Setting Up a Payment Plan for Your Taxes

  • By Peter
  • 03 Aug, 2016

The Law Offices of Matthew W. Stanley

If you owe back taxes to the Internal Revenue Service (IRS), it can feel like a constant weight on your shoulders. Having the federal government as a creditor is an unpleasant feeling.

Fortunately, the IRS offers payment plans for taxpayers who owe back taxes and can’t afford to make a lump sum payment. Furthermore, there are few types of installment plans available depending on how much you owe and how much time you need to pay off your debt.

Individual Installment Agreement for Debts $50,000 or Less

If you owe $50,000 or less in income taxes, you can choose an individual installment agreement. This allows you to make monthly payments over a certain period of time through a variety of payment options, including credit card, money order, direct funds transfer, check, payroll deductions, or online payments.

Installment Agreement for Debts Over $50,000

If you owe more than $50,000, you can still enroll in an installment plan; however, you must also submit a couple specific forms that provide information about your current financial status. You must disclose your assets, including any real estate, lines of credit, and other assets. You must also provide details about your monthly income, living expenses, and employment information.

Installment Agreement for Small Businesses

If you are a business owner whose business owes $25,000 or less in back taxes, you may be able to enroll in an In-Business Trust Fund Express installment agreement, also known as an IBTF-Express IA. In most cases, business owners are not required to submit a financial statement to enroll;  however, the business must have employees to qualify. Businesses that enroll have 24 months to pay their tax debt. Businesses that owe more than $10,000 are required to make their payments through direct deposit.

By Matthew Stanley 15 Jul, 2017

There is unfortunately no such thing as an “audit-proof” tax return. Although you can take measures to decrease the likelihood that your returns are flagged for an audit by the IRS or state tax administration, there is no guarantee that you won’t face a tax audit at some point over your tax returns.

A lot of taxpayers are unaware of this, but the IRS selects people and businesses to audit by using a computerized screening algorithm, random spot checking, and document matching. It’s impossible to be sure you will not get audited. If you are “invited” to an audit, it’s important to understand the process, know your rights, and remember that you are not necessarily being accused of tax fraud.

Review The Tax Audit Letters Carefully

All auditors/ tax examiners do not necessarily adhere to the same correspondence procedures. But typically, with the first letter, the auditor will
introduce herself or himself and notify the taxpayer that a return or more than one return have been selected for audit. The letter may request contact within a certain period of time so that the commencement of the audit and relevant details may be determined. Or it may announce that the audit has been already scheduled to begin on a particular date.

Whether the starting date is determined unilaterally by the auditor or through discussion with the taxpayer, the taxpayer should undertstand that in the final analysis, he may in effect select the starting date. The involved taxpayer will always want sufficient time to prepare for the audit. That determination is best made by the taxpayer.

Do not feel an audit date may be forced on you to suit the auditor’s convenience.

To set the stage for the audit, the auditor will always request the records, or types of records, he or she will want to review. Their description will accompany a recitation of return line items to be audited. In the case of federal audits by the IRS, the auditor, almost always a revenue agent or examining agent, will issue an “Information Document Request” or “IDR”. That document will probably be the earliest indication notifying the taxpayer of the true scope of the audit, at least the initial chapter of the audit. The auditor will usually state what he wants to see, but at the same time indicate that additional records may be requested at a later time.

Control Taxpayer Should Try to Exercise Over Conduct of the Audit. It is at this time the smart taxpayer will want to control certain aspects of the audit. We have already addressed the decision of when the audit will begin. The focus should be not on delaying the audit for delay’s sake, but on assuring that the taxpayer will be suitably prepared when the audit begins. A remedy that is always available if the the taxpayer and the auditor do not agree is the availability upon request of managerial oversight. Always feel free to seek help up the chain of command if a front line employee like the auditor is not acting reasonably.

Where will the audit be conducted?

The answer to this question perhaps obviously depends on the circumstances. The emphasis, particularly regarding larger businesses, will probably be where the records are located. As the volume of applicable records gets smaller, a good choice generally may be away from where the taxpayer is located, i.e. at a bookkeeper’s, accountant’s or attorney’s office. Avoid putting the taxpayer in the position of perhaps having to field questions on the run. We do not want a situation where the auditor can bother the taxpayer whenever a question comes up.

