 |
 |
PART VI: Enforced Tax
Collection
-
- Virtually all of the horror stories we hear about the IRS grow from
enforced tax collection. Enforced tax collection involves the IRS' power
of lien, levy and seizure. These potent weapons allow the agency to take
virtually all of the property one owns in order to satisfy the outstanding
debt. With that kind of power, there is little doubt its exercise leads
to abuse.
-
- For example, one IRS report showed that as many as 25 percent of the
assessments on the books were attributed to duplication or administrative
error. A recent General Accounting Office report shows that the IRS' data
processing systems are so bad the agency is routinely pursuing collection
from citizens who already paid their taxes. An internal audit conducted
in 1998 concluded that the agency violated federal law by imposing production
quotas on tax collectors. Still another internal audit showed that collectors
routinely violated the Taxpayers' Bill of Rights Act as well as the IRS'
own rules and procedures while carrying out the collection process. Given
the fact that the agency possesses awesome collection weapons, it is intolerable
that such problems exist.
Help with IRS Problems | Solution Packages | Top
of Page
- PROBLEM 21
THE IRS IS THREATENING A WAGE OR BANK LEVY
-
- CONSEQUENCE:
- It is difficult or impossible to pay necessary living expenses.
-
- SOLUTION:
- Make a written request for installment agreement. Collection of delinquent
tax begins with a series of notices asking for payment. If payment is not
made, the IRS eventually mails a final notice, notice of intent to levy.
This notice provides thirty days to pay, after which time the IRS may begin
enforcement action. Do not wait for the final notice to take action. Ask
for an installment agreement as soon as you receive the first notice. However,
if you are facing a final notice, there are a couple of steps you must
take immediately to head off the attack.
-
- First, write a letter to the service center that issued the final notice.
Explain that you do not have the money to be able to pay in full and ask
for an installment agreement. Include Form 9465, Installment Agreement
Request, with your letter. Please review Problem
5. Your letter should also explain that a wage or bank levy will cause
serious economic hardship by making it impossible to pay your living expenses.
Include a short worksheet showing your net take-home pay and monthly living
expenses. Send the letter via certified mail and get it off immediately.
-
- If you do not hear a favorable word from the service center within
a brief period of time, say two weeks, contact your local Taxpayer Advocate.
Use the steps outlined in Part I of this Problem
Solver to make contact with the TA. Your goal is to get an installment
agreement established based upon your ability to pay. Once the installment
agreement is in place, the IRS cannot pursue levy or seizure of assets,
including wages and bank accounts. For the full details on the process
of negotiating the installment agreement, please see chapters five and
eleven of How to Get Tax Amnesty.
Help with IRS Problems | Solution Packages | Top
of Page
- PROBLEM 22
I CANNOT AFFORD AN INSTALLMENT PAYMENT.
- My income and expenses are such that I have no money left at the end
of the month.
-
- CONSEQUENCE:
- Forcing an installment payment will cause serious hardship.
-
- SOLUTION:
- Obtain uncollectible status. When you cannot make a payment, either
because you are unemployed or because your monthly expenses meet or exceed
your income, you have the right to be considered "uncollectible."
When a case is classified as uncollectible, the account is frozen and the
IRS makes no effort to enforce collection. At the same time, it does not
require any monthly installment payment. Uncollectible status does not
mean the account is written off, nor does it mean the penalties and interest
stop running. It means only that the IRS does not undertake collection.
-
- To obtain uncollectible status, write a letter to the service center
handling the account. Explain that you cannot make a payment because you
do not have any money left after paying monthly bills. In your letter,
provide a simple worksheet showing monthly take-home pay and necessary
living expenses. The reader should be able to see that you have nothing
left after paying bills. Often, the IRS asks for a financial statement
before it formalizes uncollectible status. The statement is provided on
Form 433-A. We have a copy in the Forms Kit and Resource Guide. In addition,
chapter eleven of How to Get Tax Amnesty walks
you through the entire process of negotiating uncollectible status.
