PREP STEPS FOR IRS COLLECTIONS
- Gather your tax returns, if you have them.
- Collect any IRS notices you have.
- Obtain any Bankruptcy or Divorce papers you have in the last 3 years.
- If you have a levy, get the fax number for your Bank or Payroll at your job, whichever it is.
- Call the IRS at 1-800-829-1040 & request your "Account Transcripts" & your "Wage & Income Transcripts"* for the last 10 years. (More)
- Contact Mr. Hopkins to set a consultation in-person, by telephone, Skype or Facetime.
- Send us or bring all above documents to the consultation. See you there!
If you are self-employed please also complete IRS Form 433B.
For Tax Attorney tips to complete these vital forms please follow the TaxHelp Webinars for guidance!
Contact from the IRS
Most of the letters you receive from the IRS will come from the various Automated Collection Service (ACS) Centers around the USA along with The IRS will send you Publication 594 which (weakly) explains the Collections process. However, IRS collections might send a local Revenue Officer to visit you in your house or business. They will want to ask you questions & request documents from you by giving you a Form 9297.
Private Collection Agencies
The powers of the IRS to take your money and property are vast and taxpayers often have no idea a seizure is coming. The IRS is required to give notification before seizing but this notice is often lost or mis-mailed. The Notice of Intent to Levy is the final notice you will receive before the IRS has the right to take your assets, wages, bank accounts, etc. After 30 days they can seize practically anything. What they seize most often is Wages, Bank Accounts & Refunds.
IRS collections can also file a Notice of Federal Tax Lien against you. This is not a seizure of your property but can encumber your ability to sell the property.
Levy or Garnishment
Deny your Passport
After 30 days from the mailing of the Notice of Intent to Levy the IRS can seize most of your property. The IRS will send no further notices and they will not tell you when they are going to levy. Other Notices of Intent to Levy include a Notice CP77, (Notice CP177 to businesses),
If you are a Federal Contractor the IRS can levy without giving you a hearing. (See Notice LT75)
IRS Tax Liens
A lien against all your property exists simply because you owe the USA. Whether IRS collections will file a notice of this lien is discretionary. The IRS has administrative rules about lien filings but if they fail to follow the rules, a judge won't usually interfere.
A Tax lien is a claim of a secured interest against property the debtor owns so if the property is sold the IRS gets the proceeds. A Levy is the IRS action of taking your property. A garnishment is when Colorado takes your property.
Warning about Tax Liens and "Representatives"
This tax lien is filed publicly so everyone can see it. Therefore, immediately after the lien is filed you will receive a flood of telephone calls & letters from "representatives" who claim (& guarantee) that they can eliminate this tax problem. Many of these letters look "official" with grave warnings for failure to contact them. They offer "free consultations" where they prey upon your fears & hopes in order to sell you a very expensive, futile "service". They will steal your money (which could go to the IRS) and harm you by extending the statute of limitations. Of course, they are not lawyers & have no ethical duty to tell you the truth. (See Fraud/Scams)
Lien on Real Estate
When you own property with equity subject to an IRS lien you can still apply for a loan to pay off the IRS. This requires some special planning so don't do anything before seeking legal advice. Nevertheless, in most instances you'll have to submit an Application for Certificate of Subordination of Federal Tax Lien (Form 14134) to qualify for any loan you seek.
If you own real estate which is subject to a lien and the limitations period for collection has expired, you don't need to seek a Certificate of Release of Federal Tax Lien because the lien "self-releases" itself after the expiration of the statute of limitations. (Form 668yc)
When a lien has been filed, you still can purchase real estate and your lender will have a superior priority over the IRS collections lien so you can purchase the property. See Pub. 785.
For purchased real estate which has a lien on it the BUYER will have to make an Application for Certificate of Discharge of Property from Federal Tax Lien (Form 14135) to erase the lien from the real estate.
