Hmmm…..Why Hasn’t the IRS Cashed My Check Yet???

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    If you have an uncashed tax check at the Internal Revenue Service (IRS), you’re not alone. I am hearing this from some taxpayers about how they have sent checks to the IRS, early in the tax season, and they still have not been cashed. Making matters worse, the IRS has been sending out underpayment or failure-to-pay notices for those payments.

    First, you should know that this is clearly a systemic issue. It’s not you, it’s them. What exactly is the cause? A combination of unopened mail and the pandemic. The IRS recently noted that “If a taxpayer mailed a check (either with or without a tax return), it may still be unopened in the backlog of mail the IRS is processing due to COVID-19.”

    Second, you should not panic. If you mailed your payment, it will eventually be posted. According to the IRS “Any payments will be posted as the date we received them rather than the date the agency processed them.” Whatever you do don’t cancel your original check. Just because it hasn’t been cashed or credited doesn’t mean that it has gone missing. It’s likely just temporarily diverted.

    Also, don’t spend that money. If you’ve written a hefty check, assume that the IRS will cash it any day now. Don’t assume that you can write other checks on the same funds. While the IRS is providing relief from bad check penalties for dishonored checks the agency received between March 1 and July 15 due to delays in this IRS processing, interest and penalties may still apply. When the IRS reopened (kind of) in June, the estimated backlog of unopened IRS mail stood at 11 million. The IRS has been tasked with sorting through that mail (and opening new mail) while relying on reduced or stay-at-home staffing.

    Finally, don’t call. Due to high call volumes, the IRS says you should wait to contact the agency about any unprocessed check payments still pending.

    If you have a payment to make and you’re worried about it going missing, there are electronic payment options.

    • You can pay your taxes directly from your checking or savings account. To make a payment, click on over to the ‘Direct Pay Page’ here. You can schedule a payment or pay the same day, but IRS Direct Pay won’t accept more than two payments within 24 hours. And if you owe bunches, note that each payment must be less than $10 million.
    • Consider a same-day wire from your bank or financial institution. Contact your bank or financial institution (not the IRS) for details, including fees and deadlines. To make a payment, download and complete the ‘Same-Day Payment Worksheet’ here (it downloads as a PDF) to take with you to make the wire. Some of you may ask, what about making international wire transfers? Well, since you asked. To start with, U.S. taxpayers who reside in the United States must of course pay their taxes in U.S. dollars. But what about international taxpayers? International taxpayers without a U.S. bank account are allowed to transfer funds from their foreign bank account directly to the Internal Revenue Service to pay their taxes.To do this, you will need to complete that same ‘Same-Day Taxpayer Payment Worksheet’ that I mentioned a few sentences ago (you can find it again ——>here). Be sure to include the appropriate Tax Type Code (you’ll find your options on the bottom of the Worksheet) and tax period so that the funds will be properly applied to your tax liability. After you have completed the Worksheet, take it to your bank to initiate the wire transfer. Your foreign bank must have a banking relationship with a U.S. bank and your bank must be able to transfer money to the U.S. You’ll need the Routing Transit Number (RTN), also known as the American Banking Association (ABA) number for IRS. You may also need the IRS account number. You’ll find it here: IRS account number – 20092900IRS IRS account RTN/ABA Number – 091036164 US TREAS SINGLE TX. There may be a charge from your bank for this service. If your foreign bank needs assistance, they may need to contact the Federal Tax Payment Service Customer Service at 314-425-1810 (Please note: this is not a toll free number). You can find more information about ‘Foreign Electronic Payments’ here. Finally, while you can initiate a transfer from an international bank to pay your taxes, payments must actually be remitted to IRS in U.S. dollars. Not the Euro, yen, peso, franc, yuan, Aruban florin, or even Canadian dollars. ONLY United States dollars.
    • Electronic Funds Withdrawal (EFW) is an option that you can use to pay by direct debit from your bank account. The IRS doesn’t charge a fee to use EFW, but your financial institution might (check first to avoid a last-minute panic). You’ll need to know your bank routing and account numbers. For more information about EFW, click here.
    • You can pay what you owe by credit or debit card (for more information click here). Most of the approved IRS payment processors accept MasterCard, Visa, Discover and American Express. Generally, there’s no limit on the amount you can pay, but you are restricted to just two credit card payments in one year for the same individual tax bill (click here for more information). High-balance payments of more than $100,000 may require coordination with your credit card or debit card provider.
    • Use the Electronic Federal Tax Payment System (EFTPS) to pay by phone (or online here). To make a payment using EFTPS by phone, call (800) 555-3453. People who are deaf or have a speech disability and who have access to TTY/TDD equipment can call (800) 733-4829. To make a payment using EFTPS online, log in here, and follow the prompts. You can schedule your payment by 8 p.m. EST at least one calendar day in advance of the due date. It’s worth noting that your tax payment is due even if the website is not available, so plan ahead.

    For more information, visit www.irs.gov/payments for options to make payments other than by mail.

    Taxpayers who mail tax returns and other correspondence to the IRS should expect to wait longer than usual for a response. While the IRS is now receiving mail, the mail processing functions remain scaled back to comply with social distancing recommendations. The IRS’ ability to correspond with taxpayers about various issues, including requests for information needed to process a tax return, remains limited.

    So what about those tax returns? 

    • If you haven’t yet filed your return, the IRS advises that they are still experiencing processing delays for paper tax returns.You should file your tax return electronically. Solid Tax Solutions will prepare and electronically file your tax return. But keep in mind that the extension deadline (if a request for an extension was filed) is October 15 (which is six months from the ORIGINAL filing date, not the extended filing date).
    • If you have already filed a paper return, but have not yet heard from the IRS, don’t panic: the IRS will process your tax return in the order that it’s received. Do not file a second tax return or contact the IRS about the status of your return.

