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The Revenue Officer assigned to my client’s case claims he has documentation he will use to assess my client as a “Responsible Person”. I have requested copies of the documentation but thus far he is unwilling or is at least stalling in sending me copies. How can I compel the IRS representative to send this information to me?

Typically the Revenue Officer will make his or her decision based upon information provided at a 4180 interview. Other evidence may include a bank signature card or paychecks with your client’s signature on the signatory line. This could have been provided by your client or another person that worked for the company for which your [...]

The Revenue Officer assigned to my client’s case claims he has documentation he will use to assess my client as a “Responsible Person”. I have requested copies of the documentation but thus far he is unwilling or is at least stalling in sending me copies. How can I compel the IRS representative to send this information to me?2017-04-11T22:23:03-07:00

If Trust Fund Recovery Penalty (“TFRP”) is assessed to a previous president and there is doubt as to whether he was a responsible person and willful; and the Corporation recently filed for bankruptcy, what should be done?

If the TFRP was assessed to the previous president he most likely received correspondence from the IRS requesting a 4180 interview to determine if he was responsible for not paying the payroll taxes and the IRS determined he was responsible. Either the past president ignored or did not receive the notice (we have a current [...]

If Trust Fund Recovery Penalty (“TFRP”) is assessed to a previous president and there is doubt as to whether he was a responsible person and willful; and the Corporation recently filed for bankruptcy, what should be done?2017-04-11T22:23:03-07:00

How does the 10 year collection statute work on the trust fund penalty?

The 10-year statute of limitations on collection applies to an individual’s Civil Penalty stemming from the Trust Fund Recovery Penalty (“TFRP”) in the same manner as it does for income taxes. Keep in mind that the IRS can “passively” collect beyond the statute if they filed a perfected tax lien.

How does the 10 year collection statute work on the trust fund penalty?2016-05-13T14:46:40-07:00

If Trust Fund Recovery Penalty (“TFRP”) is assessed to a previous president and there is doubt as to whether he was a responsible person and willful; and the Corporation recently filed for bankruptcy, what should be done?

If the TFRP was assessed to the previous president he most likely received correspondence from the IRS requesting a 4180 interview to determine if he was responsible for not paying the payroll taxes and the IRS determined he was responsible. Either the past president ignored or did not receive the notice (we have a current [...]

If Trust Fund Recovery Penalty (“TFRP”) is assessed to a previous president and there is doubt as to whether he was a responsible person and willful; and the Corporation recently filed for bankruptcy, what should be done?2017-04-11T22:23:03-07:00

Do you include upcoming Obamacare/HCA penalties and/or Health Insurance cost for MDI?

Health insurance premiums are allowable and should be included in both installment agreements and offers in compromise. As for the ACA penalties, I would include them and see if the IRS fights you on this. It remains to be seen whether they will allow the expense or not.

Do you include upcoming Obamacare/HCA penalties and/or Health Insurance cost for MDI?2016-05-13T14:45:50-07:00

How should I advise and represent a client who came to me and indicated that he has an offshore account, did not report on any tax returns and did not file FBAR reports? Right now I am referring these people to an attorney, but would like to represent them myself if possible. How does amnesty work right now and how much of a penalty must be paid?

The IRS currently is offering the Offshore Voluntary Disclosure Program (“OVDP”) that began in January 2012. However, the IRS has reserved the right to end the program at any time. For that reason, we urge you to review the IRS OVDP page (see http://www.irs.gov/uac/2012-Offshore-Voluntary-Disclosure-Program) as well as the Frequently Asked Questions page (see http://www.irs.gov/Individuals/International-Taxpayers/Offshore-Voluntary-Disclosure-Program-Frequently-Asked-Questions-and-Answers-2012-Revised), and [...]

How should I advise and represent a client who came to me and indicated that he has an offshore account, did not report on any tax returns and did not file FBAR reports? Right now I am referring these people to an attorney, but would like to represent them myself if possible. How does amnesty work right now and how much of a penalty must be paid?2017-04-11T22:23:03-07:00

We didn’t cover anything with penalty abatement today (not that I was expecting it according to the agenda) and I wanted to see if you offered any suggestions on penalty abatement for late filing. I have a client that had five years of 1120S returns (single shareholder) that needed to be filed recently to get him back into compliance. Beyond the obvious, is there something out there that can be applied to help abate the late filing penalties for S-Corps? I know about “reasonable cause”, but the client doesn’t really have a good reason for not filing. Obviously Rev Proc 84-35 does not apply from what I understand because this is not a partnership. We discussed dissolving the company and starting over to make the penalties go away, but I do not want to participate in something to be considered as fraud. The business is small only shows a profit of $15K to $30K over the five years so the penalties are pretty tough in comparison to the income (around $10K or so over the five years). Any suggestions outside of the obvious are definitely appreciated. Thank you.

In terms of requesting abatement of penalties for non-filing for 5 consecutive years is an uphill battle and other than “dumb luck” the request will be denied. In and of itself starting over is not committing fraud but without having all of the details I cannot provide guidance in this case. Keep in mind that [...]

We didn’t cover anything with penalty abatement today (not that I was expecting it according to the agenda) and I wanted to see if you offered any suggestions on penalty abatement for late filing. I have a client that had five years of 1120S returns (single shareholder) that needed to be filed recently to get him back into compliance. Beyond the obvious, is there something out there that can be applied to help abate the late filing penalties for S-Corps? I know about “reasonable cause”, but the client doesn’t really have a good reason for not filing. Obviously Rev Proc 84-35 does not apply from what I understand because this is not a partnership. We discussed dissolving the company and starting over to make the penalties go away, but I do not want to participate in something to be considered as fraud. The business is small only shows a profit of $15K to $30K over the five years so the penalties are pretty tough in comparison to the income (around $10K or so over the five years). Any suggestions outside of the obvious are definitely appreciated. Thank you.2016-05-13T14:44:50-07:00

Is it possible to have penalties removed?