-
- Uncollectible status is a temporary fix. It allows you to get back
on your feet without the pressure of enforced collection. Furthermore,
it puts you into position to use one or more of the amnesty programs.
Help with IRS Problems | Solution Packages | Top
of Page
- PROBLEM 23
THE IRS HAS A WAGE OR BANK LEVY IN EFFECT
-
- CONSEQUENCE:
- It is impossible to pay living expenses.
-
- SOLUTION:
- Immediately contact the Taxpayer Advocate. Write a letter giving the
name and address of the person levied, i.e., your bank or employer, and
explain that the levy is causing serious economic hardship. Explain that
you are not able to pay living expenses if the levy is not lifted. Include
with your letter a copy of the wage or bank levy if you have one.
-
- Ask the TA to immediately issue a release of levy and that it be faxed
to your bank or employer. As soon as the bank or employer receives the
release of levy, it must disregard the levy notice and resume paying your
wages or allowing access to your bank account as usual. Chapter six of
How to Get Tax Amnesty has detailed discussion
and examples of how to write this letter and how to deal with the IRS to
obtain a quick release of wage and bank levies.
Help with IRS Problems | Solution Packages | Top
of Page
- PROBLEM 24
THE IRS FILED A TAX LIEN CAUSING CREDIT PROBLEMS
-
- CONSEQUENCE:
- It is impossible to borrow money, sell your home or otherwise maneuver
to pay the tax bill.
-
- SOLUTION:
- Make a request for lien subordination. The most effective way to deal
with tax liens standing in the way of a re-finance or some other maneuver
to satisfy the debt is through a little known procedure called the lien
subordination. In the subordination process, the IRS agrees to release
its lien or place it behind another creditor, such as a bank, in exchange
for cash equal to the value of the lien. Thus, if you owe the IRS $10,000
and have $50,000 equity in your home, the lien subordination procedure
allows you to get the money from the bank even though there is a tax lien
filed against the property.
-
- Unfortunately, not all lenders are willing to work with you and the IRS to
execute a lien subordination. The tax lien not only prevents you from
getting a loan, but often the lien and other financial problems make you a
higher credit risk, causing most banks to be unwilling to lend. This is why
we made special arrangements with a lender who understands the problems
faced by people like you. Our lending partner, Northern Lights Mortgage, has
experience dealing with non-traditional loans and those involving IRS liens.
Northern Lights is not frightened by the fact the the IRS has a lien or that
your credit may not be perfect. You can start the mortgage application
process by completing the Premier
Mortgage "Fast- App" and faxing it to the fax number on the top of the
application. If you have questions about the process, call Brian Nelson toll
free at 1-866-913-2600.
-
- This is just one of many strategies available to deal with tax liens.
In chapter six of How to Get Tax Amnesty, I describe
a total of seven ways to deal with liens which the IRS will likely never
tell you about. In addition, our Forms Kit and Resource Guide contains
the IRS Publications that discuss lien removal procedures.
Help with IRS Problems | Solution Packages | Top
of Page
- PROBLEM 25
I CANNOT GET THE IRS TO RECOGNIZE MY LETTERS AND IT CONTINUES TO PUSH AHEAD
FOR ENFORCED COLLECTION
-
- CONSEQUENCE:
- You never had a chance to present your case for installment agreement,
uncollectible status or other proposed solution to the outstanding debt.
- SOLUTION:
- File a collection appeal. The collection appeal is a new right that
every citizen must be aware of. The procedure gives you the right to challenge
any collection action on any appropriate ground, including challenging
the underlying tax debt. Use Form 9423, Collection Appeal Request, to instigate
a collection appeal. File it with the manager of the collection officer
working your case or to the Chief of the Collection Division if there is
no individual assigned to your case.
