small fraction of us to fall for this.

Unfortunately, scammers are getting even more clever. They are now beginning to mail fake IRS notices through the mail to unsuspecting citizens as well. Look at the one in the video above for an example.

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Do not give your personal information to anyone you don’t know.

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I am a member of a non profit organization called the ASTPS, or the American Society of Tax Problem Solvers, and just this week they sent out a warning about this new scam. These fake notices even include a case number, notice type, and phone number to call; however, there are a few clear indications of fakery on here. For example, the address on the fake notice above is wrong and the letter asks you to send money to the IRS when in reality you would be sending payment to the United States Treasury. The phone number that is blacked out is actually a valid IRS refund number, but calling this number would get you nowhere.

Most individuals and tax preparers would not be able to detect the problems with this notice, so be extra careful if you get a letter like this. What should you do if you get a letter from the IRS?

First of all, you’ll probably already know whether you have a problem because you’ll know if you have failed to file or pay taxes. If you know that you have a problem like this, the letter is most likely legitimate. If you know that your finances are in order with the IRS, then it is likely that the letter is fake. In any event, you should either look up the phone number on the IRS website or contact your tax professional to look into it. Do not simply send money to the address on the letter.

Protect yourself from scammers by never giving information to anybody that you don’t know. Do not give out your personal information, banking information, credit card numbers, or social security numbers to anyone that contacts you first.

If you have any questions about scams like these, have a tax problem, or know somebody that does, don’t hesitate to give me a call or send me an email. I look forward to hearing from you!

How to Handle an Audit Notice

What happens when you receive an Audit Notice from the IRS?

More than likely, your first instinct will be to panic. However, getting audited doesn’t always mean that an error was made on your tax returns. Returns are chosen for a few different reasons:

Most audits simply come from Document Matching. When you receive a W-2 form or a 1099, that information is also sent into your file at the IRS, ready to be matched. If you do not report that income on your return, the IRS computer will automatically spit out a notice recalculating your income and tax, along with a bill for that tax, plus penalties and interest.

When this happens, you must defend yourself and do some research to find out whether the IRS is correct. Many times they are correct about the oversight in reporting the income, but most of the time they are wrong in regard to the ways that it will increase your tax.

If you don’t have experience dealing with the IRS, you’ll need a Tax Professional to defend you. If you choose to defend yourself, you’ll most likely be paying far more to the IRS than you should—if you should be paying at all!

Some audits simply come from random selection. These audits come from statistical formulas. If you have outlandish deductions compared to your income, or if your deductions don’t make sense for the type of taxpayer you are (for example, if you have too many travel and entertainment expenses for your type of income), you have a high likelihood of being audited. This has happened less frequently lately, as the IRS’s operating budget has been cut by Congress. This can change, however.

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Protect yourself by hiring an experienced Tax Professional.

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Another reason for being audited is due to Related Examinations. You may be selected for an audit if there are issues with other related taxpayers, like business partners or investors, whose returns were also selected for auditing.

In all cases, the IRS will notify you by mail if you’re being audited. Occasionally, you will receive a phone call with a confirmation notice in the mail, but you will never receive an email, since email notification is not used by the IRS.

There are numerous telephone scams which call taxpayers to tell them that they owe money to the IRS and are subject to lawsuit. Don’t fall for this. Report the phone number or caller to the IRS or legal authorities.

What do you do during the audit? Be honest, but be sure to only provide the information that they are asking of you, unless that information is evidence to lower your potential tax. Also, protect yourself by hiring an experienced professional in the audit area.

Remember, you have rights. You have the right to be represented by a Tax Professional, such as a CPA, Tax Attorney or Enrolled agent. You also have the right to privacy and confidentiality about tax matters. You have the right to know why the IRS is asking for information, how the IRS will use it, and what will happen in the event that you don’t provide the requested information.

In addition, you have the right to appeal a disagreement with the IRS findings, both within the IRS and before the courts. Most of all, you have the right to be treated professionally, courteously and fairly by the IRS employees.

If you have tax problems, you should protect yourself by hiring a qualified Tax Problem Specialist. If you have questions on this topic or any others, please don’t hesitate to give me a call or send me an email. I’d be happy to help you.  

Everything You Need to Know About Federal Tax Liens

A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property, and financial assets.

A federal tax lien exists after the IRS:

• Puts your balance due on their books and assesses your liability
• Sends you a bill that explains how much you owe called a “Notice and Demand for Payment”
• If you neglect or refuse to fully pay the debt in time
• The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property

How does a lien affect you? First of all, a lien attaches to all of your assets, including real estate and securities, such as stocks and vehicles. This also includes future assets acquired during the life of the lien. A lien also limits your ability to get credit.

