Taxpayers Have a Right to Challenge IRS Positions

While getting ahold of the IRS right now might seem like an impossible challenge, the customer service issues caused by the COVID-19 pandemic don’t change the fundamental rights that all taxpayers have. Today, the IRS issued Tax Tip 2020-171, reminding taxpayers of their rights to challenge any position the IRS takes in regards to their tax matters. In addition, the IRS reminds Americans that they have the right to be heard. Again, it may not quite feel like it right now, with the increased difficulty in getting through to the IRS and actually be heard, but it is still a right that all taxpayers have.

As outlined in the Taxpayer Bill of Rights, taxpayers have the right to:

  • Raise objections.
  • Provide additional documentation in response to formal or proposed IRS actions.
  • Expect the IRS to consider their objections timely.
  • Have the IRS consider any supporting documentation promptly.
  • Receive a response if the IRS does not agree with their position.

With the current mail backlog running an estimated 3 million pieces of mail, and phone line hold times exceeding two hours on many days, it’s more difficult than ever for the IRS to meet the customer service expectations they’ve set, and that you expect. This issue is not falling on deaf ears at the Service, nor has it gone unnoticed by Congress. Over the past few months, the IRS has hired a few hundred new customer service agents, and has a couple hundred openings right now for seasonal/temporary positions in an effort to resolve some of these issues.

Challenging IRS Positions

Here are some specific examples illustrating a taxpayer’s right to challenge the IRS’s position.

In some cases, the IRS will notify a taxpayer that their tax return has a mathematical or clerical error. If this happens, the taxpayer will be provided a 60 day period in which to tell the IRS that they disagree. In response, the taxpayer should provide copies of any record that may assist the IRS in correcting the error. The taxpayer may call the number listed on the IRS notice for assistance, and also has the right to retain representation to act on their behalf. If the IRS upholds the taxpayer’s assertion, taxpayers should expect the Service to make timely corrections to their accounts.

But what happens if the IRS doesn’t agree with your challenge?

In such a situation, the IRS will send another notice that proposes a specific adjustment … Continue reading

IRS announces Taxpayer Relief Initiative to help those financially impacted by COVID-19

The IRS is following up on their People First Initiative from summer 2020 with some new administrative program changes to make life a little easier for taxpayers that owe back taxes and are not in a position to immediately repay those tax debts. While these are not new programs, the IRS is attempting to make it easier for taxpayers to take advantage of the existing programs, by increasing access to relief.

Under this new initiative:

  • Taxpayers now have 180 days to pay tax debts on a short-term payment plan, up from 120 days.
  • For taxpayers already paying on a previously accepted Offer in Compromise, the IRS is now offering some flexibility on the payment terms of that accepted offer.
  • Individuals with an existing payment plan on a tax debt will automatically have new tax debt balances tacked on to their existing payment plan.
  • As per March 2020 changes to the Internal Revenue Manual, certain individuals with income tax debts less than $250,000 no longer need to submit financial documentation in order to obtain a payment plan. This option is only available via call center staff, not cases that are assigned to field agents.
  • For individuals that only owe 2019 tax debt, and owe less than $250,000, the IRS may agree to not file a Notice of Federal Tax Lien (NFTL) against the taxpayer.
  • IRS is now allowing some individuals with existing Direct Debit Installment Agreements to use the IRS website tool (Online Payment Agreement) to modify their payment plan to lower their monthly payments.

If you owe back taxes to the IRS, you may qualify for these simplified options to take care of your tax problem.… Continue reading

The Simple Truth About IRS Offer in Compromise Fees

Most tax resolution companies give you a quote for services based primarily on three things:

  1. How much you owe the IRS
  2. What kind of taxes you owe
  3. How much the sales person thinks you can afford to pay THEM

Here’s a dirty little secret of the tax resolution industry that nobody else will tell you: The actual WORK required to resolve a case has very, very little to do with how much you owe or what kind of tax it is, and obviously nothing to do with how much of a fee you can pay for representation.

What makes a tax resolution case more complex has much, much more to do with other factors, such as:

  • the existence of other creditors
  • the status of your assets
  • whether or not there are existing levies or wage garnishments
  • how long you’ve been accruing a tax liability
  • your past efforts (or lack thereof) to resolve the issue
  • your ability to file missing returns quickly
  • whether or not your accounting is up to date
  • whether or not you are able to “stop the bleeding” and become current with present day filing and payment requirements (this is actually the single biggest factor)

Most companies have a minimum fee quote for doing an Offer in Compromise for you, and it’s generally higher than for doing a payment plan, because the OIC process takes 6 to 12 months from start to finish. Most reputable firms will charge you anywhere from $3500 to $5000 for doing a basic Offer in Compromise for you, and this may or may not include filing appeals and dealing with levies, and most definitely does not include filing any tax returns for you.

Here’s the thing, though: Filing an Offer in Compromise is actually pretty simple, and the size of your tax debt and the tax type does NOT make it any more difficult. It’s the same form, the same financial analysis, whether you owe $14,000 in personal income taxes or you owe $4.5 million in unpaid employment taxes. Big surprise: The detailed financial analysis required for the business with the payroll tax debt isn’t that much more involved than the smaller personal tax liability, assuming you have proper financial records for the business.

Instead of getting a fee quote based mainly on how much you owe and what a salesperson gets a “vibe” that you can afford to pay, make sure you get a firm fee quote … Continue reading