-
- The collection appeal immediately stops all collection action. The
case is then assigned to the Appeals Office for review. At the conference,
you have the right to present evidence to show either that the underlying
tax assessment is in error or the collection actions are improper or otherwise
not suited to the facts of the case. The Appeals Office has the duty to
show that the IRS followed all necessary administrative rules in carrying
out the collection action. You have the right to propose any applicable
solution to the problem of the delinquent tax.
-
- In chapter seven of How to Get Tax Amnesty,
I show you the details of the collection appeal process, including the
manner of completing Form 9423. Form 9423 is included in our Forms Kit
and Resource Guide.
Help with IRS Problems | Solution Packages | Top
of Page
- PROBLEM 26
I HAVE NOT FILED TAX RETURNS FOR YEARS.
-
- CONSEQUENCE:
- Your non-filing pattern continues, making matters worse every year.
-
- SOLUTION:
- Use the "non-filer" program. At present, there are as many
as ten million Americans who have stopped filing tax returns, many of them
because they did not have the money to pay one year, then failed to file.
That one year turned into many as they fell into a pattern of non-filing
caused by the fear of being found out. They desperately want to get back
into the system and stop looking over their shoulder but do not know how.
-
- Since 1992, the IRS operates the so-called "non-filer" program
specifically pointed at this situation. It offers a carrot and stick approach
to the problem. If you properly step forward and correct the non-filing,
the IRS agrees not to prosecute the potential legal violation. However,
if it finds you before you find it, it makes no promises.
-
- We have used the Non-filer program with great success. Using the techniques
in chapter eight of How to Get Tax Amnesty, citizens
have closed the door on their filing delinquencies, gotten off the tax
debt treadmill and put the problem of delinquent returns behind them forever.
This is like getting out of jail. Once you achieve these goals, you are
again free to live a normal life, not worrying about the next trip to the
mail box or shuttering at every knock on the door.
Help with IRS Problems | Solution Packages | Top
of Page
- PROBLEM 27
MY HUSBAND LEFT ME WITH A TAX DEBT THAT I DO NOT OWE AND CANNOT AFFORD
TO PAY
-
- CONSEQUENCE:
- The IRS enforces collection against you, not your spouse.
-
- SOLUTION:
- File an application for innocent spouse status.
-
- Each year, countless women are left stranded with tax debts attributable
to their husbands. When the marriage breaks up, the IRS chases the easiest
target. Too often, that happens to be the wife who is struggling to provide
for the children while the husband runs from his responsibilities.
-
- The IRS Restructuring act of 1998 added provisions to the tax code
that can extricate a person from this situation. They are referred to as
the "innocent spouse" provisions and they apply in three separate
circumstances. The first is where the tax debt is due to an error in the
return, such as unreported income or bogus deductions, attributable to
the husband which the wife did not know or had no reason to know about.
When you can show that you did not enjoy the financial benefit of the unpaid
tax, you can be relieved of the tax debt.
-
- The second condition is when you are divorced or living apart for at
least the past twelve months. Under this scenario, you have up to two years
in which to make an election to be treated as a separate taxpayer. That
is to say, you can switch your filing status from married filing jointly
to married filing separately. That way, you are taxed only on your income,
not your husband's. The election makes your husband solely liable for his
own tax debt and you do not need his consent to change the filing status.
-
- The third condition is a kind of "catch-all." It allows for
innocent spouse relief when neither of the above two conditions apply,
but where it is "inequitable" to hold the wife liable for the
debt. In this situation, general financial and life circumstances bear
upon whether it is fair to hold the wife responsible for the unpaid taxes.
-
- An innocent spouse claim is made on Form 8857. A copy is provided in
our Forms Kit and Resource Guide. My book, Taxpayers Defense Manual, shows
you how to argue and prove an innocent spouse claim. It is now easier than
ever to win an innocent spouse claim and be relieved of the tax debt your
husband created.