The audit should occur where the the taxpayer wants it to occur as long as the choice is “reasonable.” So the principle here should be to keep the auditor away from the taxpayer unless the taxpayer expects the audit to be quick and shallow.

How long should the audit last?

The is a subject that should be discussed with the auditor before the audit begins. My proposal is always this: You tell us what return items you want to audit. Do not propose a couple of items with the intent of adding to the list later. The auditor should prepare thoroughly and the taxpayer should do the same. Our agreement is to have available at the appointed location all records the taxpayer has that relate to the subjects to be audited. The auditor’s reciprocal agreement should be to start the audit and continue it until it is completed. It may take a matter of days, but the days should be in a row. No suspensions allowed. A bad situation for any taxpayer is to have to participate in a serial audit that is suspended or recessed repeatedly.

Certainly there may be instances in which an issue is identified late and takes time to develop, but those instances should be relatively rare. A related question is what to do if the auditor requests returns for periods not formally under audit or for other related taxpayers, for example for business officers or other principals of the business. My feeling about providing returns is this: To expedite the process, returns may be provided with the agreement that any items to be reviewed be identified and agreed to before the audit begins. Without that agreement, additional returns should not be provided. Auditors are generally graded based on the audits they complete rather than on the additional taxes proposed as the result of audits. So, it behooves the auditor to proceed as expeditiously as possible. That gives any taxpayer some leverage. That leverage should be exercised judiciously, but effectively. If sabers are drawn, the IRS will generally do one of two things. The first is to arrange for the IRS to terminate consideration of a case and raise all issues in a Notice of Deficiency. The second is to issue a subpoena requiring the taxpayer to present himself and his records at a given location. The IRS is more inclined to choose this second option when it has the burden of proof in a case, for example a fraud case. Throughout, the taxpayer will be ahead if he commits to reasonable discussion and cooperation.
By Matthew Stanley 22 Jun, 2017

Little by little, the Internal Revenue Service is adopting means whereby taxpayers can accomplish important tax tasks more quickly. A particularly huge problem has become the widespread difficulty taxpayers have in reaching IRS representatives with whom to discuss issues. Waiting on the telephone for an hour or two hoping a live IRS person answers is the rule now. The notion of “streamlining” procedures was introduced as part of the IRS effort to hunt down offshore deposits of untaxed wealth. That effort has been expanded and represents one the IRS’s most important collection programs. The idea of “streamlining” other, more common, collection processes has not fallen far behind. In the collection arena, the relatively easy cases to handle are those in which the taxpayer is more interested in reducing or satisfying a tax liability than in avoiding it. The natural place to start greasing the collection wheels was in the area of payment agreements, particularly voluntary ones.  

Earlier requirements
The online payment agreement rules are being relaxed, in steps. The IRS had been providing procedures whereby a taxpayer can access an “Online Payment Agreement” at the IRS website and submit an installment agreement proposal. For individuals and businesses, eligibility for online payments agreements has begun with the requirement that all required tax returns be filed. It is unlikely that prerequisite will ever be changed. Until recently, individuals must have not owed more than $50,000, including all taxes, penalties and interest. The limit for businesses has been $25,000. For individuals, the term of the agreement could generally not exceed 72 months. If the number of months under the collection statute of limitations was less than 72 months, that number controlled.  

Individuals have generally not been required to file financial statements, i.e. collection information statements, unless they had earlier defaulted on a payment agreement. Individuals have also been required to adopt a direct form of payment if their balances due totaled between $25,001 and $50,000. Direct payments have included payroll deductions and scheduled bank account drafts.

In the case of the standard balance limit of $25,000, tax liens have normally not been filed. That is also true with balances up to $50,000 if the taxpayer agrees to direct payments. Absent direct payments but with a streamlined agreement over $25,000, the IRS has determined whether a notice of federal tax should be filed.

