by Fresh Start Tax | Oct 15, 2012 | Tax Help
IRS Debt Settlement Program – Paying Taxes – Former IRS Agents – Fresh Start Tax LLC
Michael D. Sullivan, former IRS agent and teaching instructor.
There are many different options a taxpayer has in dealing with the IRS.
The IRS accepts 27% of all offers in compromise filed from taxpayers.
Being a Former IRS agent I would not recommend taxpayers file these on there own. The likelihood of acceptance is far and few between.
The reason you need a tax professional is simply because the IRS requires exacting information and most persons have no idea the amount of time and work put into each review made by the IRS. The average time spent on an acceptance is 25 hours. It is well worth the money to have a tax professional complete this lengthy process.
IRS Programs
The IRS has different programs available to taxpayers to deal with their personal or business IRS debt and depending on your individual situation there are different options available and some can completely relieve the debt.
The IRS have just released there Fresh Start Program that deals with the Debt Settlement program. The filing of offers in compromise is the official name of the debt settlement program.
An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you cannot pay your full tax liability, or doing so creates a financial hardship.
IRS will require a 433OIC form to be completed with complete documentation.
IRS considers different factors.The base factors are as follows:
a. Ability to pay;
b.Income;
c.Expenses; and
d. Asset equity.
IRS can generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time.( RCP)
IRS will explore all other payment options before submitting an offer in compromise. The Offer in Compromise program is not for everyone.It is recommended you have a tax professional pre-screen your offer before filing and wasting your time and money.
Make sure you are eligible
Before IRS can consider your offer in compromise, you must be current with all filing and payment requirements.
You will not eligible if you are in an open bankruptcy proceeding.
For those who wish to do it yourself.
You will find step-by-step instructions and all the forms for submitting an offer in the Offer in Compromise Booklet, Form 656-B (PDF)
Your completed offer package should include:
a. Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms,
b. Form 656(s) – individual and business tax debt (Corporation/ LLC/ Partnership) must be submitted on separate Form 656,
c. $150 application fee (non-refundable); and
Initial payment (non-refundable) for each Form 656.
Select a payment option
Your initial payment will vary based on your offer and the payment option you choose. you will want to discuss with your tax advisor with option is best your you. the options are as follows:
1. Lump Sum Cash: Submit an initial payment of 20 percent of the total offer amount with your application. Wait for written acceptance, then pay the remaining balance of the offer in five or fewer payments.
2.Periodic Payment: Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, continue to pay monthly until it is paid in full.
Low Income Certification may apply
If you meet the Low Income Certification guidelines, you do not have to send the application fee or the initial payment and you will not need to make monthly installments during the evaluation of your offer. See your application package for details.
Things to know about the process.
While your offer is being evaluated you must be advised:
a. Your non-refundable payments and fees will be applied to the tax liability (you may designate payments to a specific tax year and tax debt);
b. A Notice of Federal Tax Lien may be filed;
c. Other IRS collection activities are suspended;
d. The legal tax assessment and collection period is extended while the case is in offer status;
e. You must make all required payments associated with your offer;
f. You are not required to make payments on an existing installment agreement and
g. Your offer is automatically accepted if the IRS does not make a determination within two years of the IRS receipt date. Very few times this will happen.
Paying Taxes – Monthly payments through an installment agreement
You can make monthly payments through an installment agreement if you’re not financially able to pay your tax debt immediately.
However, you will reduce or eliminate the amount of penalties and interest you pay and avoid the fee associated with setting up an installment agreement if you pay your tax bill in full.
In-Business Trust Fund Express Installment Agreements
Small businesses who currently have employees can qualify for an In-Business Trust Fund Express Installment Agreement (IBTF-Express IA). These installment agreements generally do not require a financial statement or financial verification as part of the application process.
The criteria to qualify for an IBTF-Express IA are:
1. You owe $25,000 or less at the time the agreement is established. If you owe more than $25,000, you may pay down the liability before entering into the agreement in order to qualify.
2. The debt must be full paid within 24-months or prior to the Collection Statute Expiration Date (CSED), whichever is earlier.