Once the IRS places a lien upon you it will not be released until you pay ALL amounts you owe the IRS even those debts not appearing on the lien. If the reason for the lien release is because of the expiration of the statute of limitations, then there is no need to apply for a Certificate of Release of Federal Tax Lien. The "release" appears on the face of the original lien itself. You can use this language to prove no tax lien exists against you.
Certificate of Release
Certificate of Non-Attachment
But, the IRS won't agree to installment payments if you have unfiled returns. So, if you want to stop the levy, the returns must be filed and the financial information disclosed. Then, we must negotiate.
However, because of statute of limitation issues, it is best to follow the Unfiled Returns Prep Steps & contact TaxHelpLaw for an appointment before preparing or filing the returns. Filing the returns immediately may hurt you!
Options to Reduce or Erase the Debt
The various tools to reduce your IRS debt include Adjusting the Tax, Penalty Abatement, an Offer in Compromise, a Payment Plan, or Bankruptcy. With any of these remedies, there are positive and negative implications for your individual situation.
You must weigh each of these implications before carefully deciding what approach to take. Some remedies negate other remedies and worsen your position. Plus, there are non-tax implications to what you choose to do as well.
Do not be fooled by representatives who promise or guarantee a favorable result with the IRS. Only a tax attorney can go to Court and pursue all your remedies.
Pay in Full
Adjusting the Tax
Offers in Compromise
Offers should be sparingly used because they increase the statute of limitations and because of the likelihood of rejection after you've disclosed all your financial information to IRS collections and waited for at least a year. But, when used appropriately, Offers dissolve the debt and the tax lien. We only make offers if we feel they will be successful.
The only way an offer is going to be successful is if ALL the proper research is done beforehand and all the financial calculations are thoroughly reviewed with various scenarios explored to ensure the highest possible chance of success. But, even then, it is likely you'll be rejected and have resolve your case with an Appeal.
Many people who file Offers in Compromise wish they would have simply filed for Bankruptcy.
Please read and contribute to the Taxpayer Advocate Blog entitled, "Offers in Compromise".
Installment Agreements must usually be arranged to stop any levies and get time to gather the evidence & review your situation to determine the best option for your individual, long-term strategy.
Once you get a bill from IRS collections you can submit Form 9465 and request an installment agreement. But, don't be surprised if the IRS sends you Letter 484C or Notice LT27 demanding that you supply your financial information with Form 433F or Form 433A for individuals or Form 433B for Businesses. The IRS will not help you without these forms & they offer little help to comply.
So, we have designed Webinars to teach you the tactics, requirements & strategies when completing these vital forms. Then, you will be prepared against the IRS, even if you hire us to represent you. IRS Tax Collection Lawyer Mr Hopkins specializes in designing creative methods to pay the debt and give you favorable tax implications for your future!
If you prove with the Form 433F you submit to the IRS that you can't pay, they will place your account in "temporarily uncollectible" or with Letter 4223 & not enforce collection against you immediately. See also, Letter 4624C. But, the debt is not eliminated, just postponed. The IRS will probably place a lien against you & they will periodically send you "reminder" letters of the debt.
To prove a hardship case you need to have solid proof of all the billings & payments for your personal living expenses. Any extraordinary costs must be detailed, itemized & calculated for the IRS with supporting evidence of the necessity for the expense. If the expense is medical, get the doctor's report highlighting the infirmity, the duration & the prognosis. If the expense is some disaster, such as a fire, get the fire department report, the insurance report & any appraisals or estimates of the nature & effects of the disaster.
Remember to keep all billings & receipts to see if any are deductible on next year's tax return.
Please read and contribute to the TaxHelp Blog, "Uncollectible Status and the IRS".
The benefit of bankruptcy is that a Court enforces its order against the IRS. With an Offer in Compromise, you're essentially begging the IRS to take less. With bankruptcy, the Court forces the IRS to leave you alone.