Current requirements
Under criteria now in place at least until the end of September of this year, the balance due which may be subject to streamlined processing has been increased to $100,000 for individuals. To accommodate the larger allowable balance, the payment term has been increased to 84 months for individuals. As before, that period could be more limited if the collection statute of limitations expires in less than 84 months. Direct payments are no longer mandatory. But if an individual decides to pay by other means, he will have to file an IRS financial statement. Another apparent result of the larger allowable balance is that the IRS must determine whether or not a federal tax lien would be appropriate.  

The new relaxed criteria also apply to businesses, but only to those whose income tax balances do not exceed $25,000. For some time, and now, streamlined processing has and will be applied to payroll tax debt, but only if that debt does not exceed $25,000.

The current rules seem to be hit or miss, in part because they are just being tested. If you have tax balances due, and even if the balances seem a little high, apply for a streamlined payment agreement anyway if the idea appeals to you. The process is pretty easy with the “Online Payment Agreement”. You may find that the IRS is not strictly applying the test guidelines.
By Matthew Stanley 25 May, 2017

When Tax Day is around the corner, it is time for taxpayers to start the process of gathering information and completing the required documents so they can submit them on time. However, leaving all this work until the last possible moment is only too common, with many taxpayers finding themselves spending hours before the tax-filing deadline to ensure they get things done on time.

And then we have those who forget about Tax Day altogether. They either write down the wrong date, or it slips their mind altogether. In either case, not filing taxes on time is a problematic issue for those who owe taxes to the IRS. Those who are eligible for a tax refund are not going to suffer any serious consequences, as they are the ones who must make do without their refund until a later date. But failing to file and timely pay taxes that are owed will lead to civil penalties and could result in trouble for individuals and businesses. So, what should you do if you missed the tax-filing deadline and have not filed for an extension of the return due date.

1. File When You Can -
The moment you realize your mistake is when you should begin the process of filing your taxes. Whether it is a matter of sitting in front of the computer and filling out a few forms, or speaking with an accountant to go over your finances, start the process the moment you have a bit of free time. The longer you wait, the more problematic the situation will become. The federal failure to file penalty accrues at the rate of 5% of the tax liability per month, maxing out at 25% after four months. The failure to pay penalty accrues at a much slower rate, but also grow to 25%.  

2. Use the IRS Free File Software–
If you are looking to get your taxes filed in a hurry, using the IRS Free File software is a good option. You can e-file your taxes and it does not cost a thing. When you use the program, you are filling out information into the electronic versions of the IRS tax forms. If you have all your information at hand, it should not take you very long. The program is available on the IRS website, and there are two versions depending on how much money you made during the year.  

3. Plan for the Future –
Messing up on a solitary occasion is not the end of the world. However, if you are finding yourself in a position where you repeatedly file your taxes late, you may want to change your approach. Create multiple appointments in your calendar indicating that you need to work on your taxes. Book the efforts for the weekend or an off day, so you will not have the excuse of needing to complete other work instead. In fact, you should arrange to get your paperwork done a few weeks BEFORE the deadline, which would allow you safety margin of time should you procrastinate as the deadline approaches.

4. Is There Another Reason for the Late Filing?
Many taxpayers will plead an innocent mistake when the IRS contacts them regarding a failure to file. In some cases, it was an innocent error that resulted from negligence or an overbooked schedule. However, there are instances where individuals and businesses fail to complete their tax paperwork because they do not have the funds to pay the taxes they owe. If you are in such a position, ALWAYS file the return. As stated above, the failure to file penalty is significantly more punitive than failing to pay on time.
The one acceptable alternative to not filing is for individuals to obtain a six-month extension to file, to   October 15 . But, do not delay payment arrangements. The rule is that one must pay his estimated tax liability when he requests an extension.  

