IRS Tips and Negotiation Mistakes to Avoid
We represent Floridians and US citizens, nationwide, with IRS problems. Luckily, even if you are a delinquent in your taxes, you can go to an experienced IRS tax lawyer who will be able to navigate IRS procedures needed to negotiate taxes owed to the IRS. To successfully navigate the process, tax lawyers and CPAs who assist people with IRS problems will need to know what to do and what NOT to do. This article explains some common traps people fall into when trying to negotiate their tax problems with the IRS after they have been levied or have been summoned to appear before a IRS tax officer.
IRS Resolution Mistake #1:
Failing to File all Tax Returns and Failing to Pay Current Taxes
Most people seeking out IRS tax resolution help have at least one unfiled return. Many will not be current on the year in which they are looking for help. To determine whether there are any unfiled returns, we will obtain the Individual Master File (more details below) and if any unfiled returns, get the income information and file them as fast as we can. The most recent tax year returns must be filed on time as well.
If there is an IRS resolution officer assigned to the case, your tax attorney should be able to get more time to get prior/current tax returns filed properly.
The IRS wont begin to negotiate until they confirm that the person or entity in question is current on this year’s taxes.
For employee/wage earners, sometimes all they need to do is change their withholding elections with employer. Those who are self-employed have to utilize estimated quarterly payments.
April 15th is just the filing deadline. You have to pay your taxes during the year as you earn your money.
IRS Resolution Tip #1:
Obtain The Individual Master File / Business Master File Transcripts from the IRS
This is almost always Step #1. Your IRS tax lawyer will obtain your individual master file (or business master file if representing an entity) to see if all tax returns have been filed.
IRS Resolution Mistake #2:
Ignoring an IRS Officer’s Phone Call
Unpaid payroll tax case and individual cases with large unpaid tax balances will likely be assigned to a local Revenue Officer who will make personal visits and carry out tax collection on behalf of the IRS.
When someone ignores the IRS revenue officer’s phone call they issue a final notice, and if calls are still not returns, the revenue officer will likely just start levying accounts (that always gets someone's attention).
The point is, the IRS is not a problem that will simply go away. In fact, its better to have your tax resolution professional follow up with the revenue officer so the IRS knows that they are dealing with someone or an entity who recognizes that there is a problem and is being proactive (not hiding).
IRS Resolution Mistake #3:
Ignoring the Notice of Intent to Levy and Notice of Your Right to a Hearing.
The IRS send out Form Letter 1058 which lets you know what tax years have unpaid amounts, along with penalties and interest. The IRS’s Automated Collection System (ACS) then sends out Notice LT11 (essentially the IRS’s final notice of intent to seize property or levy accounts).
You IRS tax lawyer will almost always file Form 12153 (Request for a Collection Due Process Hearing), colloquially referred to as a CDP within 30 days (or between 30 days and a year, for an Equivalent Hearing (EH) or EH if not entitled to a CDP). Requesting either a CDP or EH will stop the collections process.
Will always request penalty abatement (worse IRS can say is “no”).
IRS Resolution Tip #2:
Request Face-to-Face IRS Appeals Hearings
One of the greatest tax resolution available to your IRS defense attorney is the Collections Due Process Hearing. When a hearing is requested after receiving Letter 1058 or Final Notice of Intent to Levy (LT11), the matter will usually be assigned to a Settlement Officer. Remember, as the name implies, a settlement officer's job is to resolve IRS tax matters.
Good people get into trouble with the IRS. Meeting, locally and face-to-face with IRS Settlement Officers has the advantage of personalizing the matter. Letting the settlement officer see that you are a real person trying to do the best that they can for their families, who want to resolve their IRS issues.
How to get a face-to-face meeting with an IRS settlement officer?
An in-person hearing will only be granted after:
- The client is current with their estimated tax payments;
- The client is current with their tax return filings (see Tax Resolution Mistake #1, above); and
- If the IRS settlement officer has the Collection Information Statement (IRS Form 433-A, for individuals; IRS Form 433-B for entities). Your IRS defense lawyer will begin working on completing 433A or B as soon as the CDP hearing is requested.
IRS Resolution Mistake #4:
Ignoring a Notice of Deficiency
After the IRS audit process, if the IRS determines that a citizen owes more money, it will often send out a Notice of Deficiency (NOD) - which details how the IRS determined the taxes owed and explains the right to file a petition with the US Tax Court (within 90 days) if the Notice of Deficiency calculations need to be challenged.
Timely filing a petition with the United States Tax Court is the only way to prevent the tax stated in the NOD from being assessed.
There are no extensions beyond the date shown on the Notice of Deficiency per IRC Section 6213. After 90 days, the US Tax Court has no jurisdiction to hear the case.
Often you get your very best deal with the IRS, by appealing it to the US Tax Court.
Final IRS Resolution Tip:
If you have a tax problem, let your IRS attorney resolve it
If you are not experienced in dealing with the IRS, you are just likely to say something that will hurt your efforts at getting a tax resolution. This is natural, because the IRS can be somewhat intimidating (their reputation precedes them). We don’t want you getting nervous and volunteering unnecessary information that has consequences you did not want or intend.
In other words, don’t talk to the IRS. The IRS is not your friend, they are not there to help you. The IRS has very little sympathy for people who owe them money. Get an experienced tax resolution practitioner to assist. Your IRS tax problem lawyer will have you sign a limited power of attorney, IRS Form 2848 or IRS Form 8821(just for the purposes of obtaining tax information, avoiding full power of attorney), faxed to the IRS CAF unit, which allows you to authorize a tax practitioner to represent you before the IRS.
Once you have authorized an experienced tax resolution attorney, with a valid power of attorney, to assist you, per IRC Section 7521(c) the IRS will not be able to communicate with you without your tax representative present.
The IRS cannot force a meeting or interview with someone represented by an IRS tax attorney.
- Not even during audits.
- Not even when working to assess a Trust Fund Recovery Penalty investigation.
- Not even during most IRS collection processes.
While the IRS will attempt to set up an interview, your tax attorney can just show up without the person being audited. Your tax attorney will go to the auditor if it's before a tax-compliance officer. Or the auditor will come to your tax attorney’s office if its a “field audit.” We will answer all the IRS auditor’s questions on behalf of our clients (hint, we know what the IRS is going to ask, so we get the answers from you beforehand). If your tax resolution attorney can answer all of the IRS’s questions, they have no reason to speak to the person with the actual tax problem.
A taxpayer may not be required to accompany a representative (tax attorney, enrolled agent or CPA) in the absence of an administrative summons. The IRS cannot require the presence of a represented taxpayer without an administrative summons.
If its a trust fund recovery penalty investigation, our client will fill out the same Form 4180 that the IRS officer wants filled out and let them know they have everything that they need to make a decision. As long as the IRS officer has what they need they cannot use the summons.
- TIP: Your IRS letter is not a summons.
- TIP: The IRS can only summons for information they do not already have in their possession.
As a troubled taxpayer, understand that you have the burden of proving your case (not the IRS). It's essential that if you are going to hire a tax-resolution lawyer that you be prepared to cooperate with him or her and get items your tax-defense lawyer requests from you.