The Collection System Mail and Telephone The speed

The Collection System (Mail and Telephone) The speed of the IRS ü Notices are coming more quickly – True ü Collection calls are coming more quickly – False ü Responses to notices are coming more quickly – False ü The IRS is more willing to enter into a payment agreement – True ü Trying to contact the IRS is becoming more frustrating - True 1 08: Enforcement Actions Page 185

The Collection System (Mail and Telephone) At whatever level of contact for payment agreements the IRS employee is instructed to determine if: 1. Taxpayer has filed ALL required returns 2. Taxpayer is current for all payments, including estimates 3. The amount of unpaid tax and what programs they may qualify for and 4. The amount determined in step 3 qualifies for one of the payment programs 2 08: Enforcement Actions Page 185

The Collection System (Mail and Telephone) Phone calls have diminished because: The large amount of phishing and fraud occurring by phone IRS believes that mailed notices are more effective Lower levels of employee error in handling mail interactions versus verbal interactions 3 08: Enforcement Actions Page 185

The Collection System (Mail and Telephone) Page 185 Points to remember: üDuring the process it is very likely that an IRS representative will have access to the taxpayers credit report ü Chief Counsel Advice 200726001 affirms that the IRS is under no responsibility to inform the taxpayer that IRS does in fact have a copy of the credit report 4 08: Enforcement Actions

The Collection System (Mail and Telephone) Page 185 IRS always wants financial information. 1. Not required in many situations with a DDIA up to $100, 000 full pay agreement. 2. Go on offensive, take charge of the situation, do not let IRS dictate terms, know levels of authority, remember you know more rules than they normally do. 3. Once you deliver financial information to collection they own it under guidelines in any future appeal, i. e. that do any investigation of amounts, etc. 5 08: Enforcement Actions

The Collection System (Mail and Telephone) The New Reality – IRS lacking full payment will quickly move into an installment payment environment The TA will work their way down the checklist: Full Pay Determine IA (installment agreement) ability/qualification Grant CNC when taxpayer has financial hardship 6 08: Enforcement Actions Page 186

The Collection System (Mail and Telephone) Page 187 When ACS has case PPS cannot help but they can forward the call. irs. gov/tax-professionals/practitioner-priority-service 7 08: Enforcement Actions

The Collection System (Mail and Telephone) 2. Power of Attorney ü Have it and be ready to produce ü Have Publication 4019 nearby 8 08: Enforcement Actions Page 255 -256

The Collection System (Mail and Telephone) 1. Giving information to ACS ü There never seems to be enough - Resist 2. Entering into an IA ü Be prepared to request an appeals conference 3. Try Again ü Hang up and talk to someone else 9 08: Enforcement Actions Page 188

The Collection System (Mail and Telephone) Page 188 4. No Solution to the Problem ü The supervisor approach – Very difficult as they almost never have/take the time to return the phone call. ü When the return call does not happen try again after three contacts call the TA in the taxpayers state of residence 10 08: Enforcement Actions

The Collection System (Mail and Telephone) Page 188 -189 Best Practices Record the Employee ID# and name Date and time of the call All actions requested of the taxpayer by the assistor Actions indicated that the IRS will take Collection information statement information provided to assistor Follow-up with a written letter confirming ALL of the above information 11 08: Enforcement Actions

Page 189 Private Debt Collection Program IT’s Back – Fast Act REQUIRES IRS to place certain accounts with PDC (Private Debt Collectors). 1. The assessment has been removed from active inventory due to lack of resources. 2. More than 1/3 of statute for collection has expired without IRS employee assignment. 3. The account has been assigned during the last 365 days but there has been NO interaction between IRS and taxpayer/third party. 12 08: Enforcement Actions

Page 189 Private Debt Collection Program Certain types of accounts may not be assigned to PDC: 1. There is a pending or active IA or OIC. 2. It has been classified an innocent spouse case. 3. IRS has identified the taxpayer as: a. b. c. d. Deceased Under Age 18 In a combat zone A victim of ID Theft 4. Current under examination, litigation, criminal investigation, levy or 5. Is currently exercising right of appeal. 13 08: Enforcement Actions

Page 190 Private Debt Collection Program The Winners are (announced in IR 2016 -125): 1. CBE Group 2. Con. Serve 3. Performant 4. Pioneer 14 08: Enforcement Actions

Page 190 Private Debt Collection Program The Process of Assignment – IR 2017 -74: 1. IRS will send a letter to the taxpayer informing the T/P that their account has been assigned to the PCA (Private Collection Agency). 2. The PCA will send a letter of introduction to the taxpayer Each notice will contain a 10 digit code which will replace the T/P’s SSN 15 08: Enforcement Actions