Payment Arrangements in a Pinch
The IRS offers alternative payment arrangements to taxpayers who are unable to pay in full by the return due date. The most expedient alternative arrangement is to pay in full any time up to 120 days. One may obtain that arrangement by filing an IRS “Online Payment Agreement”, or by telephone. If one requires more time, he may request an “installment agreement” of varying lengths. One can seek an installment agreement by filing the aforementioned Online Payment Agreement. The IRS also has a Form 9465 - “Installment Agreement Request” for that purpose.  
By Matthew Stanley 10 May, 2017
IRS Settlement Procedures

   To settle most civil tax claims it has against taxpayers, the IRS employs two primary processes. One is called the Offer in Compromise (OIC) program. It is used under circumstances in which a given taxpayer lacks the wherewithal to pay the outstanding federal tax claims asserted against him. He therefore may make an offer to pay an amount to resolve all of outstanding claims for tax, interest and penalties. The offer amount depends on the taxpayer’s financial statement and ability to pay and will be rejected if it does not cover all outstanding federal tax debts. 

   A separate system, and indeed a much less formal one, serves to provide civil penalty relief to those who qualify. The primary requirement asks a taxpayer to show that his failure to perform a required act, like filing a return on time, making a tax payment on time or making a deposit, was due to circumstances beyond his control, i.e. reasonable cause, and not to willful neglect. 

      Reasonable Cause 

   Analysis of whether a taxpayer had “reasonable cause” for failing to do a required act focuses on two issues. First, did the taxpayer act with “ordinary business care and prudence”? Second, did the existing circumstances prohibit the taxpayer so acting from being able to meet his legal obligations? Tax regulations describe the “usual” conditions for reasonable cause, including incapacitation for medical reasons, a natural disaster and a serious family issue requiring attention. The emphasis in these regards is on incapacitation to one extent or another.
My experience is that the IRS does not too rigorously enforce the reasonable cause rules.  It therefore stands to reason that one might seek a penalty abatement although the situation does not rise to the level of total incapacity.

   The situation becomes a little less certain in failure to pay tax situations. All taxpayers should understand that it is always preferable to file one's return rather than not file because of financial problems. The failure to file penalty increases at the rate of 5% per month to a maximum 25% within five months. The failure to pay penalty also maxes out at 25%, but over a much longer period with the rate of increase at .05% per month. Of course, interest also accrues on late payments, but the current interest rates applicable to federal taxes is still very low. 

   The simple financial inability to pay the tax reported on a return is generally not reasonable cause for failing to pay. But in the financial world, things can become complicated in a large variety of ways. Any circumstance that spells financial hardship may be accepted as reason to abate the failure to pay penalty. 

   The penalty abatement procedure is relatively informal, certainly compared to the OIC process. The penalty relief request, with appropriate documentation, may be submitted pursuant to phone number or other contact information provided in the penalty notice. Or in the rare absence of that kind of information, a request sent to the IRS Service Center serving the taxpayer’s local will normally be sufficient.

Waiver of First-Time Penalty

      If certain conditions are met, the IRS will normally waive the failure to file penalty, the failure to pay penalty and the failure to deposit penalty if the penalty is a first-time occurrence. “First time” may be a little misleading. Actually, that reference is to the first time you’ve incurred a penalty within three tax years prior to the tax year for which the penalty is asserted. 

    There are two other conditions. One, you must have filed all returns that are due or have made arrangements for an extension to file. Two, you must have paid all taxes due or have made arrangements to pay them. The procedures for applying for first-time penalty relief are the same as those above described.

This website has been prepared by the Law Offices of Matthew W. Stanley for informational purposes only and does not, and is not intended to, constitute legal advice.  This information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.
By Matthew Stanley 03 May, 2017
When you are self-employed, or you own a small business, your tax situation can become a little complicated. Small business owners and self-employed individuals often run into issues with the IRS. Perhaps you got involved in a tax controversy because you misunderstood a federal tax law. Maybe you filled out your form incorrectly in one spot, and that mistake had an impact on the rest of your filing as well. In those and other situations, you will undoubtedly have to interact with the IRS.

Fast Track Program –

Small business owners and the self-employed may resolve certain tax disputes with the IRS through the so-called Small Business/Self Employed Fast Track Settlement program, or SB/SE FTS. Indeed, most taxpayers of all sizes have variations of the IRS’s Fast Track and mediation programs available to expedite federal tax issue resolutions. The idea behind SB/SE FTS is to ensure that qualifying individuals have the opportunity to resolve their outstanding issues with the IRS while their case is undergoing audit.   The taxpayer still retains the option to request a manager’s conference and an Appeals hearing. And in the majority of cases, the SB/SE FTS means your matter should get resolved   within 60 days   of your being accepted into the program.  