    So in closing, remember to keep in mind that patience is key (particularly when dealing with the IRS). Things are s-l-o-w-l-y getting back to normal, it’s just taking time.

    AS ALWAYS: PLEASE, PLEASE, PLEASE STAY WELL and STAY HEALTHY!

    BRUCE

    ______________________________________________________________________

    Bruce – Your Host at The Tax Nook

    Our Firm’s Website: SolidTaxSolutions.com

    Categories: Income Tax, Tax Debt, Tax Return Filing Tags: , , , , , , ,

    Tax Stimulus Checks – Q & A

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    As COVID-19 continues to impact the United States, the federal government is taking action to ease the burden on taxpayers. Most recently, the U.S. Senate and the House of Representatives passed a massive stimulus package and the Coronavirus Aid, Relief, and Economic Security or CARES act was subsequently signed into law by the President (You can access the Senate bill at this link—–> THE SENATE and the House version at this link—–> THE HOUSE).

    A key feature of this stimulus package is individual ‘stimulus checks’ (To avoid any confusion, the IRS refers to these ‘stimulus checks’ as ‘Economic Impact Payments’).

    As with anything that is tax-related, there’s a little bit of confusion. To help you sort it out, here are a few questions and answers:

    Who qualifies for the stimulus payments? The payments go to almost any adult with a Social Security number, as long as they aren’t dependents of someone else. Those adults will get the payments for the children in their household.

    When will I get my check? Checks are supposed to be produced “as rapidly as possible”. Treasury Secretary Steve Mnuchin has hinted they will come in April, but it’s been suggested that it could take up to two months. One thing that is true: if you use direct deposit, you’ll get your money faster.

    (UPDATE: The Treasury Department and officials from the IRS have told the House Ways and Means Committee that the initial wave of payments will go out the week of April 13. The payments will be automatically deposited into the same bank account reflected on the 2019 or 2018 tax return filed.

    Taxpayers who will be in the first wave will have already had their direct deposit information on file with the IRS from their 2018 or 2019 tax returns. Paper checks will then start going out in May to people who don’t have direct deposit information on file with the IRS. About 5 million checks will be sent weekly, and it could take up to 20 weeks to distribute all of them. People with the lowest incomes will get their checks first.

    In the coming weeks, the U.S. Treasury  plans to develop a web-based portal that will allow individuals who have not recently submitted banking information to the IRS to do so enabling them to receive payments immediately as opposed to waiting for a check to arrive in the mail.

    In addition the IRS anticipates creating a “Where’s my Economic Impact Payment?” tracker, similar to the “Where’s my refund?” system.)

    How big will my check be? So, there are three dollar figures to be aware of in terms of the stimulus payments: $1,200 will be given to individual taxpayers, $2,400 will go to married couples filing jointly and taxpayers will receive an additional $500 per qualifying child (listed on the taxpayer’s tax return) under the age of 17.

    Are there income limits on checks? The amount of the checks would start to phaseout for those adjusted gross income more than $75,000 ($150,000 for joint returns and $112,500 for heads of household). Take note that this is adjusted gross income (AGI), not taxable income – so this will be income before your standard or itemized deductions. FYI, you’ll find your AGI number on line 8(b) of your form 1040.

    Wait a minute, how does a phaseout work? I am glad you asked. A phaseout means that the benefit goes down as income goes up. In this case, for every $100 of income above those thresholds, your check will drop by $5. So, if you are a single filer and your AGI is $75,100, your check will be $1,195 ($1,200 – $5). If you are a single filer and your AGI is $85,000, your check will be $700 ($1,200 – $500). This also means that your stimulus check will be phased out completely (meaning that you’ll get nothing) once your AGI reaches $99,000 as a single filer, $198,000 as a married couple filing jointly, or $136,500 for heads of household.

    What about limits on children? There are no limits on the number of children that qualify. The definition of child will be the same as for the child tax credit.

    Do children born in 2020 get the payment? Parents of children born this year won’t get a payment for that child now.

    However, assuming the parents qualify based on their 2020 income, they would get $500 added to their tax refund or subtracted from their income-tax bill when they file their 2020 tax returns in early 2021.

    Will I need a Social Security Number to get a check? Yes. Or as an alternative (where applicable), an adoption taxpayer identification number (ATIN). This also holds true for spouses and children.

    So how does this work? Do I need to file anything to get my check? Technically, the checks are advances of refundable credits. The Treasury will advance your check based on your most recently filed tax return (i.e., your 2018 or 2019 tax return). If you haven’t filed a tax return, and your income is from Social Security benefits (or Railroad Retirement benefits), the bill allows the Treasury to use the information on your 2019 Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Social Security Equivalent Benefit Statement . After some initial confusion, this was confirmed by the Treasury. You can see what the Treasury said here and you can see the statement put out by the IRS here.

    Okay, I don’t understand. What the heck is a refundable tax credit? A refundable credit means that you can take advantage of the credit even if you do not owe any tax. Unlike with a nonrefundable credit, if you don’t have any tax liability, the “extra” credit is not lost but is instead refunded to you.

    In this case, the stimulus check acts like a refund that you get in advance based on your 2020 income. That’s confusing because you don’t know yet how much you’re going to earn in 2020, but that is why the IRS is using earlier tax returns. But this advance payment on the credit does not affect your “normal” tax refund for 2020: you won’t lose out on your expected tax refund for 2020 with the stimulus check

    What if I don’t get the right amount? When you file your 2020 tax return, the IRS will compare numbers. If you should have gotten a check and didn’t, or if you should have gotten more than you did because the IRS didn’t know something important (like you had a child in 2020), you should get more money.

    So taxpayers who ultimately qualify for a higher stimulus check amount than they receive this year (for example: a person whose income drops from $100,000 to $70,000) would get the rest through a larger tax refund or smaller tax payment in early 2021.

