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Levy – You Have More Time to Challenge an IRS Levy

Levy – You Have More Time to Challenge an IRS Levy

The IRS reminds individuals and businesses that they have additional time to file an administrative claim or bring a civil action for wrongful levy or seizure. Tax reform legislation enacted in December extended the time limit from nine months to two years.

Here are some facts about levies and the extension of time to file a claim or civil action: * An IRS levy permits the legal seizure and sale of property to satisfy a tax debt. For purposes of a levy, the term “property” includes wages, money in bank or other financial accounts, vehicles and real estate.

* The timeframes apply when the IRS has already sold the property it levied. Taxpayers can make an administrative claim for return of their property within two years of the date of the levy.

* If an administrative claim is made within the extended two-year period, the two-year period for bringing suit is extended for one of two periods, whichever is shorter:

o Twelve months from the date the person filed the claim.

o Six months from the date the IRS disallowed the claim.

* The change in law applies to levies made before, on or after December 22, 2017, as long as the previous nine-month period hadn’t yet expired.

* Anyone who receives an IRS bill titled, Final Notice of Intent to Levy and Notice of Your Right to A Hearing, should immediately contact the IRS. By doing so, a taxpayer may be able to make arrangements to pay the liability, instead of having the IRS proceed with the levy.

(IRS Tax Tip 2018-123) (TTT 9/25/18)

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Received an IRS letter? Here is what to do….

Received an IRS letter? Here is what to do….

Some taxpayers will receive a letter from the IRS. You should not panic and remember that you have fundamental rights when interacting with the agency. These rights are in the Taxpayer Bill of Rights. (See our blog postings) Among other things, these rights dictate that letters from the IRS must include:

* Details about what the taxpayer owes, such as tax, interest and penalties.

* An explanation about why the taxpayer owes the taxes.

* Specific reasons about why the IRS may have denied a refund claim.

Taxpayers who receive a letter from the IRS can do some simple things when it arrives. Taxpayers should remember to:

* Read the entire letter carefully. Most letters deal with a specific issue and provide specific instructions on what to do.

* Compare it with the tax return. If a letter indicates a changed or corrected tax return, taxpayer should review the information and compare it with their original return.

* Respond. Taxpayers should:

o Respond to a letter with which they do not agree.

o Mail a letter explaining why they disagree.

o Mail their response to the address listed at the bottom of the letter.

o Include information and documents for the IRS to consider.

o Allow at least 30 days for a response.

* Reply timely if necessary. If a taxpayer agrees with the information, there’s no need to contact the IRS. However, when a specific response date is in the letter, there are two main reasons a taxpayer should respond by that date:

o To minimize additional interest and penalty charges.

o To preserve appeal rights if the taxpayer doesn’t agree. * Pay. Taxpayers should pay as much as they can, even if they can’t pay the full amount they owe. They can pay online or apply for an Online Payment Agreement or Offer in Compromise.

* Contact the IRS if necessary. For most letters, there’s no need to call the IRS or make an appointment at a taxpayer assistance center. If a call seems necessary, the taxpayer can call the phone number in the upper right-hand corner of the letter. They should have a copy of the tax return and letter on hand when calling.

* Keep the letter. A taxpayer should keep copies of any IRS letters or notices received with their tax records.

(IRS Tax Tip 2018-101) (TTT 9/18/18)

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Letter from the IRS? Do’s and Don’ts for Taxpayers

Letter from the IRS? Do’s and Don’ts for Taxpayers

Every year the IRS mails millions of letters to taxpayers for many reasons. If you receive one of the “friendly notices” here are some tips and suggestions:

Don’t ignore it. Most IRS letters and notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do.

Don’t panic. The IRS and its authorized private collection agencies do send letters by mail. Most of the time all the taxpayer needs to do is read the letter carefully and take the appropriate action.

Do take timely action. A notice may reference changes to a taxpayer’s account, taxes owed, a payment request or a specific issue on a tax return. Taking action timely could minimize additional interest and penalty charges.

Do review the information. If a letter is about a changed or corrected tax return, the taxpayer should review the information and compare it with the original return. If the taxpayer agrees, they should make notes about the corrections on their personal copy of the tax return, and keep it for their records.