There are audit cooperation prerequisites to acceptance in the SB/SE FTS. They include being cooperative with the examiner, providing relevant records for consideration and seeking available assistance, including managerial assistance, regarding unsettled issues.  

To request acceptance into the SB/SE FTS, the taxpayer should prepare and file a Form 14017 together with a statement describing the taxpayer’s position on the unresolved matters of fact and law. The examiner should assist in preparing the application, including helping to identify and gather relevant records. The taxpayer should feel free to ask the auditor questions about the program and to work together with that person.

Once an application is accepted into the SB/SE FTS, the Appeals Office will assign a trained mediator to the case. The mediator’s responsibility is to oversee the case in mediation and to decide whether settlement suggestions should be offered. The case, however, lies totally within the taxpayer’s control. And either the taxpayer or the IRS may elect to accept suggestions, including settlement suggestions, or reject them. A taxpayer in the program may not be forced to accept or reject decisions arising during a mediation or to follow certain guidance. Under any circumstances, however, it does behoove a taxpayer to become familiar with mediation procedures and how the process works.  

Matters Not Eligible for SB/SE FTS  

Cases that are in the IRS collection process do not qualify for the SB/SE FTS. Also not qualifying are tax matters which are pending before the IRS, but are not assigned to a particular IRS representative, or are frivolous. See IRS   Notice 2010-33   and   Announcement 2011-5   for additional issues that will not be accepted in the FTS.  
By Matthew Stanley 12 Apr, 2017

The ACA, or the Affordable Care Act, is a health insurance law that has played a major role in the way healthcare is administrated across the United States. While the Affordable Care Act has allowed millions of people to gain health insurance for the first time, there has been plenty of push back from those who found their premiums rising. Others were unhappy with how they had to switch doctors due to the ACA. Employers also found it challenging to provide healthcare for their employees through the ACA. But what role does taxation play in the ACA and how the country benefits or suffers because of the act? We take a look.

How the ACA and Taxes Work

When the ACA was enacted, some changes were also made to the Medicare tax. For instance, from January 2013, an added 0.9 percent Medicare tax is added to a person’s wages. Married couples who earn more than $250,000 a year are subjected to the tax, while individuals who are married but file separately have a threshold of $125,000. For everyone else, the threshold sits at $200,000 income per year. In most cases, employers are the ones who must deduct the tax from the wages or compensation they provide to an employee on a weekly, bi-weekly or monthly basis.

The adoption credit that is applied to a person’s tax filings also increased due to the Affordable Care Act. Meanwhile, an employee who receives health coverage through their employer can provide coverage to their children under 27 years old – tax free. The tax-free coverage for under-27 children applies to insurance plans at the work place or for retirees. It also changes how employees can make pre-tax contributions to the expanded benefits they can receive from cafeteria plans.  

The ACA certainly changed the way individuals and families received health insurance. With the pre-existing condition provision, many who were sick or suffered from a long-term condition were now able to apply for and receive health insurance. Meanwhile, children could remain on their parents’ insurance plan for much longer than before.  

However, the biggest changes brought about by the ACA were felt by employees. The Affordable Care Act made it mandatory for large-scale employers to provide health coverage for any full-time employees. If they failed to provide such coverage, they would find themselves charged a shared responsibility fee.

While larger businesses may not have too much of an issue insuring their employees, as most larger companies already provided health insurance in some form, small businesses did not feel the same way.  

Small Businesses and the ACA

Profit margins are always tight at small businesses, which is the reason they do not employ many people. And the suggestion to provide health insurance for these employees certainly posed some challenges for small businesses. It is the reason why the Small Business Health Care Tax Credit was created, to help these businesses with the costs of covering their employees. The tax credit applies to businesses of a specific size, or those businesses where most workers are low to moderate income. The tax credit only applies if a business contributes to at least half of the cost of single coverage for an employee.  

