Monthly Archives: April 2022

TIGTA found that the IRS has not provided taxpayers with adequate information on PPIAs on its public website or with the instructions pertaining to the form used to request an installment agreement, nor has the IRS created an effective means for taxpayers to request PPIAs or appeal rejected PPIAs as required by law. 

Also, TIGTA found that PPIAs were established without evidence of a complete financial analysis of the taxpayers’ ability to pay. From a judgmental sample of 30 PPIAs, TIGTA determined that the taxpayers’ financial statement had been deleted from IRS files for 11 PPIAs because more than one year had elapsed since the PPIA was established. With no financial statement in the file, TIGTA could not determine whether the IRS had properly computed the maximum monthly payment amount the taxpayers had the ability to pay. 

Collection default data indicate that the IRS is also establishing PPIAs for amounts that taxpayers cannot afford. 

Contributing to the higher default rate, TIGTA found 1,007 taxpayers defaulted on their PPIA, with an original PPIA balance over $197 million, when they failed to comply with an essential term of their agreement. 

Lastly, TIGTA found that the IRS procedures to close cases as currently not collectible should be enhanced with a PPIA option. The decision process for determining a currently not collectible case are similar to the steps taken by the IRS prior to granting a PPIA. 

If PPIAs were established for these four taxpayers, TIGTA estimates that they could have paid over $79,724 before their respective collection statutes expired. Based on our random sample, TIGTA projects that the 16,026 taxpayers who had tax liabilities closed as uncollectible could have entered PPIAs and paid a total of over $319 million before their respective collection statutes expired. 

TIGTA made six recommendations to help the IRS improve administration of PPIAs. IRS management agreed to inform taxpayers of the availability of PPIAs and provide outreach; explore and consider additional changes to the instructions for Form 9465; extend AMS history note retention requirements; remind Collection employees to conduct and document a financial analysis; and request a change to Computer Paragraph 522. IRS management partially agreed to revise CNC procedures.

 Have an IRS Tax Problem? 

 

   
Contact the Tax Lawyers at 

Marini & Associates, P.A. 

 

 

for a FREE Tax HELP contact us at:

www.TaxAid.com or www.OVDPLaw.com or

Toll Free at 888-8TaxAid (888) 882-9243

Read more at: Tax Times blog

Now that April 18th deadline for filing 2021 income tax has passed, practitioners may encounter some clients who don't have cash to pay the balance due on their returns. Clients can avoid penalties but not interest if they can get an extension of time to pay from IRS. Financially distressed clients may be able to defer paying their income taxes, including installment agreements and offers in compromise with IRS.

Paying in full within 120 days (short-term payment plan). A taxpayer can pay the full amount owed within 120 days, without having to pay any fee, but interest and any applicable penalties continue to accrue until the tax is paid in full. Taxpayers can use an online payment application (IRS website) or call IRS at 800-829-1040.

Installment agreements (long-term payment plan). Taxpayers unable to pay the full amount owed within 120 days may be able to enter into an installment agreement with IRS to pay the tax. Apply using Form 9465, Installment Agreement Request, and Form 433-F, Collection Information Statement. (IRS website)

There are different installment agreement rules for taxpayers who owe $10,000 or less, and for taxpayers who owe $50,000 or less.

Taxpayers are eligible for a guaranteed installment agreement-in other words, IRS is required to enter into the agreement-if the aggregate amount of the liability (determined without regard to interest, penalties, additions to the tax, and additional amounts) is not more than $10,000 and:

• During the past five tax years, the taxpayer (and spouse if filing a joint return) have timely filed all income tax returns and paid any income tax due, and have not entered into an installment agreement under Code Sec. 6159 for payment of income tax;
• The taxpayer agrees to pay the full amount owed within three years and to comply with all Code provisions while the agreement is in effect; and
• The taxpayer is financially unable to pay the liability in full when due and submits information that IRS may require to make this determination (i.e., a financial statement). (Code Sec. 6159(c)(2); Reg. § 301.6159-1(c)(1)).

Despite the last condition, the Internal Revenue Manual 
5.14.5.3, notes that as a matter of policy, IRS grants
guaranteed installment agreements even if the taxpayer
can pay his or her liability in full.

 There's a streamlined procedure for granting agreements for payment of tax in installments for amounts of $50,000 or less. IRS may accept streamlined installment agreements without requiring financial statements or managerial approval if the taxpayer

1.     has an "aggregate unpaid balance of assessments" (tax, assessed penalty and interest) of $50,000 or less, 

2.     has filed all returns, and 

3.     will pay up within 72 months, or will pay in full before expiration of the collection statute of limitations, whichever comes first. (IRM 5.14.5.2, IRS website)

Remember to FILE YOUR RETURN,
Even if You CANNOT Pay Your Tax!

I know this is counterintuitive, since no one wants to bring attention to the fact that they cannot pay their taxes by filing a tax return showing a tax due and not paying the tax. However by filing your return,

1.     You begin the running of the Statute of Limitations for assessment & collection,

2.     You begin the running the two-year period for discharging this debt in bankruptcy and

3.     You reduce your associative tax return penalties from 5% a month for late filing to .05% for late payment penalty. 

o    The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25 percent of your unpaid taxes.

o    If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date.