3. You must enroll in a Direct Debit installment agreement (DDIA) if the amount you owe is between $10,000 and $25,000.
4. You must be compliant with all filing and payment requirements.
Streamlined Installment Agreements
The Fresh Start provisions also mean that more taxpayers will have the ability to use streamlined installment agreements to catch up on back taxes. Under the Fresh Start initiative, the maximum dollar criteria for streamlined installment agreements has been raised from $25,000 to $50,000 and the maximum term has been raised from 60 months to 72 months.
These installment agreements generally do not require a financial statement, but a limited amount of financial information may be required in the application process.
The Streamlined Installment Agreement criteria is divided into two categories, balance due of $25,000 or less, and balance due $25,001 to $50,000.
The criteria to qualify for streamlined installment agreements with a balance due of $25,00 or less are:
a. You owe $25,000 or less, at the time the agreement is established. If you owe more than $25,000, you may pay down the liability before entering into the agreement in order to qualify.
b. The debt must be full paid within 72-months or prior to the Collection Statute Expiration Date, whichever is earlier.
c. You must be compliant with all filing and payment requirements.
d. Individuals who owe any type of tax (Form 1040, Trust Fund Recovery Penalty, etc.).
e. Defunct businesses, including any type of entity and any type tax (Form 940, 941, 943, etc.).
f. Operating businesses are limited to income tax liabilities only (Form 1120).
The criteria to qualify for streamlined installment agreements to IRS with a balance due of $25,001 to $50,000 are:
a.You owe $25,001 to $50,000, at the time the agreement is established. If you owe more than $50,000, you may pay down the liability before entering into the agreement in order to qualify.
b. The tax debt must be full paid within 72-months or prior to the Collection Statute Expiration Date, whichever is earlier.
c. You must be fully compliant with all filing and payment requirements.
d. Individuals who owe any type of tax (Form 1040, Trust Fund Recovery Penalty, etc.).
e. Businesses are limited to defunct sole proprietors who owe any type of tax, Form 940, 941, 943.
Side note- You must enroll in a Direct Debit Installment Agreement.
A limited amount of financial information may be required during the application process.
Taxpayers seeking installment agreements exceeding $50,000 will still need to supply the IRS with a Collection Information Statement (Form 433-A (PDF) or Form 433-F (PDF)).
Call us for more detail. 1-866-700-1040
by Fresh Start Tax | Oct 8, 2012 | IRS Tax Experts, IRS Tax Problem, Representation, Tax Help
IRS Tax Help – STOP IRS with a Collection Due Process – Orlando, Tampa, St. Petersburg – Florida
Mr. Michael D. Sullivan is a Former IRS Agent and Teaching Instructor with the Internal Revenue Service. Serving Florida since 1982.
We are friendly and affordable. We can Stop your IRS tax problem.
It is very possible to stop the IRS with one telephone call depending where your case is in the IRS system. The best time to stop the IRS right in there tracks is when you are in letter or notice status.
There are other tricks and techniques and they vary from case to case. After we review cases we can best set out a course to get you IRS Tax Problem Help.
Call us today for a no cost consult and let us work out a plan to manage the IRS for you. 1-866-700-1040.
If you received this Notice: Letter number CP 504.
If you just got a Notice Number CP504.
It will say – “Urgent!! We intend to levy Certain Assets.
We can stop the IRS. You must act within that 30 day window. If you have missed that opportunity you must file a notice of action within the L-1058 letter time frame which is the last of the series of notices that the IRS sends.
After that notice IRS will take enforcement action with the filing of the federal tax levies, bank and wages levies.
The IRS cannot levy with just this notice.
They must first issue a formal Notice of Intent to Levy, and that is the next step after this notice. By calling us when you receive this letter we can completely control the IRS.
If the IRS claims that they will Lien or Levy your assets.
The IRS Collection function says they are going to file a lien or levy your assets. What can you do?
We will contact the Collection function to discuss your situation and your payment options. We will discuss with you Publication 1660, Collection Appeal Rights to review your appeal rights.
Some Collection actions qualify for appeal under the Collection Appeals Program (CAP) and some qualify under the Collection Due Process (CDP) appeal.