There is a special Small Business Health Options Program, or SHOP, Marketplace, where small businesses are required to purchase health insurance coverage for their employees. And despite reports suggesting otherwise, small businesses who have less than 50 full-time employees are not legally required to provide health insurance coverage.  

Under the group coverage laws of the ACA, it is stated that if an employer decides to provide health insurance to even one full-time employee, they must provide health insurance to all their employees. And since owners are generally classified as employees for these purposes, if the owner and/or upper management of a small business are provided health insurance through the company, other employees must receive the same benefit. Similarly, if coverage is offered to one part-time employee, all part-time employees must receive the same coverage.

Given the fact that the pre-existing conditions clause is a part of the ACA, it means that employees who have certain illnesses or long-term conditions must be provided with insurance as well. No previous medical problem is cause for an employer to deny an employee health coverage. The dependents of employees are also given coverage when the group plan is enacted, which includes spouses, children and/or unmarried domestic partners. And within these group plans, if an employer decides to contribute 50 percent or more of the money for the employees’ insurance plans, they will receive the Small Business Health Care Tax Credit from the IRS.
By Matthew Stanley 05 Apr, 2017

    There are two basic programs that give taxpayers the opportunity to seek agency review of tax enforced collection procedures adopted by the IRS. The first of those, called the Collection Appeals Program, was described in the last blog. The second program available for appealing tax collection activity is called “Collection Due Process”, or CDP. The two collection programs share at least one similarity: They both allow self help. A taxpayer may want to contact the relevant collection office and try to reach a meeting of the minds to resolve a case outside of formalities. Perhaps the primary difference is that a negative CDP result may be appealed to a federal court, the U.S. Tax Court, if timely appeal periods are satisfied. CAP results may not be judicially appealed. CDP relief may be sought by filing an IRS Form 12153, Request for a Collection Due Process or Equivalent Hearing. Whether or not one of those procedures is available depends on whether the taxpayer requests relief within or after the applicable 30-day deadline. 

Collection Due Process Requirements

    The two primary means through which the IRS pursues the collection of tax is by issuance of a Notice of Federal Tax Lien and a Final Notice - Notice of Intent to Levy. When filed, a Notice of Federal Tax Lien announces publicly that the IRS claims an interest in taxpayer’s property. Regarding almost all property, once a federal tax lien arises, the IRS stands in the same shoes as the taxpayer regarding property interests. Levy notices can lead to or follow property seizures. 

    Whether or not it has a lien, the IRS may seize a taxpayer’s property if certain conditions are met. A statutory requirement is that prior to a seizure, the IRS must issue a “30-day letter” giving a taxpayer a 30-day notice that it intends to seize property. This attorney's experience is that too often, the IRS does not inform taxpayers they have 30 days to respond. That omission may be accompanied by language encouraging an immediate response.  

    If the taxpayer wants to contest either the lien or a levy, it must do so under strict 30-day time tables. In the case of a lien, the 30 days begins to run 5 days after the notice of lien is filed. The 30-day appeal period after a levy begins with the date on the levy notice. In certain instances, most commonly if it determines that tax collection is in jeopardy, the IRS may levy before it sends a notice or otherwise without waiting. The IRS will thereafter send notice of the taxpayer’s right to a hearing. The CDP hearing must be requested within 30 days of that notice. 
    A negative CDP decision may be appealed to the United States Tax Court. That Court is located in Washington D.C. However, its judges travel to various cities in the United States to hold hearings and conduct trials.

Equivalent Hearing

    All is not lost if a taxpayer’s CDP request is delayed beyond 30 days. In that event, upon timely request, the IRS will grant an “Equivalent Hearing.” The time table for requesting an equivalent hearing is one year and 5 days after a notice of lien is filed, or one year after the levy date. Like a CDP request, an equivalent hearing request will lead to a hearing before the IRS Office of Appeals. But, that Office’s decision may not be judicially appealed. It follows that in order to retain the right to have the Appeals Office decision reviewed by a court of law, the initial administrative appeals of lien and levy activity must meet the respective 30-day filing requirements.  