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Paying your tax debt in full is the best way to remove your federal tax lien.

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If you have a business, the federal tax lien attaches to all of your business property, including your accounts receivable. If you file for bankruptcy,  your tax debt, lien and notice of federal tax lien may continue after bankruptcy.

There are many ways you can get rid of your federal tax lien:

• Pay your tax debt in full: This is the easiest way to get rid of a federal tax lien. The IRS will release your lien within 30 days after you have paid your tax debt.
• Discharge of Property - Publication 783: This removes the lien from a specific property. If you sell a property which has an IRS lien, there are several circumstances to have the lien removed so you can sell. It must be in the IRS’s best interest to discharge a lien. If there is other property where the lien is covered by two-times the remaining lien after paydown or non-payment, the IRS will release the lien so you can sell, so long as there is no net value after paying off other senior liens, such as mortgages. The proposed escrow instructions and appraisal on a sale must be submitted to the IRS for approval, along with form 14135 Application for Certificate of Discharge of Property from Federal Tax Lien.
• Subordination: This does not remove the lien, but allows other creditors to move ahead of the IRS so that you can refinance an existing mortgage. This is in the borrower’s best interest to improve cash flow and does not harm the IRS. IRS publication 785 gives instructions on how to apply for a subordination.

• Withdrawal: This removes the public notice of federal tax lien and ensures that the IRS is not competing with other creditors for your property; however, you are still liable for the amount due.

Finally, you should know about two new withdrawal options that resulted from the 2011 Fresh Start initiative. If your tax liability has been paid and your lien has been released, you are in compliance for the past three years in filing your tax returns and you are current on your estimated tax payments and federal tax deposits.

Secondly, you may enter into or convert your installment agreement to a direct debit installment agreement. If you owe less than $25,000, your direct debit installment agreement must pay the amount you owe in fewer than 60 months or before the collection statute expires (10 years). You must be in compliance with all filing requirements and be current on other tax payments.  

If you have tax problems, reach out to me today. As a qualified tax resolutions specialist, I have experience in negotiating with the IRS to get you the lowest amount you have to pay. I would be happy to answer any questions you might have!

Tax Problems and Tax Secrets You Need to Know

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There are common tax problems and secrets everyone should be aware of.

Each and every year, millions of individuals and businesses find themselves in some sort of tax trouble with the IRS. Whether it is a small oversight or a large amount of back taxes, penalties, or interest due, the IRS will make sure that you are notified and that you make an effort to pay what is owed. The trouble is, many people simply can’t afford to pay the taxes they owe because of the pressure of monthly expenses and bills.

People are afraid the IRS will take all their income, their bank account, or their home. Don’t worry, there are methods of minimizing what you are required to pay and you will still have enough money to eat and pay bills. Sometimes nothing needs to be paid, or you simply pay pennies on the dollar.

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Dealing with the IRS on your own is like representing yourself in a court of law.

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Offer in Compromise, Penalty Abatement, Installment Agreements, and Currently Not Collectible are all programs to help a taxpayer in trouble. Trying to deal with the IRS on your own is like representing yourself in a court of law with no legal representation. Any information that you tell or provide to the IRS can hurt your case and cause you to pay more than you really should! Most people do not have enough knowledge of the IRS collection process or the skills necessary to submit an Offer in Compromise that is in their best interest. Many fill out the forms incorrectly, overstate their income and assets, and offer too much! About 75% of the OICs are returned at the beginning of the process due to incorrect forms. Of the 25% that the IRS processes, another 50% are rejected because the form was not filled out correctly. Experienced professionals in this area know the tricks to minimize what you would have to pay otherwise. Here are a few tax secrets you should know when working with a CPA:

• A CPA and client have client/attorney privilege in these civil matters. This privilege is not solely reserved for attorneys.
• Tax attorneys, CPAs, and enrolled agents have direct lines to the IRS and the ability to immediately access information regarding your IRS situation.
• In some cases, a portion or all of our fees are allowed by the IRS as a necessary expense in determining an Offer in Compromise. This will reduce your offer and save you money.
• If your allowable monthly expenses exceed your monthly income, you may not be required to make any payment to the IRS.
• Your account may be classified as non-collectable while the statute of limitations continues to run. 

If you have tax problems, you should protect yourself by hiring a qualified tax problem specialist. If you have any questions, please don’t hesitate to contact me. I would be happy to help you!

The IRS Fresh Start Program

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In April of 2013, the IRS introduced a new program to make it easier for taxpayers to pay back taxes and avoid tax liens. Individuals and small business taxpayers may benefit from the IRS Fresh Start program. There are three important features that you need to know.