But, there are certain qualifications and limits to filing bankruptcy. It is mandatory that all tax returns be filed prior to filing bankruptcy. At a minimum, the income taxes to be discharged must have been filed more than 2 years before the bankruptcy filing date and the tax year is at least 3 years old. With Chapter 7, the lien will not be released until the statute of limitations expires but the debt cannot be collected.
For Chapter 13 bankruptcy, the amount of "priority" & "secured" tax debt must be paid over 5 years. But, if you successfully complete the plan the IRS must release any corresponding liens against you.
The IRS can continue to collect for years not covered by the bankruptcy but they may place you in "temporarily uncollectible status".
Anyone who is considering an Offer in Compromise should review the bankruptcy options as well. Click on this link for an Evaluation of your bankruptcy options.
Please read and contribute to the TaxHelp Blog "Bankruptcy and the IRS".
There are various types of Appeals available within the IRS for Collections. The most popular one is the Collection Due Process Appeal. This is useful if the IRS will not agree to an installment agreement and insist on a levy.
However, an Appeal will only be possible if you have complied with all legal requirements. Otherwise, Appeals will reject the case. Plus, you only have one chance to succeed with a Collection Due Process hearing. If you are unsuccessful the IRS won't grant you another hearing. (See Notice LT73, for businesses)
And, you extend the statute of limitations if you Appeal, which could harm you in the long run.
Also, although the IRS invites you to Appeal a tax lien placed on you, they have no power to reverse a validly filed lien. So, if you can't contest the lien, don't waste your time and extend the statute of limitations. If you decide to Appeal, please follow the TaxHelpLaw Prep Steps for Appeals.
Often, a taxpayer claims to be an innocent spouse to seek relief from joint liability with an ex-spouse. Please note the questions in Form 8857. There are tax and non-tax implications of requesting innocent spouse relief. This action is not always wise and the manner & language of the request must be carefully considered.
Procedure Against the IRS
For almost every IRS collection case you need to:
- Order your Account Transcripts & Wage & Income Transcripts from the IRS.
- Complete Form 433. (to your advantage)
That's why we designed our Webinar series on the various Forms 433 - so you can be prepared!
IRS Requests for Your Information
Please DO NOT complete any questionnaires or financial documents for IRS collections officers until you've met with the attorney for IRS debt, Mr. Hopkins. What you say in writing WILL be used against you!
The IRS may approach other 3rd parties for information about you. (See Notice LT40. These can be very dangerous if the IRS contacts your customers.
Communication with the IRS
The primary method of contact from IRS collections remains through the US Postal Service. If your case is more serious the IRS may assign a local Revenue Officer who may come by your house or business. But, they will always send you mail. They can communicate by telephone and fax but not by E-mail. When you write the IRS, do not expect a rapid response. In fact, you can expect either a simple acknowledgment that they are reviewing your file (Notice CP3500) or requests for additional time to review your case. See Letter 2644C and Letter 2645C
Mailing Order of IRS Notices
It is often difficult to predict which notice they will send or in what order. Generally, they initially send passive letters of the debt and then each successive letter becomes increasingly hostile until they levy.
But, after the IRS has exhausted their first collection attempts, they'll periodically send you reminder notices and then the pattern of increasingly hostile letters begins again. They want to remain unpredictable, just like any debt collector.
IRS Mailing Address
We give our clients long-term protection from the IRS throughout the collection limitation period and we do not rashly make Offers in Compromise unless there is a good chance of success. We look at ALL the options!
Your strategy against IRS Collections will depend on the type of tax involved as well the years, the amount at issue and your current lifestyle. By reviewing all these factors TaxHelpLaw can create an Action Plan for you.
*Wage & Income transcripts are computer-generated IRS records about you from your job, your bank, your mortgage company, etc. Account Transcripts show details of your account at the IRS. If you are too nervous about calling IRS collections just bring what you can and come in. If you call, the IRS may be stern but don't worry, you need the Wage & Income Transcripts and the Account Transcripts. Tell them you are not yet ready to talk and need the documents to get tax legal advice. Don't Argue!!