This blog has been prepared by the Law Offices of Matthew W. Stanley for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction..
By Matthew Stanley 20 Mar, 2017

When the IRS engages in a collection procedure against an individual or a business, it does give these people or institutions the necessary time and scope to respond. We have heard so much about the link between taxes and identity theft, and the cases of individuals who had collection action brought against them because their identity was stolen. It is good to know the IRS allows individuals the right to appeal or respond to a collection action, whether or not the case involves identity theft. The IRS actually has two separate sets of procedures for appealing collection cases. One is the Collection Appeals Program, and the other, Collection Due Process. This Blog will deal with the first set of procedures.

The Collection Appeals Program

If an individual has received any of the following documents, they can go through the CAP, or the Collection Appeals Program: Notice of Federal Tax Lien, Notice of Levy, Notice of Seizure, or Denial or Termination of Installment Agreement. Each of these actions means something different, but they all have the same gist: the IRS is coming after your finances and/or assets to collect taxes that they believe you have not paid when required.  

The clear majority of collections actions from the IRS involve individuals or businesses who have not paid their taxes on time, or have gone back on an agreement they made with the IRS to pay back their taxes with installments. One of the drawbacks of CAP is that if you complete it and do not like the outcome, you cannot judicially appeal the decision to a court.

How to Navigate CAP  

If you receive a notice or telephone call from the IRS and wish to appeal a lien or levy matter, call the telephone number described in the notice or as the source of the telephone call. Explain the situation to the IRS representative, state what your disagreements are and provide your suggestions re: how to resolve the matter. This is your opportunity to reach an agreement with your initial IRS contact. So, it’s important important to prepare well for that initial discussion. It can save a lot of time. However, if you cannot reach an early agreement with that employee, explain that you would like to appeal that employee’s decision with his/her manager. Actually, it is to every taxpayer’s advantage to know that if you do not agree with the initial decision an IRS employee makes, whether or not involving a tax collections matter, you always may appeal to management.  

If the manager meets your request, your appeal is successful and done. Absent an agreement, however, the manager must forward you case to the Appeals Office. You do not have to ask for that appeal.

The foregoing paragraph describes appeals of lien and levy cases depending upon whether the initial contact was made by correspondence or telephone. Often that initial contact will come from an IRS Revenue Officer whose primary function is to collect federal taxes. The procedures for resolving those cases bear a basic resemblance to the procedures described in the preceding paragraph, but there are some material differences. Taxpayers can discuss those with their revenue officer contact or review their specifics at the IRS website, .  

Many taxpayers who agree with what they owe can enter into an installment agreements to pay their liabilities. Common issues involving installment agreements include whether they are accepted or rejected and whether they are terminated or modified. Again, basic similarities in the appeals procedures exist, but accompanied by significant differences. For example, when installment agreements are at stake, the importance of acting   within 30 days   of a termination, etc., cannot be overstated.  

Tax collection issues often are distressing, particularly if they are not handled properly. The IRS website at   can be a critical source of helpful information.  

This blog has been prepared by the Law Offices of Matthew W. Stanley for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.
By Matthew Stanley 15 Feb, 2017

 The IRS can take a very aggressive approach when it comes to going after individuals or businesses who do not pay their taxes on time and who seem unwilling to communicate about the problem. Indeed, the worse mistake committed by tax debtors is dodging the displeasure of talking about it. If one is willing to give the system a chance, there is a strong likelihood that some acceptable resolution can be found.

Paying Tax and Claims

The search for a payment plan should begin with the taxpayer(s). Don’t let yourself be put in a position where what you do is the result of threats. If you know you owe tax, initiate the discussions of how it will be paid. The longer you wait, the more chance there is that the IRS could conclude that you have no interest in paying what’s owed. Tax collectors devote their time to the tough cases. Once they know you are agreeable to reaching an understanding, you may have to work to get their attention, rather than vice versa.

Types of available payment agreements

 Do you want more time to pay your debts? Are you looking to get the overall amount reduced? If you are unable to pay the entire amount owed, an ordinary installment agreement allowing monthly payments may be the answer. That is a matter that should be arranged through discussion with the IRS. You will be normally be asked to complete an IRS financial statement, usually a Form 433-A. The length of your installment agreement and the payment will depend primarily on your monthly income and allowable expenses.  