    On the other hand, if the numbers on your 2020 tax return suggest that you got more than you should because of your income, you should not have to pay it back. As it stands at this point, if your 2020 income is higher than the thresholds mentioned above and you received the stimulus check, you will not need to pay back any part of the payment. Don’t worry: most taxpayers should get just the right amount.

    Is my check taxable? NO! This is not taxable income.

    What if I am expecting a refund for the 2019 tax year? Your 2019 refund will not be affected by the stimulus check.

    How will I get my check? Direct deposit, if you’re lucky. The IRS will deposit your payment directly into the same banking account you used for direct deposit on your last filed return.

    But what if the IRS doesn’t have my direct deposit information? According to the IRS, the Treasury plans to develop has developed a web-based portal for individuals to provide their banking information to the IRS online so that individuals can receive their payments more quickly rather than waiting for a paper check. It’s not up yet but, per the IRS, it slated to be up and running by Mid-April. UPDATE (4/15/2020): That web-based portal is now up and running folks. So you can now enter your bank information to receive, by direct deposit, your ‘Economic Impact Payment’ (i.e.,stimulus payment). You will find it on the web-portal in the ‘Filers: Get Your Payment’ section. For your convenience you can access that web-portal right here.

    UPDATE (4/12/2020): This feature will be unavailable if the Economic Impact Payment has already been > scheduled <  for mail delivery.

    What if I’ve moved? Under the law, the Treasury must send notice of the payment by mail to your last known address. The notice will include how the payment was made and the amount of the payment. The notice will also include a phone number for the appropriate point of contact at the Internal Revenue Service (IRS) if you didn’t receive the payment. You can help make sure that it goes to the right place by updating your address after a move. Usually, you’d do that on your tax return, but you can also submit a federal form 8822, Change of Address (downloads as a PDF). It generally takes four to six weeks to process a change of address.

    What if I haven’t filed for 2018 and 2019? Do it soon, even if you have a simple, zero return. And don’t forget to include your direct deposit banking information on your return.

    But what if I am not required to file a tax return? If you don’t file a tax return due to low income and you do not receive Social Security or Railroad Retirement benefits you can use the new “Non-Filers: Enter Your Payment Info Here” application at the IRS website to provide simple information so that you can receive your stimulus check.

    You will be able to find that website right here.

    What about retired folks? Retired seniors are eligible so long as they meet the other criteria (Social Security numbers, Income thresholds, etc.). As I noted above, if you depend on Social Security (or Railroad Retirement) but normally don’t file a tax return, the Treasury will rely on your SSA-1099 form (or its equivalent the RRB-1099 ) to figure and send your check.

    What about those on government benefits? And those with no income? Yes, eligible folks include those with no income, as well as those whose income comes entirely from non-taxable means-tested benefit programs, such as SSI benefits. I’ve seen a lot of confusion about this; it’s because one of the original proposals limited the checks to those who earned income. This is no longer the case.

    Will I still get the check if I owe the IRS some money? Yes. If your refund would normally be seized to pay a tax debt, that shouldn’t happen here. SHOULDN’T. Assuming it works as planned.

    I will say, though, that while the IRS has not officially provided guidance (i.e., direction) on this matter the Senate Finance Committee stated that the bill turns off nearly all ‘administrative offsets’ that ordinarily may reduce tax refunds for taxpayers who have past tax debts, or who are behind on other payments to federal or state governments, including student loan payments. The only ‘administrative offset’ that will be enforced applies to those who have past due child support obligations that the states have reported to the Treasury Department.

    What if my check is normally seized for child support? Child support is an exception to the “we won’t offset your check” rule. Under the law, your check can be seized for child support arrears.

    This is a done deal, right? Yes. It passed in the Senate and the House. The President has signed it.

    So no changes? Right? I didn’t say that. There could be additional guidance from the IRS. I’ll let you know by updating this blog.

    Not that I don’t trust you, but where can I find this in writing? You can read the Congressional Record, which notes the discussion about the checks, the vote, and the text right —-> here. (downloads as a PDF). The IRS has confirmed some of this information and will eventually post more information on its website right —-> here, but for now, there is just a banner.

    UPDATE (4/12/2020): The IRS is reporting that, for security reasons, it plans to mail a letter about the Economic Impact Payment (i.e., the stimulus check) to the taxpayer’s last known address within 15 days after the payment is paid. The letter will provide information on how the payment was made and how to report any failure to receive the payment. If a taxpayer is not sure that they are receiving a legitimate letter from the IRS, the IRS is urging taxpayers to visit IRS.gov first to protect against scam artists.

    EVERYONE PLEASE, PLEASE, PLEASE STAY WELL and STAY HEALTHY!

    BRUCE

    ______________________________________________________________________

    Bruce – Your Host at The Tax Nook

    Our Firm’s Website: SolidTaxSolutions.com

    Categories: Business, Income Tax, Tax Debt, Tax Law, Tax Return Filing, Taxes in the News Tags: , ,

    The Government Shutdown and the IRS!

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    So, now that Christmas is over and Santa Claus has made all of his visits you may be wondering if the government shutdown will affect the IRS.

    Well, as you know the government is officially on shutdown–or actually on a partial shutdown. There are a number of functions which are relatively unaffected, such as the court system, for one reason or another, but most departments have contingency plans. Most IRS employees are considered nonessential and are going on furlough. That may be good news for someone anticipating an audit, but not if you have a question for the IRS.