Need Time To Pay Your IRS Taxes?  

Contact the Tax Lawyers at 
Marini & Associates, P.A.  

for a FREE Tax HELP Contact us at:

www.TaxAid.com or www.OVDPLaw.com or

Toll Free at 888-8TaxAid (888) 882-9243

Read more at: Tax Times blog

According to Law360, a federal court in Virginia issued a formal request Friday for Switzerland to serve a U.S. citizen there with a lawsuit seeking $316,000 in penalties for his purported failure to file reports of his foreign bank accounts in the case of U.S. v. Albert K. Cambata, case number 5:21-cv-00065, in the U.S. District Court for the Western District of Virginia.

The court sent what are called letters rogatory to Swiss judicial authorities after the U.S. government asked for them as part of its case against Albert Cambata. Letters rogatory or letters of request are a formal request from a court to a foreign court for some type of judicial assistance. 

The government said Cambata, who lives in Switzerland, owes around $316,000 for his non-willful failure to file reports of foreign bank and financial accounts between 2010 and 2012. 

He Was Cited in Those Years for FBAR Violations Associated With Foreign Accounts At Banks Including UBS, HSBC and Bank Julius Baer & Co. Ltd., The Government Said, and Has Yet To Pay Any Fines Despite Receiving Notice of Them.

The court said in Friday's letter that it would reimburse Switzerland for the cost of serving Cambata. 

 Contact the Tax Lawyers at 

Marini& Associates, P.A. 

 

 

for a FREE Tax Consultation at: 

www.TaxAid.com or www.OVDPLaw.com 
or Toll Free at 888-8TaxAid (888) 882-9243

Read more at: Tax Times blog

On September 30, 2021 we posted Is the CDP Petition Filing Deadline Jurisdictional? -  SC Agrees to Hear The Issue, where we discussed the U.S. Supreme Court agreed to hear Boechler v. Commissioner of Internal Revenue, appealed from the Eighth Circuit and the Question Presented Is Whether the Time Limit in Section 6330 (D)(1) Is a Jurisdictional Requirement or a Claim Processing Rule Subject to the Equitable Tolling?

Now according to Law360, the U.S. Supreme Court on April 21, 2022 found that the U.S. Tax Court had the authority to consider a North Dakota law firm's day-late challenge to an Internal Revenue Service levy, reversing an Eighth Circuit decision that sided with the agency.

Boechler PC's suit challenging the IRS collection actions is not barred by a 30-day deadline under Internal Revenue Code Section 6330(d)(1) for bringing lien and levy challenges in the Tax Court, the justices said in a unanimous opinion. 

That Deadline Isn't A Jurisdictional Bar That Needs
To Be Cleared To Get In Front Of The Tax Court,
According To The Justices.

"The text does not clearly mandate the jurisdictional reading," Justice Amy Coney Barrett said in the court's opinion. The statute's "30-day time limit to file a petition for review of a collection due process determination is an ordinary, nonjurisdictional deadline subject to equitable tolling."

The dispute between Boechler and the IRS centers on a notice Boechler received in 2015 from the IRS communicating a discrepancy between information reported by Boechler to the IRS and the Social Security Administration, according to court filings. The firm did not respond to the correspondence from the IRS, which thereafter assessed a roughly $19,000 penalty under IRC Section 6721 that the firm failed to pay.

The IRS indicated it would levy the firm's property, and the agency affirmed that determination in collection due process hearings, which are a means of challenging IRS collection actions like property levies and liens. The firm was required to file a petition with the Tax Court challenging that determination on or before Aug. 28, 2017, but it instead filed that case Aug. 29, according to court filings. 

The Tax Court dismissed Boechler's case because of this missed deadline in a decision ultimately affirmed by the Eighth Circuit. A three-judge panel said Congress intended for Section 6330's deadline to be jurisdictional based on the actual language of the statute, although U.S. Circuit Judge Jane Kelly noted concerns about the ruling's potential impact on low-income taxpayers.

Some have argued in briefs with the high court that interpreting Section 6330(d)(1) as creating a jurisdictional hurdle has the potential to disproportionately harm low-income people and those representing themselves in the Tax Court. The U.S. has rejected some of those arguments, contending that the data do not obviously support that low-income people are most likely to use collection due process procedures. 

Oral arguments in the case centered in part on the grammar of the statute, which says in a parenthetical that "the Tax Court shall have jurisdiction with respect to such matter." The firm and the U.S. government disagreed specifically over what "such matter" refers to and, more importantly, the phrase's jurisdictional implications.

This decision will help taxpayers who don't file petitions for review of CDP determinations within the 30-day filing period in Code Sec. 6330(d)(1). The IRS will still try to get late-filed petitions dismissed for lack of jurisdiction, but now late-filing taxpayers will be able to argue that they're entitled to equitable tolling of the filing deadline.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

 

Read more at: Tax Times blog