by steve | May 21, 2019 | Tax Help, Uncategorized
You will find the definition spelled out in IRS IRM – 5.16.1.2.9 (04-29-2011)
IRS Hardship
The IRS procedures in IRM 5.15.1, Financial Analysis Handbook, are used to determine the correct resolution of the case based on the taxpayer’s assets and equity, income and expenses. IRS only looks at Income and Assets to make their determination.
A Internal Revenue Service hardship exists if a taxpayer(s) is unable to pay reasonable basic living expenses
Disclaimer: IRS Collection Financial Standards are intended for use in calculating repayment of delinquent taxes. These Standards are effective on March 1, 2011 for purposes of federal tax administration only. Expense information for use in bankruptcy calculations can be found on the website for the U.S. Trustee Program.
National Standards have been established for five necessary expenses: food, housekeeping supplies, apparel and services, personal care products and services, and miscellaneous.
The standards are derived from the Bureau of Labor Statistics (BLS) Consumer Expenditure Survey (CES) and defined as follows:
The basis for a hardship determination is from information about the taxpayer’s financial condition provided on Form 433–A, Collection Information Statement for Wage Earners and Self-Employed Individuals or Form 433–B, Collection Information Statement for Businesses.
Generally, these cases involve no income or assets, no equity in assets or insufficient income to make any payment without causing hardship.
An account should not be reported as CNC if the taxpayer has income or equity in assets, and enforced collection of the income or assets would not cause hardship.
Hardship accounts are closed using cc 24 through 32. See Exhibit 5.16.1-2.
Reminder:
Hardship closing codes can only be used for individual or joint IMF assessments, sole proprietorships, general partnerships, and LLCs, where an individual owner is identified as the liable taxpayer. See IRM 5.16.1.2.4 for decedent cases.
Verification of a CIS is not required if the aggregate unpaid balance of assessments is less than ? ? ? ? ? and the information on the CIS appears reasonable.
Under certain conditions, a CIS is not required before reporting an account CNC. The aggregate unpaid balance of assessments, including any prior CNC’s, must be less than ? ? ? ? ? ? ? ? and at least one of the following conditions must exist:
The taxpayer has a terminal illness or excessive medical bills.
The taxpayer is incarcerated.
The taxpayer’s only source of income is social security, welfare, or unemployment.
The taxpayer is unemployed with no source of income. Consider a mandatory follow-up or Manually Monitored Installment Agreement (MMIA) for seasonal workers.
Note:
Employees are required to secure documentation from the taxpayer prior to declaring the account uncollectible if internal documents such as IRPTR and RTVUE do not confirm the taxpayers’ circumstance.
The following verification is required for accounts when the aggregate unpaid balance of assessments is between ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? :
IRPTR or SUPOL
RTVUE/TRDBV
Note:
RTVUE/TRDBV is required only if the last filed return was for one of the immediate two preceding years. If RTVUE reveals new income or asset information secure a copy of the return(s) for the purpose of identifying income or assets.
For accounts where the aggregate unpaid balance of assessments is above ? ? ? ? ? the following additional verification is required:
Full credit report on IMF and sole proprietor taxpayers and LLCs (where an individual owner is identified as the liable taxpayer)
Motor vehicle records
Real and personal property courthouse records, see IRM 5.1.18.4, Real Property Records
On-line locator services, such as Accurint, follow security guidelines when using public internet search engines
CC AMDIS. If there is open Examination activity, contact the revenue agent to determine any additional sources of collection or the need to limit the scope of the examination based upon collectibility.
Audit File or Special Agents Report if the assessment originated in Examination or Criminal Investigation (CI). The file can be secured by requesting the DLN of the TC 29X/30X.
Note:
If unable to obtain any information from the special agent, consider consulting with Advisory. If there is a TC 910 on the module, the taxpayer may have filed a financial statement with the probation office.
Note:
Credit reports are optional for accounts with an aggregate balance below ? ? ? ? ? ? .
IMF accounts and BMF accounts of sole proprietorships, partnership and LLCs, (where an individual owner is identified as the liable taxpayer) that cannot be collected due to bankruptcy, will be closed using hardship closing codes.
IRC 6343(e) requires the immediate release of a levy on salary or wages due a taxpayer upon agreement with the taxpayer that the tax is not collectible. See IRM 5.11.2, Serving Levies, Releasing Levies and Returning Property. Case histories must be reviewed to ensure that wage levies are released prior to declaring an account uncollectible under hardship closing codes. The case history must be documented.
