Represent Yourself Before The IRS – Killer IRS Chapter 1
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Represent Yourself Before The IRS – Killer IRS Chapter 1
Essential Information – You Must Read This And Use With Other Information On This Site!
Remember, this is not an all inclusive web site on the IRS. There are many legal issues, definitions, and rules that are pertinent when dealing with the IRS. For those of you who want to know many of the laws, codes, etc., I suggest that you purchase a book that will teach you that. There are a few good ones out there. The purpose of this information is to show you what I have done over the years to be successful in dealing with the IRS. You can use my successful experience to outline the steps you will take to solve your IRS issues. If you need additional help, of any type, I charge $300 for a one time phone consultation to discuss, and/or review your documents, and explain to you how to resolve your issue. The call will last up to 1 hour or you can also set the same consultation with an associate CPA of up to 1 1/2 hours. Please go to the left side of the page, click on “payment” and submit $300. Then call Stephanie at 713-774-4467 and she will set up the phone appointment.
If you need to represent youself before the IRS but you’re not comfortable with it, please call us, and we will discuss the benefits of hiring us. This is what I offer. Either…
- represent yourself using this information.
- represent yourself using this information with a phone consultation.
- use this information to keep tabs on someone you hired to represent you.
- use this information to help you represent your own client.
- or hire us to represent you (best alternative).
I have read numerous books dealing with the IRS over the course of my career. Most of them just give you information about your rights, about what forms to use and when, etc. but they leave you hanging when the IRS doesn’t do what you ask them to do. These books serve an excellent purpose. Reading them will not hurt you, unless you “attack” the IRS, or try to evade being taxed. It is my intention in giving you this information that you will gain the confidence you need to proceed with the collection division without unnecessary fear.
Let’s Get Started! How To Settle With The IRS!
First, some basics you need to know… The IRS is not like any company you know of. Many experts see the IRS as an unsupervised group, who make up rules as they go along. IRS personal tend to do and say most anything to get you to do what they want. This is why many accountants find it very difficult to accomplish much when dealing directly with the collection personnel of the IRS. So how can you be successful? Well, after spending over 30 years representing thousands of taxpayers, I’ve gotten familiar with the various rules the IRS goes by, including the fabricated interpretations of the Internal Revenue Manual. I’ve learned to have unlimited patience, and not to be disrespectful, no matter how the IRS are acting. I will teach you the secrets I’ve learned over the years, so you will know how to settle with the IRS, and have similar success. You will not find this information in any book that I know of.
Outline About Your General Disposition When Dealing With IRS Personal.
Never, never complain to an IRS employee. They do not want to hear how sick you are, how poor you are, how bad the government is, how your ex-spouse or partner ripped you off, how good you were to pay most of the original principal portion of the taxes, or the flood you had in your house. Don’t get me wrong, some of that information is essential for certain parts of the case. What I am saying is don’t whine, or dump your troubles on the collection person. Stick with the facts only. There will be a time and place to list your income and expenses and why certain things happened.
Always Keep A Good Rapport.
Make the IRS person feel good and happy to be working with you (no matter how they respond). What if you were asked to recite your full address, and then 2 minutes later were asked “What is your complete address?”. Would you blurt out “You just asked me that!” with an angry expression on your face? Or would you calmly say “I gave that to you?” How willing would you be to give your address the second time? What about the 3rd time? When I say “unlimited patience” I mean it. Being a collection person for the IRS can be a very confusing and difficult job. You will get a lot further by being accepting of their behavior no matter what it is.
There is a difference between fighting with the IRS and sticking up for your rights. However, if you are willing to let issues of your rights slide, and stick with what is necessary to get the most benefit, I will show you how to save time and money.
The IRS Is Really Not Out To Get You!
The IRS does not want to put you in jail. To be put in jail you need to willfully perform a criminal act. Yes, willful non filing of an IRS tax return is a criminal act. The burden of proof is on the IRS to prove willfulness. I don’t know of anyone during my career that was ever accused of willfulness, let alone prosecuted for it. You must get any fear or guilt concerning wrongdoing out of your head. When you contact the IRS, you will deal with the situation as it is today only. In 99% of the collection cases the only real questions are…
- Where are your tax returns?
