Taxation & Estate Planning

Does the IRS follow a divorce decree?s statement of responsibility to pay a joint tax liability?

Posted on March 27, 2009
IRS problems and divorce often come bundled together.  Here is my response to a question I recieved about how a divorce decree impacts the IRS in the collection of an unpaid tax liablity: My ex was self-employed when we were married, and he never paid his taxes...

Tough economy + aggressive IRS = tax bankruptcy.

Posted on March 21, 2009
All recent indications are that the IRS is plowing ahead in its collection efforts under a weakening economy.  Revenue Officers continue to push hard, and there are no signs that Automated Collection Service has backed off its levy and lien filings. The unfortunate result of this pressure is that more and more clients are turning to a [...

Protecting retirement accounts from IRS seizure.

Posted on March 15, 2009
Retirement accounts are considered to be an investment that is protected from creditors.  But here is an interesting question from a reader about a big exception to that rule (yes, it is the IRS):  Several years ago, I liquidated all of my retirement money to pay for gambling trips to the casinos...

IRS to hire over 1,000 new collection personnel in 2009

Posted on March 13, 2009
After conducting an extensive review of their use of outside private debt collectors, the IRS has decided to eliminate the program in its entirety.  The program lasted for all of 30 months.   But the IRS is not standing still.  This is not a downsizing mode...

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What to expect when an IRS Revenue Officer comes calling to your home or business.

Posted on March 11, 2009
IRS Revenue Officers are the most experienced and sophisticated collection employees within the IRS. They work high dollar cases identified by the IRS to be of significance.  Focus is often given to business cases, employment tax liabilities, repeat offenders and non-filers...

Proposed relief for IRS interest and penalties.

Posted on March 05, 2009

The damage that can be done by IRS substitute returns, and how to solve it.

Posted on February 25, 2009
Here is a reason to always filed your tax returns… I just resolved a case where my clients did not file their 2000 and 2001 returns. This resulted in the IRS making an estimate of their liability by what is known as a “Substitute for Return...

The advantage of the Automated Collection Service practitioner priority line

Posted on February 20, 2009
For taxpayers seeking to contact the IRS on their own, what follows is a reason not to go at it alone but through a tax professional. Professionals can access the IRS Automated Collection Service by first dialing in through the IRS Practitioner Priority Line...

How does the IRS approach collecting unpaid employment taxes from a closed business and its officers?

Posted on February 14, 2009
I received this question from a reader about a closed business that owes employment taxes to the IRS, and her personal liability for the taxes: The IRS is trying to collect on employment taxes from a company that has been out of business for several years...

Has the time arrived for IRS amnesty for non-filers?

Posted on February 09, 2009
Today’s Cincinnati Enquirer published an editorial of mine about offering IRS amnesty to non-filers.   There are 6.1 million non-filers - to find out how to bring them back into the system with a fresh start and stimulate the economy, read the article here.

The powers of an IRS Revenue Officer?

Posted on February 04, 2009
When negotiating with IRS Revenue Officers, it is important to remember the many enforcement tools they have at their disposal.  These powers include: 1.     Filing a Federal tax lien securing the IRS’s interest in a taxpayer’s property. 2...

Assets to always claim as ?exempt? on an IRS financial statement (433A)

Posted on January 27, 2009
Internal Revenue Code section 6334(a) shields certain taxpayer assets from the IRS collection powers.  As these assets are beyond the reach of the IRS, it is important to remember to always exclude their value from IRS financial statement Form 433A. Claim as “exempt” the following: 1...

Offer in compromise vs. bankruptcy - Which settlement amount will be the lowest?

Posted on January 21, 2009
With new clients, I spend time discussing the options for obtaining a fresh start from IRS problems. The consultation most always involves making the client aware of the pros and cons of resolution by compromise, and by bankruptcy.   In that spirit, here then is the first of a continuing series on the use of an offer [...

Can the IRS take my spouse?s income if only I am liable?

Posted on January 17, 2009
The IRS cannot take collection action against the separate income of a non-liable spouse.   If separate tax returns are filed, only the person who signed and filed the return is legally obligated to pay the taxes.  If your spouse did not sign or file a joint return with you, then the IRS cannot collect from him [...

Is there such a thing as a ?hardship status? with the IRS?

Posted on January 09, 2009
If you cannot pay your delinquent taxes because of an economic hardship, the IRS can suspend collection efforts against you.  This does not mean your debt is forgiven; just that the IRS will defer collection and not take your wages or bank account. Internal Revenue Service Policy Statement 5-71 permits hardship status on IRS accounts, as [...

How can an extension to file a tax return impact a discharge of taxes in bankruptcy?