    How serious the shutdown is for the IRS will depend on the length of time it continues. Much more than a week and plans will change. Here are some of the functions still staffed under the short-term contingency plan:

    • Completion and testing of the upcoming Filing Year programs
    • Electronic returns processed systemically up to the point of refunds
    • Processing paper tax returns through batching
    • Processing remittances
    • Processing disaster relief transcripts
    • Continuing IRS’s computer and accounting operations to prevent data loss
    • Protection of statute expiration, bankruptcy, liens and seizure cases
    • Upcoming tax year forms design and printing
    • Maintain criminal law enforcement and undercover operations

    Some examples of functions that are non-excepted activities and will be on hold:

    • Service center processing after the point of batching (e.g., data transcription, error resolution)
    • Issuing refunds
    • Processing non-disaster relief transcripts, income verification express service/return and income verification services
    • Processing amended tax returns
    • Most Headquarters and administrative functions not related to the safety of life and protection of property
    • All audit functions, examination of returns, and processing of non-electronic tax returns that do not include remittances
    • Non-automated collections
    • Legal counsel
    • Taxpayer services such as responding to taxpayer questions (call sites) (during Non-Filing Season)
    • Information systems functions (except as necessary to prevent loss of data in process and revenue collections)
    • Planning, research, and training and development activities

    So as you can see, certain basic functions will continue. But if you’re looking for answers to questions, you’ll probably have to look elsewhere. If the furlough approaches the start of the filing season, which is just past the middle of January, it’s likely the IRS will have a problem adhering to the above schedule. Rest assured, it’s highly unlikely the filing deadlines will be extended.

    Bruce @

    Solid Tax Solutions (SolidTaxSolutions.com)

    (845) 344-1040

    ☛We are open year round: Government shutdown or no Government shutdown!☚

    ____________________________________________________________________

    Bruce – Your Host at The Tax Nook

    Our Firm’s Website: SolidTaxSolutions.com

    Other Social Media Outlets: Facebook.com/SolidTaxSolutions.

    Twitter: Twitter.com/@SolidTax1040 (BTW, We Follow-Back).


    Categories: Income Tax, Tax Audit, Tax Debt, Tax Return Filing, Taxes in the News

    Can the IRS Take Your Home and Sell It When an Offer-In-Compromise is in Effect???

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    In a somewhat recent court case on appeal —>United States v. Brabant-Scribner, No. 17-2825 (8th Cir. Aug. 17, 2018) the Eighth Circuit affirmed the decision of the district court allowing the sale of taxpayer’s home and affirmatively determining that an offer in compromise request filed by the taxpayer has no impact on the ability of the court to grant the request by the IRS to sell the home or on the IRS’ ability to sell the home once the court granted its approval. In reaching this conclusion the Eighth Circuit analyzed the exemptions to levy in Internal Revenue Code section 6334 and the relief those provisions do and do not provide.

    The taxpayer, in this case, owes the IRS over $500,000. The opinion does not discuss the actions by the taxpayer to pay or resolve her liability prior to the action by the IRS to sell her house. I imagine that the IRS considered her a “won’t pay” taxpayer. Before seeking to sell her home, the IRS had seized and sold her boat and levied on her bank accounts.

    The 1998 Restructuring and Reform Act added Internal Revenue Code section 6334(e)(1)(A) to require that prior to seizing a taxpayer’s principal residence the IRS must obtain the approval of a federal district court judge or magistrate in writing. Before the passage of this provision, the IRS could seize a taxpayer’s home with the same amount of prior approval needed to seize any other asset owned by the taxpayer. No approval was necessary to seize any asset of the taxpayer. Prior to 1998 collection due process did not exist. Prior to 1998 the 10 deadly sins did not exist one of which calls for the dismissal of an IRS employee who makes an inappropriate seizure. So, the landscape regarding seizures, and especially personal residence seizures, changed dramatically after 1998. However, the amount of litigation regarding seizure of personal residences is low and the Brabant-Scribner case offers a window on one aspect of this process.

    As the IRS initiated the process of seizing her personal residence by obtaining the appropriate court approval, the taxpayer filed an offer in compromise. She filed an effective tax administration offer of $1,000 but the amount and sincerity of her offer do not really matter to the legal outcome of this case. The timing and the amount of the offer may have influenced the thinking of the judges and made them more inclined to dismiss her argument but her possibly bad faith effort to stop the approval and execution of the sale should not have affected the outcome here.

    To convince the court to allow the sale of a personal residence, the IRS must show compliance with all legal and procedural requirements, show that the debt remains unpaid and show that “no reasonable alternative” for collection of the debt exists. The taxpayer argued that her offer was a reasonable alternative. However, the court spends three paragraphs explaining that an offer does not matter in this situation. The relevant language in the applicable regulation is “reasonable alternative for collection of the taxpayer’s debt.” The court explains that the word “for” holds the key to the outcome.

    “For” refers to an alternative to the sale of the personal residence such as an installment agreement or the offer of funds from another source to satisfy the debt. An offer in compromise is not an alternative for collection but an alternative “to” collection.

    Having determined that the words of the Treasury Regulation point toward a resolution other than an offer as providing the necessary alternative, the court looks at the remainder of the Treasury Regulation for further support of its conclusion. It points to the provision in Treasury Regulation 301.6334-1(d)(2) which provides that the taxpayer has a right to object after the IRS makes its initial showing and “will be granted a hearing to rebut the Government’s prima facie case if the taxpayer … rais[es] a genuine issue of material fact demonstrating … other assets from which the liability can be satisfied.” This regulation, like the one providing an alternative “for” collection, looks not to relief from payment of the liability but a source for making payment. It does not provide the offer in compromise as a basis for relief. Based on this the court concludes that “nothing requires the district court to ensure that the IRS has fully considered a taxpayer’s compromise offer before approving a levy on a taxpayer’s home.”