Don’t reply unless instructed to do so. There is usually no need for a taxpayer to reply to a notice unless specifically instructed to do so. On the other hand, taxpayers who owe should reply with a payment. IRS.gov has information about payment options.

Do respond to a disputed notice. If a taxpayer does not agree with the IRS, they should mail a letter explaining why they dispute the notice. They should mail it to the address on the contact stub at the bottom of the notice. The taxpayer should include information and documents for the IRS to review when considering the dispute. The taxpayer should allow at least 30 days for the IRS to respond.

Do remember that there is usually no need to call the IRS. If a taxpayer must contact the IRS by phone, they should use the number in the upper right-hand corner of the notice. The taxpayer should have a copy of the tax return and letter when calling.

Do avoid scams. The IRS will never initiate contact using social media or text message. The first contact from the IRS usually comes in the mail. Taxpayers who are unsure if they owe money to the IRS can view their tax account information on IRS.gov.

(IRS Tax Tip 2018-95) (TTT 9/11/18)

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How Does the IRS Contact Taxpayers?

How Does the IRS Contact Taxpayers?

Everyone should know how the IRS contacts taxpayers. This will help you avoid becoming a victim of scammers who pretend to be from the IRS with a goal of stealing personal information.

Here are some facts about how the IRS communicates with taxpayers:

* The IRS doesn’t normally initiate contact with taxpayers by email.

* The agency does not send text messages or contact people through social media.

* When the IRS needs to contact a taxpayer, the first contact is normally by letter delivered by the U.S. Postal Service. Fraudsters will send fake documents through the mail, and in some cases will claim they already notified a taxpayer by U.S. mail.

* Depending on the situation, IRS employees may first call or visit with a taxpayer. In some instances, the IRS sends a letter or written notice to a taxpayer in advance, but not always.

* IRS revenue agents or tax compliance officers may call a taxpayer or tax professional after mailing a notice to confirm an appointment or to discuss items for a scheduled audit. * Private debt collectors can call taxpayers for the collection of certain outstanding inactive tax liabilities, but only after the taxpayer and their representative have received written notice.

* IRS revenue officers and agents routinely make unannounced visits to a taxpayer’s home or place of business to discuss taxes owed, delinquent tax returns or a business falling behind on payroll tax deposits. IRS revenue officers will request payment of taxes owed by the taxpayer. However, taxpayers should remember that payment will never be requested to a source other than the U.S. Treasury.

* When visited by someone from the IRS, the taxpayers should always ask for credentials. IRS representatives can always provide two forms of official credentials: a pocket commission and a Personal Identity Verification Credential.

(IRS Tax Tip 2018-111) (TTT 9/04/18)

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Taxpayer Bill of Rights (Part XVIII)

Taxpayer Bill of Rights (Part XVIII): The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Right #10: The Right to a Fair and Just Tax System (cont.)

* You may request that the IRS remove any interest from your account that was caused by the IRS’s unreasonable errors or delays. For example, if the IRS delays issuing a statutory notice of deficiency because the assigned employee was away for several months attending training, and interest accrues during this time, the IRS may abate the interest as a result of the delay. IRC § 6404(e)

* The time limit for asking for the taxes you paid to be refunded may be suspended during the time you are unable to manage your financial affairs due to a mental or physical health problem. IRC § 6511(h)

* If you have acted with reasonable care you may be entitled to relief from certain penalties. Additionally, if you have a reasonable basis for taking a particular tax position, such as a position on your return or a claim for refund, you may be entitled to relief from certain penalties. Reliance on the advice of a tax professional can in certain circumstances represent reasonable cause for the abatement of certain penalties. IRC §§ 6651, 6656, 6694, 6662, 6676

* If you use a return preparer who takes an unreasonable or reckless position that results in underreporting your tax, that preparer may be subject to penalties. IRC § 6694

(IRS NTA web site) (TTT 8/28/18)

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Taxpayer Bill of Rights (Part XVII)

Taxpayer Bill of Rights (Part XVII): The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Right #10: The Right to a Fair and Just Tax System

Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

What This Means for You

* If you cannot pay your tax debt in full and you meet certain conditions, you can enter into a payment plan with the IRS where you pay a set amount over time, generally on a monthly basis. IRC § 6159 See TAS Toolkit, Installment Agreements.