Page 190 Private Debt Collection Program The Process or Assignment – IR 2017 -74: To confirm the code the T/P was to go to irs. gov/businesses/small-businesses-selfemployed/private-debt-collection Currently this site has only general information about the program 16 08: Enforcement Actions

Page 190 Private Debt Collection Program Some IRS regulatory additions to the program: ü A taxpayer in a federal declared disaster area who have requested relief cannot be assigned to the PDC program ü This includes taxpayers who were previously eligible for assignment but are not in a federally declared area. 17 08: Enforcement Actions

Page 190 Private Debt Collection Program This is how it works – IRM 10. 5. 2 1. A T/P who has been assigned and wishes to setup an IA must set up the IA with the PCA. 2. If the T/P wishes to not be assigned to the PCA they must write the PCA advising them of that request for possible reassignment. 3. If the T/P believes they have not been treated corrected they are to contact TIGTA: a. Threatened b. Scammed either by the PCA or a phony PCA. c. Mishandled by the PCA 18 08: Enforcement Actions

Page 191 Private Debt Collection Program To make a complaint about a PCA or report misconduct contact TIGTA at: irs. gov/businesses/small-businesses-self-employed/private-debtcollection 19 08: Enforcement Actions

Payment Offsets Page 191 Looking for the missing refund A. First check with IRS resources on where they say the refund is at 20 08: Enforcement Actions

Payment Offsets 21 08: Enforcement Actions Page 191 -192

Page 192 Payment Offsets Type Here 22 08: Enforcement Actions

Page 193 Payment Offsets Type Here 23 08: Enforcement Actions

Page 193 Payment Offsets When the IRS adjusts the refund they are suppose to send CP 49 explaining the adjustment 24 08: Enforcement Actions

Payment Offsets Non-tax offsets – Treasury Offset Program as directed by the Financial Management Service (FMS) including ØChild Support ØFederal Agency non-tax debts Ø Student Loans Ø Unemployment Repayments ØState Income Tax 25 08: Enforcement Actions Page 194

Payment Offsets Page 195 What do I do if the taxpayer thinks they may be subject to an agency offset but is not sure? 1. Contact FMS at 800 -304 -3107 2. Go to http: //fms. treas. gov/index. html 3. Specific information regarding payments subject to offset (Page 261) 4. Contact information for agencies that are eligible to request offset 26 08: Enforcement Actions

Payment Offsets Page 195 What to do when refund is offset by someone other than IRS? ü Contact agency that funds were sent to ü If joint refund and debt is that of only one of the taxpayers file Form 8379 – this can be filed with original return as well and if post filing should be directed to address on notice of offset 27 08: Enforcement Actions

Page 195 Payment Offsets FMS requires a POA too available at web site 28 08: Enforcement Actions

Payment Offsets There are some exemptions from offset (this does not apply to federal tax obligations) Ø Taxpayer in bankruptcy Ø Innocent spouse relief has been granted Ø Arrangements have been made to pay the debt Ø Hardship 29 08: Enforcement Actions Page 196

Levies The levy power as held by the IRS allows them to confiscate property and sell that property to satisfy the tax debt 30 08: Enforcement Actions Page 196

Page 196 Levies What can the IRS levy? Everything v v v Wages Bank Accounts Social Security Retirement Income Tax Refunds Real Estate including the taxpayer’s personal residence v Accounts Receivable v ANY money owed to taxpayer 31 08: Enforcement Actions

Levies Page 196 To issue levy IRS MUST: 1. Assess tax and send a Notice of Demand for Payment 2. Prove the taxpayer neglected or refused to pay tax 3. Send Final Notice of Intent to Levy AND Notice of Your Right to a Hearing (CDP) if not previously exercised 32 08: Enforcement Actions

Page 197 Levies This generally comes with the ability for a CDP hearing however IRS seems to be shy about discussing it 33 08: Enforcement Actions

Page 193 Levies Look for notice on Page 2 and inclusion of Form 12153 IRS is required to include Form 12153 but increasing reports by practitioners that Form 12153 is missing from the notice. 34 08: Enforcement Actions

Page 197 Levies Prohibition of IRS to pursue all levies: 35 08: Enforcement Actions Taxpayer

Page 198 Employer Requirement to Execute Wage Levy If the employer receives a wage levy on an employee they MUST comply with the levy unless released by IRS from the obligation, there are no exceptions: – The levy is incorrect – TOO BAD – The employee has made other arrangements – TOO BAD – The employer disagrees with the IRS action – TOO BAD 36 08: Enforcement Actions

Page 198 Employer Requirement to Execute Wage Levy The price of failure to comply, what do the courts say? 37 08: Enforcement Actions

Page 198 Employer Requirement to Execute Wage Levy Rule of law regarding failure to execute levy § Personally liable for amount of property levy would have yielded. § When person fails to surrender said property a penalty equal to 50% may be assessed. 38 08: Enforcement Actions