    Since the IRS properly made its case for seizing and selling the home and the taxpayer did not rebut that case, the Eighth Circuit affirms the decision of the district court to approve the sale. The decision provides clear guidance for district courts faced with the request by the IRS to seize and sell a personal residence. Personal residence seizures by the IRS remain rare at this point. Taxpayers faced with such a seizure, almost always taxpayers the IRS characterizes as “won’t pay” taxpayers, will find it difficult to stop the seizure and sale based on this decision. I do not think this decision will motivate the IRS to increase the number of personal residence seizures but it will make it a little easier to accomplish when it decides to go this route.

    If you are having problems with the IRS, Solid Tax Solutions can help you.

    We are only a ☎ phone call away at ☛ (845) 344-1040.

    ————————————————————————————————————————————————————

    Bruce – Your Host at The Tax Nook

    Our Firm’s Website: SolidTaxSolutions.com

    Other Social Media Outlets: Facebook.com/SolidTaxSolutions.

    Twitter: Twitter.com/@SolidTax1040 (BTW, We Follow-Back).

    Categories: Income Tax, Tax Audit, Tax Debt, Tax Law

    Uh-Oh! The IRS is Riding the Debt Collector Train. Again!

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    Sooooooo, the IRS has recently announced (on September 26) that it plans to begin a private collection program (authorized by the Fixing America’s Surface Transportation Act) for certain overdue federal tax debts next spring and has selected four contractors to implement the new program.

    A 1040 tax return with the word 'Overdue' stamped on it.
    The IRS Has Hired Private Debt Collectors to Collect Back Tax Debt.

    The IRS has attempted to use private contractors twice in the past, both times finding it not cost effective. Now, under the law, the IRS is required to use qualified contractors to collect inactive receivables. An inactive receivable is one that meets one of the following requirements:

    1. At any time after assessment, the Internal Revenue Service removes such receivable from the active inventory for lack of resources or inability to locate the taxpayer,
    2. More than 1/3 of the period of the applicable statute of limitation has lapsed and such receivable has not been assigned for collection to any employee of the Internal Revenue Service, or
    3. In the case of a receivable which has been assigned for collection, more than 365 days have passed without interaction with the taxpayer or a third party for purposes of furthering the collection of such receivable.

    Certain receivables are not eligible for collection using private collectors. They include:

    • Those subject to a pending or active offer-in-compromise or installment agreement,
    • Those classified as an innocent spouse case,
    • Those involving a taxpayer identified by the IRS as being:
      1. Deceased,
      2. Under the age of 18,
      3. In a designated combat zone,
      4. A victim of tax-related identity theft,
      5. Currently under examination, litigation, criminal investigation, or levy,
      6. Subject to pending or active offers in compromise,
      7. Subject to a right of appeal, or
      8. In a presidentially declared disaster areas and requesting relief from collection,
    • those currently under examination, litigation, criminal investigation, or levy, or
    • those currently subject to a proper exercise of a right of appeal under this title.

    The new program, authorized under a federal law enacted by Congress last December, enables these designated contractors to collect, on the government’s behalf, outstanding inactive tax receivables. As a condition of receiving a contract, these agencies must respect taxpayer rights including, among other things, abiding by the consumer protection provisions of the Fair Debt Collection Practices Act. The IRS has selected the following contractors to carry out this program:

      • CBE Group 1309 Technology Pkwy Cedar Falls, IA 50613
      • Conserve 200 CrossKeys Office park Fairport, NY 14450
      • Performant 333 N Canyons Pkwy Livermore, CA 94551
      • Pioneer 325 Daniel Zenker Dr Horseheads, NY 14845

    These private collection agencies will work on accounts where taxpayers owe money, but the IRS is no longer actively working their accounts. Several factors contribute to the IRS assigning these accounts to private collection agencies, including older, overdue tax accounts or lack of resources preventing the IRS from working the cases.

    The IRS will give each taxpayer and their representative written notice that their account is being transferred to a private collection agency. The agency will then send a second, separate letter to the taxpayer and their representative confirming this transfer. Private collection agencies will be able to identify themselves as contractors of the IRS collecting taxes. Employees of these collection agencies must follow the provisions of the Fair Debt Collection Practices Act and must be courteous and respect taxpayer rights.

    The IRS will do everything it can to help taxpayers avoid confusion and understand their rights and tax responsibilities, particularly in light of continual phone scams where callers impersonate IRS agents and request immediate payment.

    Private collection agencies will not ask for payment on a prepaid debit card. Taxpayers will be informed about electronic payment options for taxpayers on IRS.gov/Pay Your Tax Bill. Payment by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency.

    If you owe back taxes to the IRS, give Solid Tax Solutions a call (we are open year-round) at: (845) 344-1040.

    We are also on the web at: SolidTaxSolutions.com.

    __________________________________________________________________________________________________

    Bruce – Your Host at The Tax Nook

    Our Firm’s Website: SolidTaxSolutions.com (or just click on the icon on right sidebar of this page).

    Other Social Media Outlets: Facebook.com/SolidTaxSolutions (or just click on the icon on right sidebar of this page).

    Twitter: Twitter.com/@SolidTax1040 (BTW, We Follow-Back).

    Categories: Tax Debt

    The IRS Has Proposed Increases in Installment Agreement Fees.

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    The IRS is proposing a revised schedule of user fees that would take effect on Jan. 1, 2017, and apply to any taxpayer who enters into an installment agreement.

    The proposal, which is one of several user fee changes made this year, reflects the law that federal agencies are required to charge a user fee to recover the cost of providing certain services to the public that provides a special benefit to the recipient. Although some installment agreement fees are increasing, the IRS will continue providing reduced-fee or no-cost services to low-income taxpayers.

    Installment Agreement Fees

    The revised installment agreement fees of up to $225 would be higher for some taxpayers than those currently in effect, which can be up to $120. However, under the revised schedule any affected taxpayer could qualify for a reduced fee by making their request online using the Online Payment Agreement application on IRS.gov website. In addition, there would be no change to the current $43 rate that applies to the approximately one in three taxpayer requests that qualify under low-income guidelines. These guidelines, which change with family size, would enable a family of four with total income of around $60,000 or less to qualify for the lower fee. Also, for the first time, any taxpayer regardless of income would qualify for a new low $31 rate by requesting an installment agreement online and choosing to pay what they owe through direct debit.