* You may request that any amount owed be eliminated if it exceeds the correct amount due under the law, if the IRS has assessed it after the period allowed by law, or if the assessment was done in error or violation of the law. IRC § 6404(a) See also IRC § 6502: Limitations on collection after assessment (statute of limitations) under the Right to Finality

Next week more information on Right 10 (IRS NTA web site) (TTT 8/21/18)

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Taxpayer Bill of Rights (Part XVI)

Taxpayer Bill of Rights (Part XVI): The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Right #9: The Right to Retain Representation

Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. Taxpayers have the right to be told that if they cannot afford to hire a representative they may be eligible for assistance from a Low Income Taxpayer Clinic.

What This Means for You

* If you have won your case in court, under certain conditions, you may be entitled to recover certain reasonable administrative and litigation costs related to your dispute with the IRS. IRC § 7430

* In most situations the IRS must suspend an interview if you request to consult with a representative, such as an attorney, CPA, or enrolled agent. IRC § 7521(b)(2)

* You may select a person, such as an attorney, CPA, or enrolled agent to represent you in an interview with the IRS. The IRS cannot require that you attend with your representative, unless it formally summons you to appear. IRC § 7521(c)

* If you are an individual taxpayer eligible for Low Income Taxpayer Clinic (LITC) assistance (generally your income must be at or below 250 percent of the federal poverty level), you may ask an LITC to represent you (for free or a minimal fee) in your tax dispute before the IRS or federal court. IRC § 7526 For more information, see Publication 4134, Low Income Taxpayer Clinic List.

Next week information on Right 10 (IRS NTA web site) (TTT 8/14/18)

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Taxpayer Bill of Rights (Part XV)

Taxpayer Bill of Rights (Part XV): The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Right #8: The Right to Confidentiality (cont.)

What This Means for You

* In general, the IRS cannot contact third parties, e.g., your employer, neighbors, or bank, to obtain information about adjusting or collecting your tax liability unless it provides you with reasonable notice in advance. Subject to some exceptions, the IRS is required to periodically provide you a list of the third party contacts and upon request. IRC § 7602(c)

* The National Taxpayer Advocate and Local Taxpayer Advocates may decide whether to share with the IRS any information you (or your representative) provide them regarding your tax matter, including the fact that you’ve contacted the Taxpayer Advocate Service. IRC § 7803(c)(4)(A)(iv)

(IRS NTA web site) (TTT 8/07/18)

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Taxpayer Bill of Rights (Part XIV)

Taxpayer Bill of Rights (Part XIV): The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Right #8: The Right to Confidentiality (cont.)

What This Means for You

* Communications between you and an attorney with respect to legal advice the attorney gives you are generally privileged. A similar privilege applies to tax advice you receive from an individual who is authorized to practice before the IRS (e.g., certified public accountant, enrolled agent, and enrolled actuary), but only to the extent that the communication between you and that individual would be privileged if it had been between you and an attorney. For example, communication between you and an individual authorized to practice before the IRS regarding the preparation of a tax return is not privileged because there would be no similar privilege between a taxpayer and an attorney. The privilege relating to taxpayer communications with an individual authorized to practice before the IRS only applies in the context of noncriminal tax matters before the IRS, and noncriminal tax proceedings in Federal court where the United States is a party. IRC § 7525

More information next week on Right 8 (IRS NTA web site) (TTT 7/31/18)

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Taxpayer Bill of Rights (Part XIII)

Taxpayer Bill of Rights (Part XIII): The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Right #8: The Right to Confidentiality

Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect the IRS to investigate and take appropriate action against its employees, return preparers, and others who wrongfully use or disclose taxpayer return information.

What This Means for You

* In general, the IRS may not disclose your tax information to third parties unless you give it permission, e.g., you request that we disclose information in connection with a mortgage or student loan application. IRC § 6103

* If a tax return preparer discloses or uses your tax information for any purpose other than for tax preparation, the preparer may be subject to civil penalties. If the disclosure or improper use is done knowingly or recklessly, the preparer may also be subject to criminal fines and imprisonment. IRC §§ 6713, 7216

More information next week on Right 8 (IRS NTA web site) (TTT 07/24/18)