Reminder:
If TC 670 with designated payment code (DPC) 05 (levy) is present on any module or a regular series of payments is noted, ensure that the disposition of the levy is known.
A compliance check will be made and the results documented in the case history for all hardship determinations per IRM 5.16.1.1(5). All open filing requirements or Del Ret modules must generally be resolved and closed appropriately when reporting an account CNC.
Open Del Ret modules may be resolved by closing as little or no tax due, or income below filing requirement (P-5-133), if warranted by the facts of the case. See IRM 5.1.11, Delinquent Return Accounts, for options to resolve delinquent return accounts. If the taxpayer is required to file and refuses a referral or summons may be appropriate. See IRC IRM 25.5, Summons Handbook for summons procedures.
by steve | May 21, 2019 | Tax Help, Uncategorized
Joint and Several Liability and Federal Tax Debt
A tax debt liability from the filing of a joint tax return, including interest and penalties, is considered to be a joint and several. Joint and several liability means that two or more individuals are each responsible for full payment of the same tax debt. In the case of a federal tax liability, a joint and several liability usually arises when a married couple files a joint tax return.
This means each spouse is individually responsible for the entire tax debt even if only one spouse earned all of the income.
The Internal Revenue Service (IRS) can collect the entire amount of the joint tax debt from one or both spouses. For example, if Mr. and Mrs. Taxpayer owe $5,000.00 jointly to the IRS, the IRS can collect the full $5,000 from either Mr. Taxpayer, Mrs. Taxpayer, or both Mr. and Mrs. Taxpayer.
The IRS can collect from either Mr. or Mrs. Taxpayer even if a divorce decree states one of them is solely responsible for the tax debt. The good news is that the IRS cannot collect more than is actually owed.
Joint and several liability is an important concept because it allows the IRS to collect a joint tax debt from more than one source. After a divorce occurs, one spouse may enter into an Installment Agreement, be placed into Currently Not Collectible status, reach a tax settlement by filing an Offer in Compromise, or be relieved of all or part of a joint liability through Innocent Spouse Relief, while the other spouse has no formal arrangement with the IRS.
The IRS can and usually does continue to pursue collection of a joint tax debt from the spouse that has no formal arrangement.
The IRS will use all available tools including Wage Garnishments, Bank Levies, Federal Tax Liens, and – sometimes – Asset Seizures to collect a tax debt.
If a taxpayer and a former spouse jointly owe the IRS, it is important that each have a formal arrangement with the IRS, whether it is achieved by filing an Offer in Compromise, establishing an Installment Agreement, or requesting Currently Not Collectible status.
by admin | Nov 4, 2014 | Tax Help, Uncategorized
If you cannot pay your tax bill it only makes sense to hire former IRS agents know the system to handle all tax negotiations.
We are a full service tax firm with an expertise in IRS and state tax problems.
If you owe the IRS and cannot afford pay?
IRS send out over 25 million first notices so do not feel bad.
There are many options you have available to resolve your IRS tax problem. It is always best to get some good sound IRS tax help and IRS advice to resolve your problem in the most efficient way.
Call us for a no cost initial consultation so we can discuss all the tax options in detail to best resolve your case. 1-866-700-1040.
How IRS will try to resolve your tax bill.
IRS treats all tax bills like a receivable.
There is a system.
IRS sends out a series of tax notices and bills, as a general rule the IRS will send out 2, 2, or 4 tax notices depending on the type of IRS tax debt.
Your last and final notice will be a notice of seizure and a right to a hearing.
If you do not act on the last and final notice, IRS will be sending out a bank levy or wage levy garnishment and that will probably be followed up with the filing of a Federal Tax Lien.
It is imperative you act on the final notice because it get uglier and uglier. Those taxpayers who put their head in the sand are in for very tough days when they find out one day their bank account has been emptied for the IRS is just garnished or levies their wages from IRS back taxes.
A current documented financial Statement.
As a general rule, the Internal Revenue Service will require a current financial statement to determine how they will take your case off IRS Cade 2 computer system which is the enforcement computer system at IRS uses to collect those who owe back IRS taxes.
IRS will want a financial statement (433 A,F) along with three months of bank statements, copy of all monthly bills and a copy of your pay stub to completely verify the financial statements.
After the Internal Revenue Service verifies your current financial statement there are three general tax or settlement options available.