    The top rate of $225 applies to taxpayers who enter into an installment agreement in person, over the phone, by mail or by filing Form 9465 with the IRS. But a taxpayer who establishes an agreement in this manner can substantially cut the fee to just $107 by choosing to make their monthly payments by direct debit from their bank account.
    Alternatively, a taxpayer who chooses to set up an installment agreement using the agency’s Online Payment Agreement application will pay a fee of $149. Similarly, they can cut this amount to just $31 by also choosing direct debit.

    Proposed Fees

    Here is the proposed schedule of user fees:

    • Regular installment agreement: $225
    • Regular direct debit installment agreement: $107
    • Online payment agreement: $149
    • Direct debit online payment agreement: $31
    • Restructured or reinstated installment agreement: $89
    • Low-income rate: $43

    Further details on these proposed changes can be found in proposed regulations (REG-108792-16 in case you were wondering), now available in the Federal Register. The IRS welcomes comment on these changes, and a public hearing on the regulations will take place in Washington, D.C. For details on submitting comments, just take a look at the proposed regulations.

    By law, federal agencies are required to charge a user fee to recover the cost of providing certain services to the public that confer a special benefit to the recipient. Installment agreements are an example of a service that confers a special benefit to eligible taxpayers. Agencies must review these fees every two years to determine whether they are recovering the costs of providing these services.

    In the past, the IRS often charged less than the full cost for many services in an effort to make them accessible to a broader range of taxpayers. But given current constraints on agency resources, the IRS can no longer continue this practice in most cases.

    Nevertheless, the IRS intends to continue providing reduced-fee or no-cost services to low-income taxpayers. For that reason, the IRS will continue subsidizing part of the cost of providing installment agreements to low-income taxpayers.

    You can find out more information, on the IRS’ website, about the IRS User Fee Program.

    If you are contemplating an Installment Agreement or have other issues regarding back taxes owed the IRS, give us a call at (845) 344-1040. We are here year-round to help you.

    You can find out more about us on our website => SolidTaxSolutions.com.

    __________________________________________________________________________________________________

    Bruce – Your Host at The Tax Nook

    Our Firm’s Website: SolidTaxSolutions.com (or just click on the icon on right sidebar of this page).

    Other Social Media Outlets: Facebook.com/SolidTaxSolutions (or just click on the icon on right sidebar of this page).

    Twitter: Twitter.com/@SolidTax1040 (BTW, We Follow-Back).

    Categories: Tax Debt, Uncategorized

    THE IRS MAY TAKE SOCIAL SECURITY BENEFITS TO SATISFY TAX DEBTS!

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    To satisfy tax debts, the IRS may levy a taxpayer’s Social Security benefits. However, a provision of the Internal Revenue Code requires the IRS to release levies that cause economic hardship.

    An IRS Building.
    Social Security Recipients Who Have Tax Debts May Receive a Visit From the IRS!

    In addition, taxpayers have the right to claim an exemption against the levy, which allows them to receive a minimum amount of the Social Security payment and prevent all or part of the levy.

    The Treasury Inspector General for Tax Administration (TIGTA) initiated an audit to determine whether the IRS appropriately applied manual levies to Social Security benefits. IRS Revenue officers make levy determinations of Social Security benefits on a case-by-case basis and exercise judgment in making the determination to levy. While there are special procedures and thresholds for levying Individual Retirement Accounts (IRA) and 401(k) retirement accounts, there are no special considerations or procedures for revenue officers when levying Social Security benefits. In these cases, the revenue officers follow procedures for levying assets in general. In most cases, revenue officers are compliant with these general IRS procedures when levying Social Security benefits. However, for 15 percent of the audit’s sample, TIGTA found that IRS revenue officers took levy action on Social Security recipients that likely caused or exacerbated economic hardship. These levies may be due in part to a change in collection policies that appears to give equal weight to nonlegal considerations (such as whether taxpayers are “cooperative” within the subjective determination of revenue officers) and the legal requirement to release the levy when the IRS determines that the levy is creating an economic hardship for the taxpayer. In these cases, revenue officers could have discerned from the facts that the taxpayers were experiencing economic hardship.

    In Addition, while existing procedures allow revenue officers to manually levy up to 100 percent of Social Security benefits, taxpayers have the right to claim an exemption from the levy. However, in 28 percent of the sampled cases, IRS revenue officers used the wrong form to levy Social Security benefits. As a result, the IRS did not consider exemption amounts before establishing the levy. Of these cases, 6 percent involved taxpayers who suffered greater Social Security levies than allowed by law.

    The TIGTA believes the IRS needs to adjust its policies and procedures to allow revenue officers, with appropriate discretion, not to levy if facts and circumstances clearly show that taxpayers are in or on the threshold of an economic hardship.

    If you would like to see the complete report (ah yes, nice summertime reading), go to: www.treasury.gov/tigta/auditreports/2016reports/201630043fr.pdf.

    Is this an example of to much force used by the IRS? Is it misguided?

    __________________________________________________________________________________________________

    Bruce – Your Host at The Tax Nook

    Our Firm’s Website: SolidTaxSolutions.com (or just click on the icon on right sidebar of this page).

    Other Social Media Outlets: Facebook.com/SolidTaxSolutions (or just click on the icon on right sidebar of this page).

    Twitter: Twitter.com/@SolidTax1040 (BTW, We Follow-Back).

    Categories: Tax Debt

    A Notice of Federal Tax Lien, The IRS, and YOU!