These two programs offer different advantages depending on the facts of your case. Publication 1660 will help you decide which is best for you.
You received a Notice of Federal Tax Lien and Right to a Hearing
If you just received a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320, Letter 3172.
The Letter 3172 gives you 30 days to request a Collection Due Process (CDP) hearing to discuss the lien filing. We will request a CDP hearing if you feel the lien is inappropriate and will cause a hardship.
However, as explained in Publication 1660, in a CDP hearing Appeals can only discuss the existence of or amount that you owe under very limited circumstances. If Appeals cannot consider the underlying liability, you have three options to re-open that issue:
1. Pay the amount due in full and file a claim for refund. If the IRS disallows your claim you will have the right to Appeal at that time.
2. Follow the instructions in Publication 3598 and request an Audit Reconsideration. Note that you must submit new information the IRS did not previously consider in order to have an audit reconsideration.
3. Follow the instruction in Form 656 and file an Offer in Compromise, Doubt as to Liability.
You just received a Letter L-1058
If you just received a Letter L-1058 or LT11 – FINAL NOTICE OF INTENT TO LEVY AND NOTICE OF YOUR RIGHT TO A HEARING this is your last chance to appeal with the IRS. Do not let this opportunity slip by.
We will discuss with you Publication 1660. The Letter 3172 gives you 30 days to request a Collection Due Process (CDP) hearing. We will request a CDP hearing if you feel the levy is inappropriate.
However, as explained in Publication 1660, in a CDP hearing Appeals can only discuss the existence of or amount that you owe under very limited circumstances.
Call us today for find out more. 1-86-700-1040.
by Fresh Start Tax | Oct 4, 2012 | Offer in Compromise, Representation, Tax Help, Tax Settlements
Settle a IRS Tax Debt – Offers in Compromise – Former IRS Agent
Mr. Michael D. Sullivan is a former IRS Agent and Teaching Instructor who both worked and taught the IRS Debt Settlement program at the IRS called the offer in compromise.
The new IRS Fresh Start Program has made Settling with the IRS a reality. The old Offer Program was broke and it was almost impossible for taxpayers to get Offers in Compromise through the system. The government lost millions of dollars in lost revenue because of a antiquated system. The IRS now has finally done the right thing, help struggling taxpayers.
IRS roughly gets 55,000 offers presented to them each year with an average acceptance rate of 25%. With the new Fresh Start Program I would not be surprise if we do not break the 100k mark this year. With that said, there is no telling at this time how long it will take to process the Offers. Before the New Fresh Start Program there were 7500 cases in the Que, the cases must be stacked up against the wall.
With Millions of taxpayers owing back taxes to the IRS, the average tax payer has 3 ways to basically get the IRS of there back. The taxpayer must give IRS a current financial, either a 433A or a 433F depending on where the case is in the IRS system.
IRS will then review the financial statement and all correspondence to document the numbers placed on the 433A and 433F to make sure the financial statement is correct. Based on the National Standards IRS will either place the case in;
1. Hardship,
2.Part Payment or installment status.
3. The feasibility of an Offer in Compromise.
Before taxpayers go running off submitting Offers in Compromise to settle their tax debt it is a best practice to have a tax professional pre-screen the Offer to make sure the Offer can and will be accepted by the IRS. Offers are very complex and not easily accepted by the IRS.It is easier for IRS to reject the offer and accept it. It is far less work.
About 20 hours of government work goes in to an accepted Offer in Compromise. If accepted it makes its way up the chain of command getting approval after approval before it is finally signed off by a IRS Tax Attorney for legal purposes.
All accepted offers in compromise can be found in regional office at the IRS for public review and inspection.
The New Fresh Start Program
Changes the IRS has made as part of its “Fresh Start” initiative over the past two years have made it easier for taxpayers to qualify for alternative payment programs. The Fresh Start changes should provide a good incentive for taxpayers to work with the IRS to resolve past due back taxes.