Page 198 -199 Releasing Levies and Levied Property The IRS must release the levy if: a. Account is paid in full b. Collection Statute has expired c. Taxpayer proves releasing levy would enhance the collection of the tax d. A qualifying installment agreement has been entered into that does not agreed to such. e. The levy has created a significant economic hardship, i. e. the Vinateri Case f. FMV of property exceeds liability and interest of government is not hindered. 39 08: Enforcement Actions

Page 200 Includes Stopped Payment Fees but One Year Filing Window 40 08: Enforcement Actions

Page 200 -201 Levy on Wages, Salary and Other Income Type here 41 08: Enforcement Actions

Page 201 Levy on Wages, Salary and Other Income Some plain truths about levies ü IRS does not want your taxpayer’s non-cash property they simply want their attention ü IRM 5. 17. 3. 5 which governs the IRS employees conduct during a levy is extensive and one miss-step dooms the levy ü But the taxpayer has a limited window to bring the error to IRS attention Van Skiver v. United States 42 08: Enforcement Actions

Levy on Wages, Salary and Other Income IRS levy tool while powerful seldom realizes $ in any meaningful way in comparison to taxpayer cooperation 43 08: Enforcement Actions Page 201

Page 202 Liens Federal Tax Lien (FTL) – a public notice of the US Government’s interest in ALL the property of the taxpayer – a creditor like any other subject to the rules of first come first serve 44 08: Enforcement Actions Federal Tax Lien

Liens A FTL may: üAppear on a credit report üBe noted by a prospective employer üAffect the licensing of an individual üImpair the taxpayer’s ability to conduct their financial affairs 45 08: Enforcement Actions Page 202

Liens Page 202 With the release of Reg. 301. 6323 the lien threshold is $10, 000, a taxpayer friendly change that has contributed to the LARGE reduction in the number of liens. 46 08: Enforcement Actions

Liens The FTL has become a noose of even of those taxpayers who have paid their debt: The mere recording of a FTL will lower the FICO score by at least 100 points for 7 years even after the lien is no longer valid. This included taxpayers who paid their tax debts in full. 47 08: Enforcement Actions Page 202

Liens Page 202 Regulation 301. 6323 updating many actions that occur as a result of the issuance of a Federal Tax Lien (FTL) Relief – The FTL can be completely removed (i. e. withdrawn) in two circumstances, when: § The Debt is paid in full § A debt that is less than $25, 000 and the taxpayer has entered into a direct debit installment agreement 48 08: Enforcement Actions

Liens Page 202 -203 To file a federal tax lien the IRS must: a. Assess the liability b. Send a Notice and Demand for Payment c. The taxpayer has refused or neglected to pay the debt in FULL Reminder, the IRS cannot place FTL when debt is less than $10, 000 49 08: Enforcement Actions

Liens Page 203 Getting rid of the liens: a. Withdrawal – It never happened it does not exist it is expunged. b. Release – The lien was satisfied and ability to enforce no longer exists. 50 08: Enforcement Actions

Liens Subordination of a federal tax lien – the process by which the federal government allows a creditor to move ahead of them in their security interest Apply for per the procedures of Publication 784 51 08: Enforcement Actions Page 204

Liens Page 204 The IRS will subordinate the government’s lien when: The subordination does not materially change the government’s position – i. e. refinance A creditor provides additional funds with the purpose of providing monies for payment of the tax debt The amount paid represents the government’s interest in the property 52 08: Enforcement Actions

Liens Page 204 Application for Certificate of Discharge – Refer to Publication 783 for procedures 53 q In the event the taxpayer sells the property the application should be made and any amount of government interest must be paid q If a personal residence a relocation allowance can be requested 08: Enforcement Actions

Liens Page 204 Automatic Release of Lien Ø 30 days after satisfaction of amounts due Ø 30 days post IRS acceptance of payment bond Inquires should be made to the Centralized Lien Unit at 1 -800 -913 -6050 54 08: Enforcement Actions

Liens Page 204 Difficult Lien Issues Collection Technical Services Advisory Function – Refer to Publication 4235 Certificate of Discharge Subordinations Subrogation Non-attachment Withdrawal Complex Issues 55 08: Enforcement Actions

Liens 56 08: Enforcement Actions Page 206

Liens 57 08: Enforcement Actions Page 206

The Enforcement Powers of the IRS By statutory authority the IRS is the most powerful collection agency in the world. By a show of hands: 1. Who feels that the IRS is mostly fair and reasonable with their collection activities. 2. Who feels that the IRS regularly oversteps the intention of congress with their enforcement powers. 3. If my client has a problem with the IRS we encourage them to pay and make the problem go away. 58 08: Enforcement Actions