- Will you “show me the money”?
The collection division wants any unfiled returns, and wants to be satisfied concerning how taxes will be paid! During the discussion you can deal with other issues, but not in place of these two. Got it? So even if you stall the collection officer (as some advisors incorrectly advise), the manager may discover that the officer is not handling their responsibilities as they should and issue a bank levy. When you “scream” that you were waiting for the collection officer to look up a payment and get back to you, you will be told something like “You had two months to provide him with the financial statement information and you didn’t, so we levied your account”. So much for stalling the collection officer. You have to take responsibility yourself to see that the case goes smoothly and quickly so no collection action is taken.
Rather than wasting your time with discussions about what the IRS can and can’t do, it’s easier to just accept that the IRS will do whatever it wants to do against you to collect delinquent returns and taxes. You can fare better by speaking up and defending yourself. We need to focus on just taking care of business and leaving the history lessons, and the general IRS discussions, to the books you can buy off the shelf.
Maybe you want, more time to file returns, more time to submit documents, a lower dollar monthly payment on a payment plan, or more favorable offer in compromise terms. Do not assume the IRS is out to get you, and complain that they are being unfair. You can expect to be burdened with short deadlines. 2-3 week deadlines may be issued when talking to Automated Collections (ACS). If they won’t give you a longer period, you can hang up the phone and call back. Chances are the log of the previous call will not be available yet, so the new person won’t know you called minutes ago. Either way, you can accept the shorter deadline, and on the last day call and explain that you are almost finished. Tell them that you are willing to send the information in now by fax, and then overnight express, and ask if you can have a couple of days more to complete the information requested. Chances are you will get the extension. However, after I teach you what to do, you really should have no trouble meeting the deadline. If you have a Revenue Officer on your case, chances are they will be a bit more liberal in granting you time.
Each Collection Or Audit Group Operates Independently In How They Do Things.
The rules can be different, they can change, or the person you are talking to may decide to “brow beat” you, and not tell you the rules you are to follow. They may not even admit what the rules are, or what rights you have, even after you tell them that you know what the rules are. Remember, don’t fight. Take the best you can get, and move on. You will see later that you have options along the way to sway things back in your favor. Usually you will have to decide if the action is worth the time to pursue or not. Often it is not. It is usually easier to bend to the IRS’s timetable for tax preparation and the submission of documents. Of course, paying additional taxes is another matter. If the dollar amount is high you will want to put the time and effort into saving the money.
Try Not To Make Assumptions About The Person You Are Dealing With.
You should give requested information as if you are talking to a computer that sometimes produces output that doesn’t make sense. It is foolish to try to prove the computer is wrong. You must enter the IRS’s world, with their rules. Don’t worry, I will tell you in this manual what the important rules are, every step of the way.
That’s it for the general disposition you must have.
Things To Be Aware Of…
The IRS Website
The address is www.irs.gov, on this website you will find links to the many services the IRS provides. You can get forms (although I find just putting “IRS form xxxx” in a Google search engine is quicker), instructions, etc. You can look up codes, revenue rulings, and even copies of the IRS manuals, including the collection manual. It’s important to check dates, since the website is not always kept up to date. Don’t start loving this site too much. The guides give you what the IRS wants you to believe the rules are. The information is not written in your favor. The IRS often doesn’t advise you of alternate positions, etc. that benefit you more. The IRS will not give you a “map” for using their rules and codes for your best advantage. The site is a great source for forms and general information on areas you need more information about. I use it when needed. Also, sign up on the www.eftps.gov site for your personal and business payments. There will be a time you will need to make a payment quickly, and this will be the best way to do it. The payment posts the next day, and you get a tracking number to prove the payment was made. You won’t have to rely on the bank or delivery service. It takes several weeks to get set up, so you must get set up now, in anticipation of using it. Don’t worry, it’s free and worth the trouble.
