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PART I: One Thing Every
Citizen Must Know
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- Let us begin with what could be the single most important development
in taxpayers rights in twenty years' the Taxpayer Advocate (TA). The Taxpayer
Advocate, formerly known as the Problems Resolution Officer, was created
by the Taxpayers' Bill of Rights Act of 1988. The purpose of the TA is
to function as a liaison between the IRS and the citizen. The TA's role
is to step in where normal channels fail and help citizens resolve cases
that otherwise might lead to hardship.
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- Each year, the TA helps thousands of people resolve disputes surrounding
tax refunds, improper audits, installment agreement issues, penalty assessments
and so on. However, precious few people realize the TA exists and consequently,
few take advantage of this resource. With the passage of the 1998 IRS Restructuring
and Reform Act, the power of the TA is expanded. Now more than ever, the
TA is a tool that every citizen must be aware of and understand how to
use.
- PROBLEM 1:
NOBODY IN THE IRS CARES
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- I need help--quick!! The IRS has or is about to levy a bank account
or pay check. It refuses to issue a refund I am entitled to and need. It
is taking some action that will cause hardship if allowed to proceed.
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- CONSEQUENCE:
- The agency continues to deprive you of rights or otherwise takes action
which causes a hardship, such as enforced collection, failure to issue
a refund, etc.
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- SOLUTION:
- Immediately contact the Taxpayer Advocate. The Taxpayer Advocate is
charged with the affirmative duty to step in and set things right when
the IRS otherwise fails to do its job. The TA operates to smooth out the
rough spots in tax law enforcement. This office should be used anytime
there is a failure on the part of the IRS to:
- take action it should, such as issue a refund, or
- refrain from taking action, such as carrying out a wage or bank levy.
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- Gain access to the TA in one of two ways. The first is to use Form
911, Application for Taxpayer Assistance Order. The Taxpayer Assistance
Order (TAO) is an order commanding the IRS to either stop action or take
action, as the case may be. The agency is required by law to follow a TAO.
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- A WORD ABOUT FORMS: Before we go on, let us briefly discuss
the question of tax forms. Nearly all of the forms discussed in this Problem
Solver are not available in the usual forms distribution locations, such
as banks and post offices, nor are they generally available from the IRS
through its instruction booklets. In fact, in some cases, the IRS actually
denies that these official IRS forms exist. For that reason, we have compiled
a forms package that includes the forms you cannot easily obtain. We call
it the Forms Kit and Resource Guide, which can be found in our Solution Packages.
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- The second way to access the TA is to merely write a letter to the
local TA in your district. Historically, the IRS refused to publish the
addresses and phone numbers of the various TA offices. However, I have
obtained a complete directory of all TA addresses, phone and fax numbers.
We have the directory published in our Forms Kit.
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- There are several points to keep in mind about your communications
with the TA. First, give clear and succinct details about the facts of
the case. Explain what has happened and when, and who is responsible for
the actions at issue. Give names and dates and if possible, provide copies
of past letters. Second, be clear about the damage or hardship that you
are or will suffer as a result of the actions. For example, if the IRS
is threatening a wage levy and will not negotiate a reasonable installment
payment (specific procedures for installment agreements are discussed in
Part II of this Problem Solver), the damage is loss of wages and the resulting
inability to pay monthly living expenses. Third, be clear and succinct
about the relief you are seeking. In the case of the installment payment,
state that you want the TA to order the IRS to accept your installment
payment of "X" dollars per month. Be sure to sign your letter
and give a phone number where you can be reached. You must show a willingness
to cooperate with the TA and meet all of IRS' legal demands before you
can expect the TA to respond favorably.
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- A word of caution about the Form 911. When you submit Form 911, whether
the TA grants the request or not, signing the form operates to toll the
collection statute of limitations. The collection statute is the rule of
law that limits the IRS' right to collect taxes. Ordinarily, the agency
has just ten years from the date of a tax assessment in which to collect.
After that period, the IRS' legal right to collect expires. However, by
signing Form 911, you extend that ten-year period beginning with the date
of submitting Form 911 and continuing to the date of its disposition by
the TA. That is why I like to use the letter method of contacting the TA
rather than Form 911. The letter does not stop the collection statute.
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- Chapter seven of my book, How to Get Tax Amnesty,
provides more ideas on dealing with the TA, including specific examples
of how the TA can help. Also, chapter ten of that book explains the collection
statute of limitation, how to calculate the collection statute and what
to do if you believe your collection statute has expired.
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