Posted on January 03, 2009
One rule to follow in bankrupting income taxes is that the liability must be from a return that was due to be filed three years before the bankruptcy is commenced. The key is to be careful to include extensions of time to file in calculating the due date of the return, especially starting in 2009...

How do I know if my business is in tax trouble?

Posted on December 27, 2008
Entrepreneurs justifiably take great pride in their business.  But this pride often gets in the way of a clear understanding of the risk of continuing to operate into a storm of IRS trouble.  The IRS comes down hardest on businesses with tax troubles, and owners and management are usually implicated as well...

Can the IRS continue to audit me year after year?

Posted on December 22, 2008
There are limits on the IRS continuing audits year after year.  These audits are known as “repetitive audits.” Their scope is limited by Internal Revenue Manual 4.10.2.8.5.   The Internal Revenue Manual states that if you are contacted by the IRS, and had a similar issue examined by them in either of the two prior years, [...

When is the IRS prohibited from taking collection action? Part III

Posted on December 14, 2008
Here are the final five situations to look for when the IRS cannot take collection action: When the value of the property is protected by exemptions provided by Section 6334 of the Internal Revenue Code.  There is certain property that the IRS cannot take under any circumstance, including your furniture and household goods valued up to [...

When is the IRS prohibited from taking collection action? Part II

Posted on December 07, 2008
Here are five more situations in which the IRS is barred from taking collection action against you: When the timeframe to collect the liability has expired.  The IRS has 10 years to collect a liability from the date it puts the liability on its books...

When is the IRS prohibited from taking collection action? Part I.

Posted on November 30, 2008
The list of when the IRS cannot take property is fairly extensive, so I will do this in parts to break it down simply. Here is Part I of when the IRS is prohibited from taking collection action: When there is insufficient equity in the property.  There must be sufficient net proceeds from the sale to [...

How many offers in compromise does the IRS really accept?

Posted on November 17, 2008
The IRS offer in compromise program has been promoted endlessly over the last several years. Turn on your television, open up the newspaper, or listen to the radio, and there it is.   My clients usually are very interested in the compromise program, but the first thing I do is set them straight that this is [...

What do I do if I am audited by the IRS but my recordkeeping is poor or my records are lost?

Posted on November 09, 2008
Since I often help clients close out IRS audits when their records are lacking, I thought it was time to answer this question:  I recieved a letter to meet an auditor from the IRS to audit my 2005 - 2007 taxes. My house was broken into several times, and I don?t have any of my paperwork [...

If I file bankruptcy on the IRS, but my spouse does not, will the filing stop the IRS to both of us or only me?

Posted on October 26, 2008
When a bankruptcy is filed on the IRS, Section 362 of the Bankruptcy Code imposes what is called an “automatic stay” on collection activity by creditors, including the IRS.  The automatic stay requires the IRS to release any levys and to cease any further collection action...

Can the IRS conduct a collection interview at your house or business?

Posted on October 18, 2008
IRS Revenue Officers continue to become more aggressive in the field. Here is a new approach to look for: I had a recent case in which a Revenue Officer sent my client a notice stating that that there would be an interview at my client’s house.  These meetings usually take place at an IRS office...

Go back six years to get current on unfiled returns.

Posted on October 15, 2008
In most cases, the IRS will require the past six years of unfiled tax returns for an account to be considered current.  This is a written directive of the IRS, found in IRS Policy Statement 5-133, “Delinquent Returns - Enforcement of Filing Requirements”...

How does the IRS value retirement accounts in an offer in compromise?

Posted on October 12, 2008
I recently received a email question inquiring about how the IRS values retirement assets in an offer in compromise. If you do not have the right to access the retirement money, then neither does the IRS, and it is not included in the value of a compromise...

IRS levies on Social Security benefits - enforced collection on those who can least afford it

Posted on September 15, 2008
I have seen an increase in calls to my office from retirees who have received an IRS levy on their Social Security benefits.  In most every case, the levy (1) relates to conduct from self-employment when they were younger, and that conduct has long ago ended and (2) creates a substantial hardship for the retiree, [...

Can the IRS take my stuff?

Posted on September 09, 2008
In the vast majority of cases, you will not lose any of your stuff to the IRS.  Most clothing and personal household belongings are beyond the scope of the IRS collection power.  Here’s why: Section 6334(a)(1) of the Internal Revenue Code allows you to keep all of your clothing...

IRS steps it up on pursuit of unpaid employment taxes

Posted on August 31, 2008
In tough economic times, hard-working entrepreneurs protect their business by first paying the vendors, suppliers and employees that are necessary to operations, and delaying payment to the IRS.   This is because the vendors and employees are at the door, waiting for payment, and there can be no tomorrow without them...

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