The IRS Service Center
This group processes returns and sends out notices or errors, audits, etc. You may get a letter showing a balance due, or various audit letters. If a letter shows a balance due then the first notice “request for payment” is sent. Other requests may be sent before the IRS sends the cp501- cp504 series of notices. The cp504 is the notice of intent to levy. If not paid or resolved in 30 days the account will transfer to ACS division. ACS will issue a letter 1058 final notice giving the taxpayer 30 days to appeal. Of course the IRS can skip this step and send it directly to a revenue officer (R.O.), who may levy your account before contacting you. So never let a notice of intent to levy go past the 30 days. Yes, the R.O. is supposed to issue a letter 1058, but may do so simultaneously with the levy. You decide if you want to handle it at ACS before it goes to a R.O. You need to take control and not be a victim. I’ve had clients who told me they hired attorneys who bragged they were necessary because they checked notice dates and other legal notice issues to try to catch the IRS in a mistake so they can take them to court. Some attorneys play on your emotions and sense of fair play. Don’t fall for it. All you want to accomplish (I hope), is to resolve the problem in the easiest, least costly way. I have given you the simple version. The IRS accelerates notices under certain conditions. Why try to figure out how to catch them doing something wrong? Especially since it hardly ever benefits you. I will show you how to prepare for dealing with the IRS to get the best possible advantage.
It is rare to have to resort to using tax court for a collection matter (or even an audit matter). The few times I had my clients petition the tax court, it was with the intention of getting the case transferred to appeals. Each time the petition was accepted, and the IRS’s legal department contacted us, I was able to convince the IRS that it would be in there best interest to transfer the case to appeals. You can do this too by convincing them that it will lighten their case load. Tell them that the tax court is pretty full of unnecessary and frivolous cases, and yours is really an appeals case. The only reason you filed a court petition is that the time to file an appeal expired, so this was your only remedy.
Handling Your Case In General And The Taxpayer Advocate
The Taxpayer Advocate is the group to go to when all else fails. When trying to resolve something with an IRS employee, and there is a disagreement, request to speak to the manager. If that fails, and you still think they are being unreasonable you can go to the supervisor above or the taxpayer advocates office. Let’s see how this works.
You call ACS and are not getting anywhere with the ACS employee. Asking to speak to an ACS manager usually doesn’t work very well, and they often won’t call you back. So just hang up nicely, and call immediately back till you get someone who is at least somewhat reasonable. Then attempt to work out why you called. First verify the status of your case. Ask, is this an ACS case? Is the case in the queue being transferred to a revenue officer? If it is an ACS case, then ACS has control over it. If your case is waiting to be transferred to a revenue officer, the ACS employee can’t really take action on it, so don’t waste your time. They will try to ask questions and take control. They may try to get collection information from you. Just find out what you need, and hang up the phone. Make sure you call revenue officers immediately when you hear from them. They have a habit of levying accounts quicker than you think. Don’t give them bank or work information, even if they press for it. Just tell them you need about two weeks to get everything together. They will want to set up a meeting. Set it up two weeks from now. Preferably in their office if they will allow it. Another benefit of having a representative, is that the meetings are mostly in the representative’s office so the IRS doesn’t poke around your place! Spend the time leading up to the meeting getting your financial statements and back up information together. Look up the IRS table expense allowances for the expenses on the 433A, and put together a picture of your income and expense information and asset situation. Know ahead of time what assets the IRS will allow you to keep, and the likelihood of them allowing each expense deductions. If you are properly prepared, you have a greater chance of getting what you want.
If you are dealing with a revenue officer, the same applies. Don’t allow them to brow beat you into submission. You have the right to hire a representative and have time before disclosing your financial information to them. They will try to get you to answer questions about marital status, business ID #’s etc. Even if you think the answers are easy and won’t hurt you, don’t give to them. If you do, you establish a rapport that allows them influence over you for future questions. In addition you may give information you will want to retract later. Just keep insisting that you are you, and your social security number is yours, and your address is yours and for the rest you will get back to them with on the date of the meeting. If they don’t want to wait two weeks, you can agree to a meeting in one week with an agreement from the R.O. to an extension if necessary. If they expect you to meet sooner, ask for manager’s name and phone number (which you should do anyway from the start), so you can find out why you can’t have two weeks. The R.O. may change the date, or try to brow beat you into not calling. Tell them you are not calling to complain about the R.O. This is very important and should always be said when you ask for someone’s manager. Never get mad and say “give me your manager!” They take that as a threat, and they can get very tough if you fight with them. Just say you want the manager’s opinion about the appointment date, because you think it is unreasonable, and you want to know what they think about it. Don’t be surprised if the manager gives you more time. The manager may also try to intimidate you for calling. No problem, this way you find out early on if you have a good manager or one who doesn’t police the revenue officers in their group. This information will help you make decisions later.
