The Ultimate IRS Collection Workshop From Billing Notice to Offer - PDF document

The Ultimate IRS Collection Workshop From Billing Notice to Offer Acceptance Letter Presented by: Eric L. Green, Esq. 1 CPE  There will be 16 attendance check words  Please write these down  You will need them at the end when you click on the link and go get the certificate The Ultimate IRS Collection Workshop 2 2 Schedule  Stick to our schedule  10 Minute breaks at the top of each hour  Go to the restroom and refill your coffee (or drink of choice) The Ultimate IRS Collection Workshop 3 3

QUICK BREAK We will resume the program in a moment. 4 Agenda • The Current State of IRS Collection • The Tax Collection Process • Collection Appeals • Collection Alternatives The Ultimate IRS Collection Workshop 5 5 Why Collection is HOT and Getting Hotter… The Ultimate IRS Collection Workshop 6 6

Non ‐ Filers More than 7 million (Before COVID ‐ 19) The Ultimate IRS Collection Workshop 7 7 IRS Collection Process • Assessment of the tax • 10 ‐ Year Collection Statute • Billing Notices • Threat to levy and right to a hearing Appeals (CDP, Equivalent, CAP) • Resolution • The Ultimate IRS Collection Workshop 8 8 Step #1: Tax Compliance All returns filed that are due as of this date • • Current tax period payments being made Proper withholding a) Estimated tax payments b) Payroll tax deposits c) The Ultimate IRS Collection Workshop 9 9

Inside Secret • What is compliance for tax returns? Last 6 years – IRM 1.2.14.1.18 • The Ultimate IRS Collection Workshop 10 10 IRS Collection Process: Assessment • The IRS will assess the tax when the return is received and processed or it creates a “substitute for return” (SFR) for the taxpayer • Pull transcripts to determine the exact date of assessment The Ultimate IRS Collection Workshop 11 11 Goal? Taxpayer should voluntarily • file their own return Otherwise IRS will do it for • them The Ultimate IRS Collection Workshop 12 12

IRS Collection Process: 10-Year Statute Pursuant to IRC § 6502 the IRS has 10 years to collect a • tax debt • The 10 ‐ year statute begins upon the date of assessment, not the date of filing • There are a number of actions that will toll, or suspend, the collection statute The Ultimate IRS Collection Workshop 13 13 IRS Collection Process: 10-Year Statute Taxpayer files bankruptcy—IRC § 6503(h) • • The time for a bankruptcy plus six months! Filing of a Collection Due Process hearing request—Regulation • § 301.6330 ‐ 1(g) Filing of an Offer in Compromise—Regulation § 301.7122 ‐ 1(i) • Pending Installment Agreement — IRC § 6331(i)(5) • The Ultimate IRS Collection Workshop 14 14 Transcripts • This is why we pull transcripts How much time remains will drive the decision on how to resolve • the tax debt • Need to review the Transcripts for things the taxpayer has done that may have tolled (extended) the statute The Ultimate IRS Collection Workshop 15 15

Pull Transcripts Offer ‐ in ‐ Compromise Master Class 16 16 Calculate the CSED Dates Offer ‐ in ‐ Compromise Master Class 17 17 Billing Notice — CP 501 The Ultimate IRS Collection Workshop 18 18

Threat to Levy — CP-504 The Ultimate IRS Collection Workshop 19 19 CP-90 The Ultimate IRS Collection Workshop 20 20 IRS Collection Process: Final Notice and Right to a Hearing • Final Notice includes Form 12153 • Taxpayer has 30 ‐ days to request a hearing • You MUST file the request If the 30 ‐ day window is missed, file for an equivalent • hearing The Ultimate IRS Collection Workshop 21 21

Form 12153 The Ultimate IRS Collection Workshop 22 22 IRS Collection Process: Appeals: CDP • 1998 IRS Restructuring and Reform Act created appeal rights for Collection Cases and gave the United States Tax Court authority to hear collection appeals • The IRS is required to give the taxpayer 30 days to request an appeal prior to levying This appeal is referred to as Collection Due Process Appeal, or • CDP The Ultimate IRS Collection Workshop 23 23 IRS Collection Process: Appeals: CDP • If the Form 12153 is filed within 30 days requesting a CDP hearing, the case will be forwarded to Appeals • All collection action will cease for that tax period, unless the taxpayer continues to pyramid liabilities If the taxpayer continues to incur new tax liabilities, Appeals may • grant tax collection division the authority to continue enforced collection activity The Ultimate IRS Collection Workshop 24 24

