I represent taxpayers in Gainesville and the state of Florida who have tax issues with the IRS.

Can the IRS contact your friends, neighbors, and employer? This is the government, of course they can. But the tax law does require them to give you reasonable notice.


What is reasonable notice you ask? The Ninth Circuit of the Court of Appeals recently ruled that it cannot be a generalized statement referring to third parties in the whole. Instead it must be a written notice that they plan to contact a specifically named party. The Court’s reasoning was that these contacts could be very detrimental to the taxpayer. First, the contact alone was an exception to the rule that your tax information was completely confidential. Secondly there was a possible or even probable negative impact on the taxpayer’s reputation that the IRS was making inquiries.


This is great news for people in California and Arizona who are in the Ninth Circuit’s area. But, what about us in Florida? It also looks like good news for us. The IRS is adopting changes that will give everybody reasonable notice. While the IRS policy book (aka Internal Revenue Manual) still reflects their old policy of only providing a general notice in Publication 1 – Your Rights as a Taxpayer, which they mail out in all audits. There was a new memorandum issued last July with an effective date of 8/15/19. It requires IRS employees to provide written notice of who they intend to contact at least 45 days in advance.


This is a much-needed change. It allows you the option to provide the necessary documents so that the IRS does not need to contact your friends, customers, or employer.


If you or someone you know has received a Notice of Intent to Levy or some other federal or state tax issue, please feel free to contact me at either (352) 317-5692 or email jim@backoffice2.net.

  • Jim Payne

I represent taxpayers in Gainesville and the state of Florida who have tax issues with the IRS.


Whenever you owe the IRS on a tax debt, there is an automatic statutory lien created by law. The problem for other creditors is that they won’t know about this claim on your property. The answer to that problem is the Notice of Federal Tax Lien which is filed in a courthouse near to the taxpayer’s residence. The big question for anybody receiving one of these notices is “how do I get rid of it?” There are various ways to get an IRS to release a lien on your property.

  • Pay the debt in full – not a great answer if you don’t have the cash

  • Discharge of property – the IRS releases a specific property from its general lien on all assets of the debtor

  • Subordination – the IRS allows other creditors to move ahead of their claim on a specific property

  • Withdrawal – the IRS releases the lien even though the debt is still owed.

Payment in Full

Of course, this is the IRS preferred reason for issuing a Certificate of Release of Federal Tax Lien. The IRS has an automated system that should issue this certificate within 30 days of receiving final payment or the discharge of the debt due to the Statute of Limitations running out.


Discharge of property

Sometimes it is in the best interest of the government to release the lien against a specific property. The IRS guidelines allow them to do this when the value of remaining property under lien is at least 2 times the taxpayers debt. Other reasons include an agreement to hold the proceeds of any sale in trust for the United States.


Subordination

This is another one of those things that require the situation to be in “the best interest of the government. This is generally what happens when the IRS wants the sale to go through, but other creditors will block it unless they get their cut first.


Withdrawal

The IRS can withdraw their public Notice of Federal Tax Lien. This usually happens when the TP enters a Payment Plan that will allow the government to receive full payment in 60 months or less. There is a Fresh Start program that allow some people with tax debts of $25,000 or less to qualify for withdrawal.


The IRS Notice of Federal Tax Lien has some large repercussions that will incentive you to get a release. The biggest one is usually the impact on your credit rating. The second one is the hassle of having to deal with yet another creditor when selling a property. When in doubt as to your qualifications for one of the above outs, it’s one of those things where there is no downside to asking.


If you or someone you know has received a Notice of Intent to Levy or some other federal or state tax issue, please feel free to contact me at either (352) 317-5692 or email jim@backoffice2.net.

I represent taxpayers in Gainesville and the state of Florida who have tax issues with the IRS.

There are three basic options that you can use in dealing with the IRS Collections Division:

  1. Payment Plans – You agree to make regular payments against your debt and the IRS agrees to not bug you too much.

  2. Offer-in-Compromise – You make an offer to clear the debt for less than the face value of the amount owed.

  3. Uncollectable Status – You show that your financial situation is such that you can’t make any immediate payments.

Payment Plans

There are several forms of automatically approved plans. If you qualify, all you do is fill out a form on the IRS website and start making payments – no fuss, no bother. Not everybody can fit under one of these automatic plans and as a result they will have to submit financial information to the IRS and negotiate a payment amount.


Offer-in-Compromise

This is the pennies on the dollar approach that you hear about on TV ads. What the ads don’t mention is that the IRS has no incentive to accept such an offer. Afterall, they have better legal tools to collect from debtors than private industry and they can afford to wait too see what the taxpayer might earn in the future. The fact of the matter is that the majority of offers are rejected by the IRS.


The IRS does except some offers - those that it determines are in its best interest. They do this using a formula approach that looks at the taxpayer’s current assets and potential future income. If the offer is more than the formula result, it is likely to be accepted provided the taxpayer has filed all tax returns that are due.

Uncollectable Status

The IRS does not want to waste their time if the situation is such that no amount of investigative work coupled with browbeating and threats of levy will result in cash collected. Once they determine that a taxpayer fits into that category, they mark the case as uncollectible and plan to revisit the situation every couple of years. This is great news for the taxpayer in that the IRS leaves them alone for a while and the 10-year Statute of Limitations continues to run.


What to do if you can’t pay the Taxes

If you can qualify for one of the Automatic Payment Plans and can live with the payment amount, then this is obviously your best option. The IRS leaves you alone as long as the payments are being made.


The road on the all the other options is a lot harder and you should consider professional help. You will have to submit detailed financial information about what you own and your income and living costs to the IRS. Included in this package of financial information are bank statements and other documents to substantiate your financial position. The IRS will then run your numbers through their formula and determine the amount of money that is the “Reasonable Collection Potential” to evaluate how much you can pay.


The Reasonable Collection Potential formula is not a secret. There is software available that allows a practitioner like me to run the numbers and calculate the amount that the IRS is likely to consider reasonable in advance. Once we know this amount, we can develop a strategy to decide which is the best option to consider – payment plan, offer-in-compromise, or uncollectible status.


If you or someone you know has received a Notice of Intent to Levy or some other federal or state tax issue, please feel free to contact me at either (352) 317-5692 or email jim@backoffice2.net.

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