Yes. There are various reasons used to request abatement for reasonable cause but the most commonly accepted method is to request a First Time Penalty Abatement (“FTPA”) based upon IRS rules.

Is it possible to have penalties removed?2016-05-13T14:44:27-07:00

If using national standards shows that a taxpayer’s monthly disposable income (“MDI”) is zero, can an offer in compromise be submitted if the offer is made using money gifted from family and friends?

Yes and no. Yes the taxpayer can obtain the funds from family or friends. When we submit an offer, we usually state that the money being used to pay the offer was borrowed from family friends, and not gifted. This information is entered in the section on the form where the IRS asks for the [...]

If using national standards shows that a taxpayer’s monthly disposable income (“MDI”) is zero, can an offer in compromise be submitted if the offer is made using money gifted from family and friends?2016-05-13T14:43:54-07:00

If your actual housing and utility expense is lower than the IRS standard can you still use the higher IRS standard?

The IRS allows the lower of actual vs IRS standard for housing and utility expense . If you do not have substantiation to justify the maximum, you may be request that the standard be used but our success rate attempting this has been very limited.

If your actual housing and utility expense is lower than the IRS standard can you still use the higher IRS standard?2016-05-13T14:43:32-07:00

What standards do you use if taxpayer lives outside of the United States?

There are no international standards. The IRS IRM states “…standards are not available for international taxpayers or the U.S. Territories, except for housing and utilities in Puerto Rico. In the absence of standardized figures for foreign countries, a fair and consistent approach should be applied to what is allowed as living expenses for international taxpayers.” [...]

What standards do you use if taxpayer lives outside of the United States?2016-05-13T14:41:36-07:00

Is additional income recognized when all or part of one’s tax liability is forgiven?

In terms of cancellation of debt (“COD”) income the answer is no. But if the terms of an offer in compromise are not fully met (including staying in compliance for a 5-year period subsequent to the offer) the balance of the compromised liability will be reinstated.

Is additional income recognized when all or part of one’s tax liability is forgiven?2016-05-13T14:41:11-07:00

How do you determine the fees you charge to prepare an installment agreement or an Offer in Compromise?

Typically our fees are based upon our standard hourly rates. Keep in mind that it may be difficult to extract information from tax resolution clients so charging on a fixed fee basis may be risky. Streamlined installment agreements typically begin at around $1,800 and offers may be over $10,000 depending on their complexity.

How do you determine the fees you charge to prepare an installment agreement or an Offer in Compromise?2017-04-11T22:23:03-07:00

Does the IRS consider the taxpayer’s ability to pay as of the time they are contacted to negotiate or their ability to pay in the future?

The answer to this question is both. The IRS will allow an installment payment amount based upon the taxpayer’s current ability to pay. If the taxpayers financial picture indicate he or she will have the opportunity to earn more going forward, the IRS will revisit the installment agreement payment amount in the future. If the [...]

Does the IRS consider the taxpayer’s ability to pay as of the time they are contacted to negotiate or their ability to pay in the future?2016-05-13T14:28:27-07:00

Are there situations where the IRS would accept greater than the national and local standard or is this a hard maximum that they will not budge upon?

For purposes of an installment agreement, the IRS will often allow higher than their standards. For an Offer in Compromise there are situations where the standards may be exceeded. They typically will allow higher than the out-of-pocket medical expense allowance if the higher amount can be substantiated. Be prepared to make the argument that there [...]

Are there situations where the IRS would accept greater than the national and local standard or is this a hard maximum that they will not budge upon?2016-05-13T14:24:24-07:00

A husband and wife are currently in an installment agreement. The husband lost his job and the wife was told she has liver cancer. They filed bankruptcy in 2012. Is there a chance to avoid paying the back taxes they owe? The amount owed is currently $24,000 stemming from liabilities from 2010 and before.

Assuming the couple has few assets or can liquidate their assets to make a partial payment, it makes sense for the couple to submit an Offer in Compromise. Based upon the information given, the couple has little or no income which will bode well to having an offer accepted will allow them to pay substantially [...]

A husband and wife are currently in an installment agreement. The husband lost his job and the wife was told she has liver cancer. They filed bankruptcy in 2012. Is there a chance to avoid paying the back taxes they owe? The amount owed is currently $24,000 stemming from liabilities from 2010 and before.2016-05-13T14:24:03-07:00

Does submitting a request for an installment agreement legally ‘fix’ the taxpayer’s liability owed or can the liability later be argued?

The tax liability can be “argued” or more appropriately collected upon as long as the statute of limitations on collection (10 years for the IRS) is still open. If the amount of the installment payment is less than necessary to full-pay the liability over the collection statute (known as claiming "hardship"), the IRS will most [...]

Does submitting a request for an installment agreement legally ‘fix’ the taxpayer’s liability owed or can the liability later be argued?2016-05-24T10:41:53-07:00

Why would the IRS accept an Offer in Compromise (“OIC”) based upon 12 months disposable income payments and not what you could pay over 5 or 10 years?

This is a good question. The answer is that the taxpayer has to be in a difficult situation that warrants accepting a relatively low amount. If the taxpayer has a large portion of the statute on collection remaining or appears to be able to earn substantially over the remaining term of the statute, the offer [...]

Why would the IRS accept an Offer in Compromise (“OIC”) based upon 12 months disposable income payments and not what you could pay over 5 or 10 years?2016-05-13T14:22:43-07:00

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