IRS Code Section 6159
If a client or taxpayer is unable to pay in full, Sec. 6159 allows the IRS to enter into a monthly payment plan (installment agreement). The IRS also has the authority to settle the tax, penalties, and interest by negotiating an offer in compromise (OIC). This is a contract between the taxpayer and the government to settle the tax debt for less than the full amount owed.
The Offer in Compromise calculation
When the IRS calculates a taxpayer’s reasonable collection potential, it will now look at only one year of future income for offers paid in five or fewer months, down from four years, and two years of future income for offers paid in six to 24 months, down from five years. This is a huge change
All offers must be fully paid within 24 months of the date the offer is accepted.
The Form 656-B, Offer in Compromise Booklet, and Form 656, Offer in Compromise, has been revised to reflect the changes.
Changes to the OIC
Other changes to the program include narrowed guidelines and clarification of when a dissipated assets will be included in the calculation of reasonable collection potential.
In addition, equity in income producing assets generally will not be included in the calculation of reasonable collection potential for on-going businesses.
Each offer is based on its own set of circumstance so it is best to have Fresh Start Tax review and process your offer.
Do not pay a firm to submit your offer unless you fully understand the ramifications of the program.
Changes to Allowable Living Expenses
The Allowable Living Expense standards are used in cases requiring financial analysis to determine a taxpayer’s ability to pay. The standard allowances provide consistency and fairness in collection determinations by incorporating average expenditures for basic necessities for citizens in similar geographic areas. These standards are used when evaluating both installment agreement and offer in compromise requests.
The National Standard miscellaneous allowance has been expanded to include additional items.
A New Change – Taxpayers can use the miscellaneous allowance for expenses such as credit card payments and bank fees and charges.
Other payments now allowed as expenses.
New guidance has also been clarified to allow payments for loans guaranteed by the federal government for the taxpayer’s post-high school education. In addition, payments for delinquent state and local taxes may be allowed based on percentage basis of tax owed to the state and IRS.
Call us today, 1-866-700-1040, for a no cost evaluation.
Settle a IRS Tax Debt – Offers in Compromise – Former IRS Agent – Fresh Start Tax
by Fresh Start Tax | Sep 26, 2012 | Offer in Compromise, Tax Help
IRS accepts 27% of all offers in compromise filed.
Last year that accounted for 14,000 plus offers being accepted by the IRS. An Offer in Compromise a IRS tax settlement.
Being a Former IRS Agent and teaching Instructor I have seen taxpayers struggle needlessly for years in an effort to settle their tax bills with the IRS. The old system was broke and the truth of the matter, the old Offer in Compromise Program was completely broke and was in need of much improvement.
It was almost impossible to get an Offer in Compromise through the IRS because the system was to hard, to complicated, unachievable the general attitude of the IRS by the Agents to the program was to simply reject offers in compromise.
Finally IRS stepped up to the plate and completely revamped the program and now the question remains, will IRS follow through and accept offers under the new Fresh Start Program. The changes made are huge. I firmly believe if the IRS follows up with its press releases and administers the program like it is fashioned out, the taxpayers can breathe again and be free of the bondage which they have be held captive too.
The New Fresh Start Program, the affordable tax settlement process:
The Internal Revenue Service announced another expansion of its “Fresh Start” initiative by offering more flexible terms to its Offer in Compromise (OIC) program that will enable some of the most financially distressed taxpayers to clear up their tax problems and in many cases more quickly and affordable than in the past and this is welcome news.
The new Fresh Start Program focuses on the financial analysis used to determine which taxpayers qualify for an OIC. This announcement also enables some taxpayers to resolve their tax problems in as little as one to two years compared to four or five years in the past.
Changes to the program include:
- Revising the calculation for the taxpayer’s future income.
- Allowing taxpayers to repay their student loans.
- Allowing taxpayers to pay state and local delinquent taxes.
- Expanding the Allowable Living Expense allowance category and amount.
What is a Offer in Compromise? – Doubt as to Collectibility
In general, an OIC is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. An OIC is generally not accepted if the IRS believes the liability can be paid in full as a lump sum or a through payment agreement. There are two other offer programs not mentioned in this blog. Call us for more details, 1-866-700-1040.