If you are really getting frustrated dealing with the collection division, and they are about to issue a lien, or levy, or other collection action, you could call the taxpayer advocate group. You can search at www.irs.gov/advocate or just Google “Taxpayer Advocate” for the Form 911 to use. It’s easy to fill out. No need to give you line by line instructions. But I warn you, when they get busy, they will attempt to make little of your hardship reason. Be careful to explain, and attach an additional sheet if necessary, how you will suffer a great hardship if they don’t intervene. Explain exactly what you want them to do. If you have to get them involved because the R.O. has threaten to take enforcement action because of a short deadline, or some other petty reason, then so be it. File your 911 by fax and call the Advocates office to follow it up. Another reason the Advocate uses to turn down a case, is that they will claim that you have not proven that the current action is a burden to you. You can’t assume that collection action will take place. You actually have to ask the revenue officer what he/she intends to do if you miss your one week deadline (for example). They may say nothing probably, just issue a letter. Well until you know what’s in that letter, you may not have the level of hardship required for an advocate case. The letter may just be a second request (a formal one) for documents. So make sure you can explain, in detail, the exact action that is imminent, and will cause you the exact hardship you see will happen to you.
The taxpayer advocate works with the IRS, often in the same building. You should call them to see if they will take your case. Use them for help when dealing with the collection division or the offer in compromise division, not the audit division. I’ve never used them for an offer division complaint. I’m not sure if they have much power, since the offer division claims they can pretty much deny offers as they wish. Appeals can force them to take lower valuations for items. Other than that, they can make suggestions concerning fairness. I’ve not experienced Appeals to have much more power.
One good thing about the taxpayer advocate’s office, is that they have greater powers then previously to get the attention of the collection division. They are taken very seriously, and the collection division will respond promptly to them.
Did You Move?
When you move, file a change of address form 8822 with the IRS. File it certified return receipt, and keep a copy of the form and proof of mailing. Many people don’t give the IRS their address change as a way to put more distance between themselves and the IRS. This is a big mistake. If you get notices on time, you can avoid collection action easier, and have a better chance at stopping the liability or claim against you. Now that you know how to deal with the IRS, file form 8822 when you change your address.
Tax Return Extensions
If you can’t complete and mail your 1040 personal tax return by April 15th, file an automatic extension form 4868. It’s very easy to fill out. Read the instructions on the form, and remember that you don’t have to pay the amount estimated. You only have to put down approximately what the liability will be when you file the return. Don’t try to make it a lower amount. In fact estimate a bit high. A high estimate will avoid late filing penalties.
If you can’t pay at the time of filing, file on time and also file form 1127, Application for extension of time to pay. You must show reasonable cause, etc. The strict requirements are listed on the back of the form. Do this anytime you can’t pay in situations as described on the form. Download the form and get familiar with the acceptable reasons for granting it. I have done this successfully more than once. You have nothing to lose by trying it on your own. If you need more than 6 months to pay, you can avoid the collection officer by filing Form 9465 with your return. Form 9465 is an Installment agreement request. If your liability is under ,000 they must accept it, as long as you meet the rules printed on the form. You can also try it for balances greater than ,000. If accepted, you avoid dealing with the collection division. Heck, why not attach your 433a and/or 433b and really convince them to set you up on installments. Just make sure you don’t show that you can pay more than the amount offered, or that you have equity in your house or retirement plan that they will want. Only submit financials with form 9465 if you are “proud of how poor you are” and confident that you have nothing that they can touch!
If you can’t file business forms W-2′s and 1099′s on time for people you paid, file form 8809 to get an extension. You can find this information in the instructions for forms W-2 and W-3.
As you go through each section of this site, remember that the bottom section of the page that starts “Represent Yourself Before The IRS” begins the inside information. Now select a topic on the left side panel, or if you are considering hiring us call me, Joe Mastriano CPA, 713-774-4467 or email me!
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