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    After filing a Notice of Federal Tax Lien (NFTL), the IRS must notify the affected taxpayers in writing, at their last known address, within five business days of the NFTL filings.

    Taxpayers’ rights to timely appeal the NFTL filings may be jeopardized if the IRS does not comply with this statutory requirement. The Treasury Inspector General for Tax Administration (TIGTA) reviewed a statistically valid sample of 133 NFTLs filed for the 12-month period beginning July 1, 2014 and ending June 30, 2015, and determined that the IRS timely and correctly mailed the copy of NFTL filing and appeal rights to the taxpayers’ last known address, as required by Code Section 6320(a). However, tests of a judgmental sample of 162 undelivered lien notices identified nine cases for which lien notices were not timely sent to the taxpayers’ last known addresses because the lien notices were sent to the taxpayers’ old addresses even though IRS systems reflected their new addresses. Among the nine, seven sampled lien notices were not sent to the secondary taxpayers’ last known addresses because employees did not identify separate addresses for taxpayers’ spouses. Both notices were instead sent to the primary taxpayers’ addresses. Although the IRS reissued lien notices for three of the cases upon receipt of the undelivered lien notices and subsequently reissued lien notices for the remaining six cases, all nine cases involve potential legal violations because the IRS did not meet its statutory requirement to timely send lien notices to the taxpayer’s last known address. IRS regulations require that taxpayer representatives be provided copies of all correspondence issued to the taxpayer. However, for six of the 37 sample cases for which the taxpayer had an authorized representative, the IRS did not notify the taxpayers’ representatives of the NFTL filings. TIGTA estimated that 22,866 taxpayers may have been adversely affected. In addition, for 17 of 162 judgmentally sampled undeliverable lien notices, employees did not update the mail status of the lien notice with the appropriate transaction code and action code combination.

    If you would like to see the full report, go to www.treasury.gov/tigta/auditrepor ts/2016reports/201630047fr.pdf.

    ___________________________________________________________________________________________________

    Bruce – Your Host at The Tax Nook

    Our Firm’s Website: SolidTaxSolutions.com (or just click on the icon on right sidebar of this page).

    Other Social Media Outlets: Facebook.com/SolidTaxSolutions (or just click on the icon on right sidebar of this page).

    Twitter: Twitter.com/@SolidTax1040 (BTW, We Follow-Back).

    Categories: Tax Debt

    IF YOU ARE THE RECIPIENT OF AN IRS LEVY YOU NEED TO MOVE VERY, VERY, FAST!

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    Recently, I wrote an article on this blog giving an introduction to A Bank Levy (you can read that article here). After writing that article I ‘got to thinking’ about a court case that gives a real life application of the affect of a Bank Levy and how time can play a role in its operation.
    Since Tax Season is in full swing I was not able to write about it sooner but I did not forget about you.

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    So, this is a case which a California District Court heard in 2014 and is titled: United States of America v. JPMorgan Chase Bank NA (you can read the case here). If the decision in this case against JPMorgan Chase stands, banks may be more inclined to be lickety split when the IRS comes knocking with claims against a depositor’s money.

    So to give you an overview of this case I will start with James Waterman who reported $21,584 of Adjusted Gross Income (AGI) on his 2008 tax return while claiming a refund of $78,169, which he received in August of 2009. Shortly thereafter, the IRS determined that Mr. Waterman actually owed $92,770.

    Collection Officer Ted Hanson was assigned to the case. The Office of Chief Counsel gave Mr. Hanson authority to issue a Jeopardy Levy. There is potential for quite a bit of process when the IRS proposes to just take your stuff in order to satisfy a tax liability. A Jeopardy Levy, which is called for when there are indications that the taxpayer might be moving assets out of harm’s way, is quickly effective without the issuance of a notice informing the taxpayer of the right to a Collection Due Process (CDP) hearing, which can slow matters to a snail’s pace.

    At around 9:30 AM on September 9, 2009, Mr. Hanson visited Mr. Waterman to demand payment of the amount owed. Mr. Waterman did not pay so Mr. Hanson served him with a series of documents, including a notice that IRS intended to levy his bank account.

    A Race To The Bank!

    Mr. Hanson then drove to the local Chase branch where Mr. Waterman had two accounts totaling $47,375.47. The jeopardy levy was served on one of Chase’s employees. Two hours later Mr. Waterman withdrew $40,000 from one of the accounts.

    Chase was not in as much of a hurry as the other two players in the drama. Chase froze Mr. Waterman’s account two days later on September 11 and remitted the balance of $7,659.48, which included $0.32 of interest that had posted in the interim, to the IRS on October 1.

    Who’s Responsible?

    The thing about an IRS Levy is that if you are holding somebody’s property and you fail to turn it over to the IRS, the IRS can get it from you. So the IRS was looking for Chase to make up the $40,000 that left the account two hours after it had notice of the levy. Chase thinks that the IRS was being a little unreasonable and that IRS bears some of the blame.

    It turns out that because this was a Jeopardy Levy, the collection officer was not required to explicitly give notice to Mr. Waterman that he intended to levy his bank accounts. Mr. Hanson, the Collection Officer, did so anyway, perhaps prompting Waterman to withdraw the money before Chase had time to freeze the account.

    The District Court indicated that Mr. Hanson telling Mr. Waterman about the levy was improper. It went on to note that there are only two defenses to the levy.
    One is that the entity being levied does not actually have anything that belongs to the taxpayer and the other is that there is a prior claim against the property.

    Chase contended that it was entitled to a reasonable amount of time to react to the levy and that the IRS tipping Waterman off is what led to the loss. Chase’s argument did not go far with the judge.

    “The fact of the matter, though, is that the IRS was required to tip Waterman off no matter what. Even when jeopardy assessments are made, the IRS must provide notice of demand for immediate payment before any levy may be imposed. 26 U.S.C. § 6331(a). While this notice does not necessarily inform the taxpayer that bank accounts will soon be levied, it certainly lets them know that something is afoot.