The IRS looks at the taxpayer’s income and assets to make a determination of the taxpayer’s reasonable collection potential. OICs are subject to acceptance on legal requirements. To get the Offer to acceptance process is both lengthy and a bit complicated.
The IRS recognizes that many taxpayers are still struggling to pay their bills so the agency has been working to put in place common-sense changes to the OIC program to more closely reflect real-world situations. IRS finally got the picture.
When the IRS calculates a taxpayer’s reasonable collection potential, it will now look at only one year of future income for offers paid in five or fewer months, down from four years, and two years of future income for offers paid in six to 24 months, down from five years. All offers must be fully paid within 24 months of the date the offer is accepted.
Other changes to the OIC program include narrowed parameters and clarification of when a dissipated asset will be included in the calculation of reasonable collection potential. In addition, equity in income producing assets generally will not be included in the calculation of reasonable collection potential for on-going businesses.
Changes to the Allowable Living Expenses Section
The Allowable Living Expense standards are used in cases requiring financial analysis to determine a taxpayer’s ability to pay. The standard allowances provide consistency and fairness in collection determinations by incorporating average expenditures for basic necessities for citizens in similar geographic areas. These standards are used when evaluating installment agreement and offer in compromise requests.
Changes to The National Standard Section
The National Standard miscellaneous allowance has been expanded to include additional items. Taxpayers can use the miscellaneous allowance for expenses such as credit card payments and bank fees and charges.
Changes to The Miscellaneous Section
Guidance has also been clarified to allow payments for loans guaranteed by the federal government for the taxpayer’s post-high school education. In addition, payments for delinquent state and local taxes may be allowed based on percentage basis of tax owed to the state and IRS.
Offers in Compromise, New Tax Settlement Program ,Fresh Start Tax, Affordable Tax Solutions
by Fresh Start Tax | Sep 26, 2012 | FBAR, Offshore Program, Offshore Tax Problems, Tax Help, Tax Lawyer
If you are a US citizen living in Switzerland or the surrounding area and need FBAR help, call us today.
We have a number of Switzerland FBAR clients and understand the tax issues and related tax problems that can occur.
We are comprised of Board Certified Tax Attorneys, Tax Lawyers, CPA’s and Former IRS Agents who have over 60 years with the IRS.
Tax News – February 2, 2012
“Switzerland’s oldest bank was indicted back on February 02, 2012 for conspiring with U.S. taxpayers and others to hide more than $1.2 billion in secret offshore foreign banks and financial accounts and the income they generated from the IRS.
It was the first time in history that an overseas bank was indicted by the United States for facilitating tax fraud by U.S. taxpayers.”
IRS will be paying closer attention to US taxpayers living abroad having overseas bank accounts and financial interests. Large amounts of funds have been placed beyond the reach of the FEDS and they plan to do something about that.
Since IRS received over $5.5 Billion over the last five years as a result of FBAR the IRS plans to ramp up enforcement because of the large pool of revenue sitting in the pockets of foreign banks and financial institutions. The IRS has committed over $500,000 million dollars in the next fiscal year to the areas of tax compliance, no filers and tax enforcement.
If you have nothing to hide or squirm about you can certainly file and report FBAR on your own. However, if you have anything that can make you nervous you should contact us for a free tax consult. 1-866-700-1040.
How you should report your account to the IRS.
Filers of FBAR should report their foreign accounts using the following method:
A. (1) completing boxes 7a and 7b on Form 1040 Schedule B, box 3 on the Form 1041 “Other Information” section, box 10 on Form 1065 Schedule B, or boxes 6a and 6b on Form 1120 Schedule N and (2) completing Form TD F 90-22.1 (PDF).
FBAR due dates:
The FBAR is due by June 30 of the year following the year that the account holder meets the $10,000 threshold.
The granting by the Internal Revenue Service of an extension to file Federal income tax returns does not extend the due date for filing an FBAR.
Taxpayers who file FBAR cannot request an extension of the FBAR due date.
If a filer does not have all the available information to file the return by June 30, they should file as complete a return as they can and amend the document when the additional or new information becomes available.
