Innocent & Injured Spouse Overview

What is innocent spouse relief? What is injured spouse relief? What’s the actual difference between the two?

These are common questions that we get in our tax resolution CPE classes. Watch the following high level overview of innocent and injured spouse to learn the difference and apply them to help your clients.

 

Note: This was recorded in November 2015 based on Internal Revenue Code and IRS policies in place at the time. Practitioners should seek out the latest changes to the code and IRS procedures in effect today. For the most up to date version of this class, enroll in our tax resolution specialist training program and become a Certified Taxpayer Representative™.

Unedited Transcript

Note: This is a raw, unedited transcript of the recording that was produced with an automated transcription tool, not a human transcriptionist. It’s provided merely for reference and to help you find specific sections of the video you might want to jump to.

[00:00:00.150]
Our course objectives today are to define the difference between innocent and injured spouse relief. This is a very commonly, very commonly messed up thing, even amongst practitioners understanding the difference between between the two.

[00:00:22.920]
You know, for practitioners, it can be difficult. We’re also going to look at the injured spouse procedures. We’ll look at various innocent spouse provisions and rules, including some things that you don’t commonly hear about. We’ll go in-depth on Form 88 57. And then finally, we’ll discuss appeals procedures for innocent spouse relief. So what is the difference between innocent and injured spouse relief?

[00:01:00.860]
So like I said earlier, this very commonly confused, so injured spouse, this is when one spouse is, quote unquote, injured by federal offsets of the other spouse’s sole liability. Remember, if they’re filing married, filing jointly on their 10 40, then they are jointly liable for jointly and separately liable for the tax obligation. However, there are cases where one spouse has a debt that can be satisfied through the federal offset program.

[00:01:47.740]
The most common situations where this occurs are unpaid child support debts to various federal or state agencies and separate tax liabilities.

[00:01:58.780]
For example, if one spouse has a tax liability that was incurred prior to the marriage or if a one spouse owns a business and there was an employment tax situation that generated a trust fund, recovery penalty trust fund, the recovery penalties are only … Continue reading

Increasing the Utility of Your Federal Tax Lien Lists

Federal tax lien lists are useful for a variety of lead generation purposes. However, far too many firms use these lists for only limited purposes. This article will explore several methods for increasing the utility of those tax lien lists you have.

First, make sure that you are running all tax liens through the National Change of Address (NCOA) database. Numerous companies provide this service, just do a Google search to find one. You can also obtain this service through a local direct mail service provider or list broker in your area, if you prefer to do business with local companies.

Not only is NCOA processing required by the US Postal Service, you’ll discover that it also reduces your returned mail volume substantially. Tax liens are, by definition, filed against companies and individuals that owe money to the government. Chances are, they also owe money to other organizations. As such, it is not uncommon for the businesses to close, and individuals to move. It’s simply the nature of the beast. Since tax liens are filed using the last known address, this is what goes into our database. Returned mail volumes of 15% to 30% are not uncommon when doing mailings to tax lien lists that have not been NCOA processed.

Second, if you are doing telemarketing, run the lists through a telephone data hygiene service and/or a phone append service. This will make sure you have the best phone numbers possible for your telemarketing efforts. Our database is connected to a robust phone append API, but that’s just one database. So even if you get phone numbers from us, it may still be worth your while to process them again through another service.

Third, don’t throw away your old tax lien lists. Tax debtors are bombarded by a tidal wave of tax resolution firms during the first two weeks after the tax lien is filed. Then, with the low hanging fruit gone, fewer companies are contacting them. After a few months, nobody is calling or mailing.

Every few months, pull up those old lists, and mail and call them again. For businesses that accrue new liabilities every quarter, they are starting a new collections cycle every 3 months, but a new lien may only be filed once a year. For individuals, the problem doesn’t go away even if it’s not addressed and the IRS isn’t taking enforced collections action at the present time.… Continue reading

Why You Should Become An Enrolled Agent

Note: If you’re already an EA, CPA, or attorney, then this post will be of zero interest to you. If you’re an unenrolled preparer, however, keep reading…

It’s becoming increasingly common for me to receive emails like this one from a return preparer in Sacramento, CA:

I would like to pursue this opportunity. I am currently not an EA. What ways have others moved ahead until they became an EA? Can I hire one? What do you suggest?

Here was my verbatim reply to this particular email:

By “this opportunity”, I presume you’re referring to collections representation services?

While hiring an EA, CPA, or attorney is definitely an option, I would still encourage you to obtain your Enrolled Agent license yourself. Honestly, the test isn’t that difficult for an experienced tax preparer that puts in a couple weeks of study. The Gleim test prep books are the ones I used, and they were pretty good.

The reason I would encourage you to get your license yourself, even if you hire a licensed person to do the work, is because by IRS regulation, you must be licensed in order to solicit representation services. In other words, it’s a violation for an unlicensed person, even an experienced preparer, to sell licensed representation services.

A couple weeks of study and a few hundred dollars for the tests is a tiny price to pay to be able to sell something as lucrative as tax resolution, in my biased opinion. 🙂

Since this comes up frequently, I figured it was finally worth it’s own blog post, so here we go.

Let’s start with the one thing that I feel I’ve become a broken record about over the past few years:

In order to sell tax resolution services, you MUST be licensed. This is non-negotiable.

I’m starting with this, instead of “why you should be licensed”, because I feel like it’s the most salient point for anybody reading this blog. Most folks end up here because of the information I provide on marketing and selling tax resolution services.

In case you’re not familiar with Revenue Procedure 81-38, this was the original Revenue Procedure covering limited practice without enrollment. Section 8 of this Revenue Procedure explicitly bars individuals that are NOT an EA, CPA, or attorney from soliciting representation services (which is what “tax resolution”) is.

Many folks erroneously believe that every provision of 81-38 was replaced by Revenue Procedure 2014-42… Continue reading