There are 3 basic ways IRS attempts to close
1. Hardships – You simply cannot pay IRS at this time.this is called a current hardship.
Cases usually go into a 2 or 3 year suspended status because of an inability to pay. This is also called currently noncollectable.
Your case will go into a hardship status because you do not have the income coming in to meet your current expenses. The IRS will use the National Standards Program to assess hardship.You can find that on our website.
2. Payment Agreements, Installment Payments, Payment Plans
b. Payment Agreements. Cases can be closed with agreed upon monthly installment payments to the IRS. We will review the different programs the IRS uses for the lowest possible amount required.
3. IRS Offer in Compromise, Tax Settlement
The IRS may accept an Offer in Compromise based on three grounds:
1. Doubt as to Collectibility – Doubt exists that the taxpayer could ever pay the full amount of tax liability owed within the remainder of the statutory period for collection.
2. Doubt as to Liability – A legitimate doubt exists that the assessed tax liability is correct. Possible reasons to submit a doubt as to liability offer include:
(1) the examiner made a mistake interpreting the law,
(2) the examiner failed to consider the taxpayer’s evidence or
(3) the taxpayer has new evidence.
3. Effective Tax Administration/ Exceptional Circumstances – There is no doubt that the tax is correct and there is potential to collect the full amount of the tax owed, but an exceptional circumstance exists that would allow the IRS to consider an OIC. To be eligible for compromise on this basis, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.
Call us for a free initial tax consultation and hear the truth about owing IRS back taxes.
If you are in a current hardship or need a current installment agreement or want to submit an offer in compromise, call our tax professionals today.
Owe IRS Back Taxes and Cannot Pay? Get Help from Former IRS Agents – Tax Attorneys, Former IRS
by Fresh Start Tax | Sep 18, 2014 | Tax Help, Uncategorized
If you have received IRS tax notice CP 504 ,you must contact IRS or IRS will follow up with enforced collection action including bank levies and wage garnishment notices.
The IRS CP notice 504 is one of IRS’s last actions before collection enforcement.
If you are unsure what to do, contact us today and speak to former IRS agents and managers who know the system and can give you expert affordable tax help in dealing with your IRS notice.
Sometimes taxpayers who have received this CP504 notice could be eligible for a tax debt settlement called an offer in compromise.
Call us today for a free initial tax consultation.
Most of the time that Fresh Start Tax is contacted, it is because a 504 notice has been received.
Here is the content you’ll find in this IRS form:
——
Urgent!!
We intend to levy on certain assets. Please respond NOW.
Our records indicate that you haven’t paid the amount you owe. The law requires that you pay your tax at the time you file your return.
This is your notice, as required by Internal Revenue Code Section 6331(d), of our intent to levy (take) any state tax refunds that you may be entitled to if we don’t receive your payment in full. In addition, we will begin to search for other assets we may levy.
We can also file a Notice of Federal Tax Lien, if we haven’t already done so. To prevent collection action, please pay the current balance now. If you’ve already paid, can’t pay, or have arranged for an installment agreement, it is important that you call us immediately at the telephone number show below.
——-
The IRS waits approximately 6 weeks and you can believe a levy is coming down the pike, to your employer and to your bank.
Many times these notices come certified, so be forewarned, call Fresh Start Tax ASAP.
by Fresh Start Tax | Apr 7, 2014 | Tax Help, Uncategorized
The IRS Enforcement Period
IRS Policy Statement 5-133 (P-5-133), IRM 1.2.14.1.18, Delinquent returns—enforcement of filing requirements, discusses delinquent returns and the enforcement filing requirements.
The enforcement period is not to be more than six years.
However, the extent to which delinquency procedures will be enforced will depend upon the facts and circumstances of each case, and by reference to factors ensuring evenhanded administration of staffing and other Service resources.
Enforcement for longer or shorter periods may be used when consideration has been given to:
- The taxpayer’s prior history of noncompliance.
- The existence of income from illegal sources.
- The effect upon voluntary compliance.
- The anticipated revenue in relation to the time and effort, required to determine tax due.
- Any special circumstances existing in the case of a particular taxpayer, class of taxpayer, or industry, or which may be peculiar to the class of tax involved.
- Normally, application of the above criteria will result in enforcement of delinquency procedures for not more than six (6) years. Enforcement beyond such period will not be undertaken without prior managerial approval. Also, if delinquency procedures are not to be enforced for the full six year period of delinquent
by Fresh Start Tax | Dec 29, 2012 | Income Tax Preparation, Tax Help, Uncategorized
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