The issue of multiple owners of Foreign Accounts
We have had the same issues come up with a our Switzerland clients that bears a comment. With respect to the issue of Multiple Owners of Foreign Accounts:
In the case of co-owners, each taxpayer who makes a voluntary disclosure will be liable for the penalty on his percentage of the highest aggregate balance in the account. His/her voluntary disclosure is effective as to his tax liability only. It does not cover the other co-owners.
The IRS may examine any co-owner who does not make a voluntary disclosure. Co-owners examined by the IRS will be subject to all appropriate penalties or tax crimes.
FBAR Help, US Taxpayers living in Switzerland, Tax Attorneys, Lawyers, Former IRS, FBAR International Experts.
by Fresh Start Tax | Sep 23, 2012 | IRS Tax Advice, Tax Help
The IRS form 433F is the chief tool the IRS uses to find out collection information to collect your back tax debt. It is not a innocent tax form.
The chief goal of the IRS Agent taking the information is to find out how the IRS can be paid in full.
When it comes to giving IRS a financial statement I would recommend letting a tax professional handle the case from here unless you are absolutely broke.
As Former IRS Agents we know exactly how to effectively and efficiently close IRS cases for good.
We have closed thousands of cases since 1982. There is a very specific format to close IRS cases and each open case in the IRS collection inventory goes through the same exact process.
Most of the open IRS cases that are in collection status in the IRS CADE 2 computer will need a documented IRS form 433F to close the case. The Form 433F is basically a list of the taxpayers income and expenses. With this information in the hand, the IRS can make a decision how to close the case. The case will be closed based the best interest of the US government.
Cases closed by the IRS will either be closed by putting the case in hardship, a payment plan or the filing of an offer in compromise.
See the Fresh Start Tax Link to the 433 F http://freshstarttax.com/irs-forms/
Tax Tips for success when dealing with the IRS financial statements:
The 433-F is a financial statement that is primarily used by the Automated Collection System of the Internal Revenue Service, also called the ACS Unit. The ASC Units handles millions of cases each year.The ASC Unit will only get involved after IRS sends out a series of at least three tax notices.
This ACS Unit is set up throughout different regions in the United States and works off of a 1-800 telephone answering switching system. Go luck getting through.
All calls to the ACS go into one national telephone system and then calls are routed to whichever regions telephone lines are available to pick up. Call volumes determines this.
It is possible that a case from Florida may be worked in California. Few times if any are cases actually worked in the State in which you live.
The one feature about this system is that it allows taxpayers on the East Coast to call up to 8:00 PM, Eastern Standard Time to close their cases.
The downside to this system is that it is almost impossible to close the case with one telephone call. Fresh Start Tax has the ability to make this happen. For the average Joe calling the IRS , it will take at least 3 calls and 3 IRS agents to resolve there tax issue or problem.
What typically happens is that you call the 1 800 telephone number and the IRS agent asks you to complete the 433-F and at that very time, the agent on the telephone wants all documentation to support it. They are looking for pay stubs, bank statements, car payments, insurance…………… and such. Nobody has all the documents requires so repeated calls and frustration follow.
If you have the correct documentation, you will be asked to fax it to the IRS agent directly, but if you are missing one piece that they are looking for, you must call back after you retrieve the missing supporting document(s).
The pain continues.
You will then call the 1-800 telephone number again and someone else always answers the phone usually in another location. You can never get the first agent you spoke with. You have to go over the whole case again and at that time, the second agent who reviews the 433-F may ask for different documentation than the first agent inquired about. This process can repeat itself over and over. The average number of calls before a case is closed is 3.
This is the most frustrating system in the world and the IRS knows it and does absolutely nothing to fix it. If this is not bad enough, each case worked must be approved by a supervisor so your case can drag on and on.
The IRS will tell you “they will get back to you and let you know.”
This does not happen. You must call them back, always, to find out if your case if closed.
You must confirm your case is closed.
If you do not confirm that your case is closed, it is very possible that the case will hit the enforced collection system of the IRS and the federal tax lien and/or a bank levy on a bank accounts and wage garnishment may take place.
Always call back to confirm your case is closed.
I would also get the name and ID number of the IRS Agent and keep it on file.
