Taxpayer’s Other Payment Options
We have mentioned other payment options throughout this post. We are going to put them together here.
Determining other payment options for your client takes serious research, compilation of records and information, and then sitting the client down and having a coming to reality meeting with them. This is where we help them decide on some of those option I mentioned earlier:
1. The Fresh Start Initiative – Full Pay Installment Agreement or Partial Pay Installment Agreement Read More
Getting a Lien/Levy Released
Once a taxpayer has a lien or levy in place (isn’t this where we usually come in?), the representatives primary job is to try and get the lien/levy released. There are many ways to do this. First and foremost is to get the taxpayer to pay the balance due, assuming we have determined he actually owes it.
Liens are usually “self-releasing” after the CSED date has passed. When the IRS files a lien the Form 668Y, Notice of Federal Tax Lien, has a section to let the party the lien is filed with the release date. If the CSED is extended for some reason after the filing of the Form 668Y the IRS will re-file the Lien with a new release date. Read More
Collection Due Process (CDP)
Another option in the representatives toolbox is the CDP Hearing request. Unlike the CAP, the reasons for requesting a CDP Hearing are more limited. They have strictly to do with Liens and Levies.
Timing is a critical factor in this process. Timely filing of the request preserves the taxpayers rights to Judicial Review of the decision made by the Appeals Division. If you, as a representative, are not brought in until after the time lines are blown, you may still file a request for a hearing but it will be an Equivalent Hearing (EH) and the right of Judicial Review is not available. Read More
Collection Appeal Program (CAP)
We have been talking about all the things the IRS Collections Division can do to a taxpayer who fails to pay their tax liability. Now is the time to talk about what we, as out client’s representative, can do to stand between our client and all the things the IRS will try to put in place.
As we discussed before there are very specific things the IRS must do, in order, on the correct time line, and document to be able to take these types of drastic collections activities against a taxpayer. That is the place for us to start. Did the IRS follow it’s own rules? If you are not familiar with IRM Chapter 5, Collecting Process, and Chapter 8, Read More
When is a Levy Issued?
Technically, there is no legal difference between a levy and a seizure. The IRS uses these terms to specify who was the custody of the property that was taken, either a third party or the taxpayer himself. For the purpose of this discussion we will term property taken from a third party as a levy and property taken directly from the taxpayer as a seizure.
As with the NFTL, the IRS can not levy until the three requirements (notice, demand, and notice of intent to levy) have been issued. These notifications can occur after the NFTL process or in conjunction with it, depending on the specific circumstances.
The Letter 1058, Final Notice of Intent to Levy and Notice of Your Right to a Hearing, must Read More
The Enforcement Process
Enforced collections is a process that starts after requests for voluntary compliance to the taxpayer fail. The process is pretty simple and straightforward:
• A tax return is filed (or not)
• The tax liability is paid (or not)
• The IRS officially assesses the tax (ASED/CSED tolled)
• The tax liability is paid (or not) upon demand
• Liens is placed on the account
• Notice of Federal Tax Lien (NFTL) is issued to taxpayer Read More
Today we will be looking at the IRS Lien and Levy programs as a part of the Collection Division. We will learn about the very strict time tables involved, how to get a lien or levy removed, withdrawn, or subordinated and how to help our clients get things back in their control.
1. The enforcement process.
2. When does the IRS institute a lien?
3. When is a levy issued?
4. Collection Appeal Program (CAP)
5. Collection Due Process (CDP)
6. What can the taxpayer do to release a lien/levy? Read More
Loving and Cir. 230
In February of 2014 the U.S. Court of Appeals upheld the D.C. Circuit Court’s 2013 decision that the IRS had overstepped it’s authority in establishing certification and continuing education requirements for all tax preparers, not just the traditional “representatives” including Attorneys, CPA’s, and EAs.
The regulations had been seen by CPA’s and Enrolled Agents as a way to level the playing field. Without the regulations, we could be at a disadvantage because we are required to comply with competency and quality control regulations under IRS Circular 230, while unlicensed tax return preparers are not. Read More
What if you have a situation that you have determined needs a more proactive approach from a tax professional? As always, the first step is to get a good detailed engagement letter in place. If there is ever a time to make sure you have a good “disengagement clause” in place, this is it.
IRS Circular 230 Subpart B covers the Duties and restrictions Relating to practice before the Internal revenue Service. There have been some changes recently that we will discuss in the next section, however, the basics remain. You must be competent, exercise due diligence, and promptly follow lawful requests for information when practicing before the Read More
Now for the ways I define the difference between Audit Assistance and Audit Representation. Everyone of you is going to set “the line in the sand” at a different location for this call, so please understand these are not hard and fast “rules”, just what I have found works for me.
Audit Assistance include the items you do for you regular clients that get those pesky letters from the IRS of state that are really no big deal. Things like:
1. Missing form from a mailed return
2. Missing signature from a mailed return Read More
We will be focusing on the difference between Audit Assistance and Audit Representation in the next series of blogs. Is there a difference? Where is the line? Do all taxpayers need actual representation? Does IRS Cir. 230 require representation as opposed to assistance? How does the newly upheld Loving ruling change the playing field?
We will explore and answer these questions and more. We will also review the need for a specific engagement letter for specific situations, how these decisions can affect your E&O coverage, and how they can affect the future of your practice.
We will start with the basics of any client contact, no matter the topic of conversation. Read More
Your State Income Tax return and CODI
The Commonwealth of Massachusetts complies with all of the federal rules on CODI, deemed sales, and bankruptcy dealing with CODI except the IRC §108(i) Reacquisition of Business Debt Deferral.
For purposes of the corporate excise and the personal income tax, a taxpayer that makes the federal election allowed by IRC § 108(i) is required to add back to gross income any CODI that is deferred under IRC § 108(i). In future years when the deferred CODI is recognized for federal purposes, the taxpayer is allowed to make a corresponding subtraction, since the recognition event will have already taken place for Massachusetts Read More