Help with IRS Problems | Solution Packages | Top
of Page
- PROBLEM 28
MY IRS DEBT JUST KEEPS GROWING
-
- CONSEQUENCE:
- You fear that you will "take the debt to your grave"
-
- SOLUTION:
- Apply for Tax Amnesty. There are millions of citizens facing this disaster
right now. At present, there are some seventeen million individuals who
owe taxes to the IRS, much of which can never be paid. One General Accounting
Office study of the situation reported that as little as 23 percent of
the debts on the IRS' books are collectible. In addition, there are as
many as ten to twelve million people who have stopped filing tax returns
entirely. Many of these people are on what I call the tax debt treadmill,
where they take one step forward and two steps back in the quest for tax
debt relief. These people need to know there is help available.
-
- The IRS has programs that allow a person to reduce or eliminate a debt
he cannot pay. And while the agency does little to publicize them, they
have been tremendously successful for people who otherwise have no way
out. The premise of the book How to Get Tax Amnesty
is that these programs provide forgiveness--a fresh start for those covered
up with tax debt.
-
- One program to accomplish this is what I call the cents-on-the-dollar
program; what the IRS calls the "offer in compromise." As both
titles imply, the program allows one to make a settlement for less than
what is owed. Suppose, for example, you owe the IRS $25,000. Suppose further
that your maximum ability to pay is $5,000. You could expect to settle
your case for twenty cents on the dollar. And while that may sound incredible,
the national average settlement is more like thirteen cents on the dollar
and people using my book How to Get Tax Amnesty
as a guide, regularly settle for five to ten cents on the dollar. Recently,
we settled a $170,000 tax debt for just $5,000--less than three cents on
the dollar.
-
- Another program for achieving forgiveness of tax debts is to use the
federal bankruptcy laws. Perhaps the best-kept legal secret in the United
States is the fact that federal income taxes are dischargeable in bankruptcy.
However, there is not one lawyer or accountant in a thousand who knows
it. In addition, the IRS regularly provides misinformation and disinformation
about the right to discharge taxes in bankruptcy. However, in the years
since How to Get Tax Amnesty was released, we
have discharged countless millions of dollars in tax debts through bankruptcy
and this tool has enabled countless others to negotiate a reasonable offer
in compromise settlement.
-
- In sum, there is no reason to spend another day fretting about delinquent
tax debts that continue to grow. Instead, go on the offensive. Use one
or more of the amnesty programs to reduce or eliminate your debt. Free
yourself and your family from the bondage of ever-growing tax debt. Enable
yourself to become productive once again. Put yourself in the position
of building a future for your family instead of being in debt to the IRS.
The tools are available and have been proven effective many times in cases
just like yours.
-
- After reading How to Get Tax Amnesty you
will see just exactly what your options are and how to carry them out.
But if you need further guidance on which amnesty program is best for you
and the strategy you should follow, consider utilizing our Tax
Solution Network. This service allows us to review all the facts
of your case and provide specific direction on how best to settle your
debt.
Help with IRS Problems | Solution Packages | Top
of Page
- PROBLEM 29
I CANNOT AFFORD A TAX PROFESSIONAL TO HELP WITH MY TAX PROBLEM
-
- CONSEQUENCE:
- You continue to struggle with no help, placing yourself at the mercy
of the IRS.
-
- SOLUTION:
- Use our Tax Solution Network.
-
- Our inexpensive self-help materials are proven effective, but some
people need additional, more personal guidance, even though they incur
additional fees. Our Tax Solution
Network is the perfect solution for those in need of personal, definitive guidance
to solve their problem. The TSN is designed to apply our vast experience
to your individual situation and present you with a clear and simple step-by-step
guide for solving your problem. By using the TSN, you obtain reliable information
to help you through your IRS problem for a small fraction of what you might
think it would cost. The TSN answers critical questions about how you should
proceed. If you believe you need experienced help in find a solution to
your problem, do not hesitate to utilize our Tax
Solution Network.
Help with IRS Problems | Solution Packages | Top
of Page |
|