An attractive alternative is a “Streamlined” payment agreement. Until recently, qualification for one of those was a debt of no more than $25,000 and an ability to pay   within 5 years . Those requirements have been relaxed to allow an existing debt of $50,000 payable over a six year term. Unless some extraordinary factor is present, the taxpayer does not have to provide a financial statement to qualify.

There are times when a taxpayer’s accustomed life style and available assets are too substantial to permit settlement without adjustments. The taxpayer may require time to reduce living expenses and sell certain assets before a tax payment resolution may be obtained. In those situations, the IRS may give the taxpayer a period of time unencumbered by collection activity, usually 6 months to a year, to complete the necessary adjustments.  

A third payment agreement alternative may allow for less than full payment of the tax debt if the period remaining within which the IRS could collect the debt does not permit a taxpayer with limited financial resources to fully pay. IRS normally had ten years from the date of assessment to collect the taxes, interest and penalties owed. Before that ten year period expires, the IRS may file suit to reduce it tax claim to judgement. The IRS will not take that step unless the amounts outstanding are worth the effort. So, when a tax debt exists, it is alway important to determine how much time is left under the collection statute to measure the taxpayer’s possibility of qualifying for less than full payment.  

When an agreement is reached, it is absolutely vital that you adhere to the terms that have been agreed. By far the most common violation of payment agreements is for a taxpayer to reach a point where he is unable to sustain the payments at the agreed upon level. When that happens,   always   contact the IRS   before   the payment due date to request an adjustment in payment agreement terms. Otherwise, the IRS will treat the payment agreement as violated, making it very difficult to obtain relaxed payment terms in the future.
By Peter 16 Jan, 2017
Law Offices of Matthew W. Stanley

What does tax-related identity theft mean?

Tax-related identity theft is a form of fraud that happens when an individual uses a stolen Social Security number in order to obtain a tax return and claim a fraudulent refund. Many victims do not realize that this scam has happened to them until they try to file the return themselves and are denied because it has already been filed by the scammer. Additionally, you may discover your information has been stolen when the IRS sends you a letter regarding a suspicious return using our Social Security number. Identity theft can some in many different forms, so it is important you are educated in the ways it can be executed and how it works.

Know the warning signs

It’s time to be alert for potential tax-related identity theft if your tax provider or the Internal Revenue Service contacts you. The alert could be about several different concerns. They could alert you that several tax returns were filed under your Social Security number, which is a definite way to tell something suspicious is going on with your taxes. Additionally, they could notify you that you owe additional taxes that you do not believe should be valid, or have a refund offset taken against you for a year you did not file a return. Finally, the IRS may indicate you have received money from an employer with whom you are unfamiliar.  

Protect Yourself

There are many tips to protect yourself from identity theft and strategies you can use to prevent yourself from becoming a victim. Never carry your Social Security number or any files regarding your SSN and taxpayer identification number with you regularly, unless you need it for a particularly valid reason. Also, be certain to give your SSN out as little as possible, and only provide it when absolutely essential. It is always safe to ask a business or someone seeking your Social Security number why they need it and what they plan to do with it. Do not feel obligated to hand it out to whomever may ask for it.  

Checking your credit report about every year is another way to make sure nothing fraudulent is going on in your accounts. Credit reports from each of the major agencies can be found for free to consumers online. However, they are entitled to charge you for displaying your credit score, but that is an optional benefit. When searching for secure information online, be sure to secure your personal information and always use your personal computer to conduct your searches. Protect those private devices with firewalls, anti-virus software, and update security patches. Changing passwords for the internet accounts you associate with harvesting your important information is also vital to ensure no hackers get a hold of your data.

Developing advanced passwords is an essential skill in protecting yourself online. It is important to not use the same password for multiple services online. Using a mix of numbers, letters, and symbols will also increase the difficulty with a hacker cracking your code. Personal information and common words are not good choices for passwords because they are easy to guess. Additionally, make sure you have recovery emails available in case you have forgotten your password or need to change it to upgrade its security.

This website has been prepared by the Law Offices of Matthew W. Stanley for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licenses in your jurisdiction.
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