First of all, you need to consider the tax liens. The Fresh Start program increased the amount that taxpayers can owe before the IRS generally will file a Notice of Federal Tax Lien. That amount is now $10,000. However, in some cases the IRS may still file a lien notice on amounts less than $10,000.

When a taxpayer meets certain requirements and pays off their tax debt, the IRS may now withdraw a filed Notice of Federal Tax Lien. You must request this in writing using Form 12277, Application for Withdrawal. Some taxpayers may qualify to have their lien notice withdrawn if they are paying their tax debt through a direct debit installment agreement. You also need to request this in writing by using Form 12277.

If you default on a direct debit installment agreement, the IRS may file a new Notice of Federal Tax Lien and resume collection actions. Don’t ever miss a payment.

Next up are installment agreements. The Fresh Start program expanded access to streamlined installment agreements. Now if you owe up to $50,000, you can pay through monthly direct debit payments for up to six years. While the IRS generally will not need a financial statement, they may need some financial information from the taxpayer. The easiest way to apply for a payment plan is to use the online payment agreement tool at IRS.gov. If you don’t have web access, you may file  Form 9465 to apply.

If you are in need of an installment agreement for more than $50,000 in tax debts or for longer than six years, you still need to provide the IRS with a financial statement. In these cases, the IRS may ask for one of two forms: Form 4330A, the collection information statement, or Form 433-F.

Finally, you should be aware of offers in compromise. An offer in compromise is an agreement that allows taxpayers to settle their tax debt for less than the full amount. Fresh Start expanded and streamlined the OIC program. The IRS now has more flexibility when analyzing a taxpayer’s ability to pay and ultimately reduces the amount the IRS will accept. This makes the offer program available to a larger group of taxpayers.

Generally, the IRS will accept an offer if it represents the most the agency can expect to collect within a reasonable period of time. The IRS will not accept an offer if it believes that the taxpayer can pay the amount owed in full as a lump sum or through a payment agreement. The IRS looks at several factors, including your income and assets, to make a decision regarding your ability to pay. You can use the offer in compromise pre-qualifier tool on IRS.gov to see if you may be eligible for an OIC.

We can help you negotiate with the IRS to get you the lowest amount you have to pay. If you have any tax problems, please give me a call or send me an email. I would be happy to help you!

Can You Eliminate Tax Debts in Bankruptcy?

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Can you eliminate tax debts in bankruptcy? In many cases, a taxpayer is still liable for tax debts after bankruptcy. However, bankruptcy law allows the discharge of tax debt only in some circumstances.

A tax debt is more likely to be discharged in Chapter 7 than in a Chapter 13 bankruptcy. In Chapter 13, tax debt, just like any other debt, is paid back on a repayment plan. Chapter 7 bankruptcies allow a debtor to discharge or wipe out debts, including federal tax debt.

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A tax debt is more likely to be discharged in Chapter 7 than in a Chapter 13 bankruptcy.

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Federal tax debt that can be wiped out, depending on the type of tax debt and certain conditions under Chapter 7 bankruptcy, such as:

• The tax must be for income taxes. Payroll taxes and penalties for fraud are not eligible for discharge.
• The tax returns for the debts must have been filed two years before filing bankruptcy.
• The tax liability is at least three years old. In other words, the tax debt is from a tax return that was originally due at least three years before filing bankruptcy.
• The IRS assessed the tax debt at least 240 days before the debtor filed for bankruptcy.
• The taxpayer did not commit willful tax evasion. Possible evasive actions include changing your Social Security number, your name, the spelling of your name, repeated failure to pay taxes, filing a blank or incomplete tax return, and withdrawing cash from a bank account and hiding it.
• The taxpayer did not commit tax fraud.

Penalties on taxes can also be wiped out in bankruptcy. After the discharge of the tax liability, the taxpayer is no longer responsible for paying the taxes and the IRS may not garnish wages or bank accounts.

Even if the discharge of tax debt occurs under Chapter 7, if the IRS placed a federal tax lien on the taxpayer’s property prior to the bankruptcy case, it will remain after discharge. As a result, it is necessary to clear the title by paying off the lien before selling the property.

There are tax debts that are not eligible for discharge, such as tax debts from unfiled tax returns and trust fund taxes or payroll taxes withheld from employee’s paychecks by the employer. If a taxpayer is not able to discharge the tax debts under Chapter 7, he or she should consider an installment plan or offer in compromise to settle the tax debt with the IRS.

If you think you can wipe out your federal taxes under bankruptcy, you should hire a qualified tax problem specialist. We have experience and strategies negotiating with the IRS. If you have any questions, give me a call or send me an email. I would be happy to help you!