IRS Collection Process: Appeals: CDP • Appeals will contact the taxpayer with a letter confirming they have the case and requesting information Knowing the Appeal was requested, the • taxpayer should be preparing the Collection Information Statement (Forms 433) in advance of the hearing The Ultimate IRS Collection Workshop 25 25 IRS Collection Process: Appeals: CDP • The hearing is usually by phone, though the representative can request a face ‐ to ‐ face meeting • No guarantee IRS will grant the in ‐ person request The Ultimate IRS Collection Workshop 26 26 IRS Collection Process: Appeals: Equivalent Hearings • If the taxpayer failed to request a CDP hearing, they have up until one year to request an equivalent hearing • With an equivalent hearing there is no requirement the IRS cease levy action There is no right to judicial review in the Tax Court • The Ultimate IRS Collection Workshop 27 27

IRS Collection Process: Appeals: CAP • IRS created a procedural appeal process called the Collection Appeal Process, or CAP A CAP appeal can be requested whenever a levy or lien is • threatened by the collection division • This is a procedural review to make sure the collection division has followed procedure • It allows a taxpayer to get their case in front of an appeals officer The Ultimate IRS Collection Workshop 28 28 IRS Collection Tools: Levies The seizure of a taxpayer’s • property Generally issued when a taxpayer • has either failed to respond to IRS requests or failed to provide the collection division information The Ultimate IRS Collection Workshop 29 29 Two types of Levy • Regular Levy (bank, vendors) • Continuing (wages or routinely paid commissions) ~ IRS allows standard deduction divided by the pay periods and takes the amount above that The Ultimate IRS Collection Workshop 30 30

Avoiding/Dealing with a Levy Do what taxpayer should have done! • Compliance • Call IRS • Propose a resolution The Ultimate IRS Collection Workshop 31 31 Remember…  Find out how much was taken before calling  Request a release of the funds (may do this the first time)  If not, ask for a partial release if necessary to pay bills The Ultimate IRS Collection Workshop 32 32 IRS Collection Tools: Liens Pursuant to IRC § 6321, a lien arises automatically whenever • demand for payment is made and the taxpayer fails to pay No other action is required of the IRS • • IRS may file a Notice of Federal Tax Lien • Though the lien arises without any further IRS action, the IRS filed the Notice to inform third ‐ party creditors of the IRS lien on the taxpayer ’ s assets to protect its (the IRS’s) interest The Ultimate IRS Collection Workshop 33 33

IRS Collection Tools: Liens IRC § 6320 grants the taxpayer the right to a hearing to contest the • filing of a notice of federal tax lien Pursuant to IRC § 6322 the lien will continue in force until the tax is • either paid, compromised, or the 10 ‐ year collection statute expires The Ultimate IRS Collection Workshop 34 34 Tax Liens  Discharge (sell out from under the lien)  Withdrawal (statute expired and bank is an idiot)  Subordination (house that burned down) The Ultimate IRS Collection Workshop 35 35 Inside Secret to Liens  The IRS just wants the equity it could get if it seized  Release: IRS is getting whatever it’s interest is  Subordination: it get the IRS cash or improves collection  Withdrawal: under 25K in a direct debit IA which full pays in 60 months or less (IRM 5.12.9.3.2.1) The Ultimate IRS Collection Workshop 36 36

The Fixing America’s Surface Transportation Act • The FAST act funds America’s highways • Added provisions for IRS collection • Requires IRS to use private debt collectors • Allows IRS to have passports suspended The Ultimate IRS Collection Workshop 37 37 Passport Denial/Revocation • The IRS to inform the United States Secretary of State of those taxpayers who owe “seriously delinquent taxes,” • Defined as those taxpayers who owe more than $50,000 in back taxes • State Department may revoke the passports of those taxpayers owing back taxes or deny the issuance of a passport to taxpayers applying for one that owes back taxes The Ultimate IRS Collection Workshop 38 38 Passport Denial/Revocation A taxpayer will not have his or her passport suspended/revoked if they are: • Paying the tax through an I/A • Involved in an Offer ‐ in ‐ Compromise • Has filed a request for a Collection Due Process hearing • Has filed for innocent spouse relief The Ultimate IRS Collection Workshop 39 39