Tax Resolution Hot Sheet™ #5: IRS Levy Procedural Deviations for ACTC

In this issue:

  • Three procedural deviations on levy action in relation to ACTC, Recovery Rebates, and RRF Payments
  • Are you meeting the needs of your clients?

A Trio of Procedural Deviations in Relation to Certain Levies
Two IRM procedural deviations were issued on July 13, 2021, to join one that was issued March 18, 2021, in relation to levy action taken against tax debtors that receive certain federal payments. These are of no surprise to any tax pro, of course, but it’s nice to see the Service still paying attention to such small details that can directly impact the lives of millions of Americans.

These SB/SE Collection memos can be found here:

Each memo says more or less the same thing, just in relation to a different source of funds. In short, the procedural deviations stipulate that the IRS must release levies that attach to any account containing funds from one of the three sources. Also, IRS personnel should not issue levies against bank accounts that are known to contain such funds.

If a Collection employee believes that such an account should still be levied, each memo specifies that such levies must be run up the flagpole to either an Area Director or Campus Director before commencing with levy action or refusing to release such a levy.

For 1040 tax debtors with children in particular, this can, for all intents and purposes, provide a get out of levy free card. Since levies should not be issued on accounts to which Advance Child Tax Credit funds are deposited until the conclusion of such monthly payments in December 2021, a shrewd taxpayer representative can effectively “shield” one client bank account from levy action through the end of the year. If your client is eligible for ACTC payments, but is foregoing them to avoid having to deal with potential issues in 2022, it might be worth rethinking that.

Protecting clients from levy action is one of the biggest benefits that a tax pro can bring to a tax debtor, and this can now provide a short-term avenue for doing so, thus giving you time to correct the other underlying issues that got the taxpayer in trouble in the first place.

Ready to learn more about levy releases? Check out CTR-161: Levies & Levy Releases for 2 CE/CPE hours, inside the Tax Resolution Continue reading

Tax Resolution Hot Sheet™ #4: Appeals – Digital Signatures, Digital Case Files

In this issue:

  • Reissuance of digital signature guidance for Appeals
  • Extension of electronic case file pilot for Examination Appeals
  • Make just one more cold call

Extension of Digital Signature Guidance
Today, we have a pair of Appeals-related guidance extensions to discuss. First up is memo AP-08-0521-0015. In response to the pandemic last year, Appeals basically had no other choice than to create a procedural deviation to allow for digital signatures on many documents. More specifically, this change related to digital images of signatures, which are usually verboten.

In other words, Appeals was able to temporarily accept signatures that were drawn on computer — e.g., there was never a wet ink signature to start with. It’s also important to note that these are NOT true “digital signatures”, which have some sort of authentication protocol attached to them. This is literally just drawing a signature with your mouse, or taking a photo of a signature with your phone and cropping it, and then copy/pasting it into the IRS form, with no security provisions.

In other departments, such as the CAF Unit, we’ve already seen relatively quick (by government standards) creation of true digital signature options. It’s my hope that the Service will expand those technologies to all departments sooner rather than later, making life easier for everybody.

Also in this procedural deviation is the ability for Appeals personnel to receive taxpayer documents via email and to send taxpayers documents via SecureZip. We can only hope that this is going well, and that in the future we can do the same with Collections and Examination. Then we’d really be living the dream, eh?

These temporary provisions were set to expire, but have been extended through Dec. 31, 2021.

Electronic Case Files in Field Examination Appeals
IRS field units still use paper files for the vast majority of the work they do. When a taxpayer is getting put through the ringer on either the Collection or Exam side, there’s a massive amount of paper created. Running an audit from an iPad? Pfft, maybe by 2050, if we’re lucky. 🙂

But, at least there are some steps in the right direction. Within SB/SE, there has been a pilot program running for a little while (pre-COVID) that allows for digital case files for certain types of field examination. These are mostly individual income tax examinations that are being run under this program. Payroll tax, excise tax, gift … Continue reading

Tax Resolution Hot Sheet™ #3: Filing Compliance for IAs; Examinations Beget Examinations; Follow Up Marketing

In this issue:

  • Procedural update on filing compliance for Installment Agreements
  • Employment tax exams initiated from income tax audits
  • Are you sending Thank You notes?

Filing Compliance for Campus Installment Agreements
An update has been made to IRM effective July 1, 2021 to allow Campus Collection to grant payment plans to taxpayers whose account records show filing delinquency for 2019 and 2020. Since the IRS is still woefully behind on processing paper filed returns for 2019, not to mention 2020, their have been issues with taxpayers that have filed to get an IA established to resolve prior tax periods.

This IRM change addresses this issue, and finally gives you an option to help clients that are stuck in this situation. As you should already be aware, the IRS employee handling a Collection case is required to do a compliance check to make sure the taxpayer has filed all required returns before they authorize an Installment Agreement for that taxpayer. If their 2019 or 2020 return is sitting in a mail tub somewhere, not yet opened, then the taxpayer has met their filing obligation and should be able to get their IA.

This IRM update is in effect through the end of the current fiscal year (Sep. 30, 2021). Telephone assistors can set up the IA even if the return does not show up on IRS computer systems — but again, only for 2019 and 2020 returns. In addition, if you have a client that filed a 2020 return that has not been processed, ask the IRS employee to include the 2020 liability in the payment plan right now as you set it up. You’ll need a copy of the client’s 2020 return in hand, to read off the balance due, but it can help reduce penalties and interest a little bit and definitely saves a lot of time.

This procedural deviation applies to both IMF and BMF liabilities; AKA, both individual and business tax debts.

To learn more about Installment Agreement procedures, including the purpose of demonstrating that your client is current and compliant and how that benefits your client, see our 2-hour CPE class, CTR-132: Individual Installment Agreements, available exclusively to Academy members.

Examination Begets Examination
IRS Policy Statements are an under-explored portion of the already under-explored Internal Revenue Manual (IRM). Studying the IRM is, in my experience, the key to being a better taxpayer representative, and I’ve recently become fascinated with … Continue reading