    Moreover, Section 6332 does not contain any reasonableness element that would delay the vesting of the United States’ interest in property under a bank’s control.
    The only requirement is that a bank “surrender any property … subject to levy” or risk being held liable for the disappearance of that property.
    26 U.S.C. § 6332(d)(1). While it is true that the bank need not immediately “surrender” the property, it must upon being given notice preserve that property or run the risk of paying the depositor’s tax bill. That is the state of affairs here. Waterman’s money was “property … subject to levy,” the IRS agent served the bank with the levy giving it notice of the government’s claimed interest in the property, and Chase allowed it to slip away. Section 6332 is therefore applicable.”

    So the Moral of the Story Is……..

    An IRS Levy is No Joke!

    Before it got to this stage, Mr. Waterman would have received several other notices from the IRS prior to the Jeopardy Levy and the visit by the IRS Collection Officer. A consultation with a competent tax professional would have avoided this horrid scene.

    When you receive a notice (ANY notice) from the IRS (or the state) contact
    SOLID TAX SOLUTIONS immediately at (845) 344-1040.

    _________________________________________________________________________________________________

    Bruce – Your Host at The Tax Nook

    Our Firm’s Website: SolidTaxSolutions.com (or just click on the icon on right sidebar of this page).

    Other Social Media Outlets: Facebook.com/SolidTaxSolutions (or just click on the icon on right sidebar of this page).

    Twitter: Twitter.com/@SolidTax1040 (BTW, We Follow-Back).

    Categories: Tax Debt

    WHAT YOU SHOULD KNOW ABOUT A BANK LEVY!

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    Like a Ninja assassin, a bank levy strikes without a peep. How and when, no one knows. One day your debit/credit card will be working fine, but the next day your card will be rejected while making purchases or while trying to draw cash from the ATM. The IRS bank Levy can be quite devastating and can make normal life impossible; turning it upside down.

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    A bank levy can be one of the harshest methods of collecting taxes used by the IRS. Should
    you ever face a bank levy it shouldn’t come as a surprise because the IRS gives a fair warning to individuals in advance that they plan on using this method.


    Bank levy – An Introduction

    Bank levy is one of the easiest, quickest and the most preferred ways adopted by the IRS to levy you and get your attention fast. A bank levy is a situation wherein you have been informed that your account has been frozen and all or some portion of the money in your bank balance is taken away.
    A bank levy is when the IRS literally and legally goes into your bank account and takes out a portion or all of your balance in order to make even for the unpaid taxes you owe to the IRS. When this happens, the bank has no say but to assist or accommodate the IRS. And if the bank refuses to do so, the IRS will personally hold the bank responsible for the funds that they were to receive if they were to levy your account.

    Why and When Does Bank Levy Happen?

    A bank levy is simply not levied just like that…impromptu. A bank levy can happen for a number of reasons, but the most common of them being, unpaid tax debt. Remember IRS does not want to levy, but has no choice. When the IRS finds out that you have not paid taxes to them, the IRS sends out series of four notices to the taxpayer (i.e., to inform you of their intentions to levy). In most of the cases, taxpayers do not respond. There are many reasons for it like the taxpayer has moved away or never got the IRS bank levy notices, or declines paying the amount due, etc. After sending out the fourth notice, the IRS sends out bank levy notices to the bank.

    The Course of Action the IRS Takes for Bank Levy?

    The bank levy process is actually the last straw of a long method of collection that the IRS follows. If the IRS wants to levy your bank account they must have assessed you with a tax amount to pay which you either must have not paid or entered into a payment agreement, and then were sent a final notice of intent to levy by the IRS. The IRS will literally and legally go into your bank and freeze your account(s). The balance in your account(s) will remain
    frozen for 21 days until the IRS takes away the money you owe them.

    Actions You Can Take to Stop or Avoid a Bank Levy

    It isn’t an easy task to stop the IRS from taking away your money. If your account has already been frozen, you just can’t prevent the IRS from taking the money in your frozen account. However, you can adopt some common methods to get back into the good books of the IRS.

    Installment Agreement: There are many methods of payments that have been offered by the IRS to pay off the taxes you have owed over the time. One of them being the Installment Agreement wherein you will pay the taxes owed in installments. After entering into an installment agreement, if you keep up on your promise, you will be in their good books and will not be levied, even though you may still have a large outstanding unpaid tax balance.

    Offer in Compromise: Another method which the IRS rarely agrees to is Offer in Compromise. If you can show and prove that your living and financial conditions are so bad that there is no way you will ever be able to pay back the taxes you owe, the IRS will relent.

    Uncollectible Status: If you prove your uncollectible status, the IRS may suspend their collection efforts and give you some time so that you can improve your financial situation enough and pay your taxes.

    Appeal: You can file for an appeal within 30 days of receiving your final notice of intent to levy, before the levy has been issued by filing IRS form 12153. Filing for Collection Due Process (CDP), allows the taxpayer or their Power of Attorney to reach a final resolution with a settlement officer.

    Though it it is difficult for you to deal with a IRS Levy, you do have a way out.

    And that is by seeking the help of a competent tax professional before it is to late.

    SOLID TAX SOLUTIONS can and will help you with your tax issues.

    Call SOLID TAX SOLUTIONS at (845) 344-1040.

    ———————————————————————————————————————

    Bruce – Your Host at The Tax Nook

    Our Firm’s Website: SolidTaxSolutions.com (or just click on the icon on right sidebar of this page).

    Other Social Media Outlets: Facebook.com/SolidTaxSolutions (or just click on the icon on right sidebar of this page).

    Twitter: Twitter.com/@SolidTax1040 (BTW, We Follow-Back).

    Categories: Tax Debt