Assets to always claim as “exempt” on an IRS financial statement (433A)

Internal Revenue Code section 6334(a) shields certain taxpayer assets from the IRS collection powers.  As these assets are beyond the reach of the IRS, it is important to remember to always exclude their value from IRS financial statement Form 433A.
Claim as “exempt” the following:
1.     Tools of the trade or profession up to $3,950 [...]

Offer in compromise vs. bankruptcy – Which settlement amount will be the lowest?

With new clients, I spend time discussing the options for obtaining a fresh start from IRS problems. The consultation most always involves making the client aware of the pros and cons of resolution by compromise, and by bankruptcy.  
In that spirit, here then is the first of a continuing series on the use of an offer [...]

Can the IRS take my spouse’s income if only I am liable?

The IRS cannot take collection action against the separate income of a non-liable spouse.  
If separate tax returns are filed, only the person who signed and filed the return is legally obligated to pay the taxes.  If your spouse did not sign or file a joint return with you, then the IRS cannot collect from him [...]

Is there such a thing as a “hardship status” with the IRS?

If you cannot pay your delinquent taxes because of an economic hardship, the IRS can suspend collection efforts against you.  This does not mean your debt is forgiven; just that the IRS will defer collection and not take your wages or bank account.
Internal Revenue Service Policy Statement 5-71 permits hardship status on IRS accounts, as [...]

How can an extension to file a tax return impact a discharge of taxes in bankruptcy?

One rule to follow in bankrupting income taxes is that the liability must be from a return that was due to be filed three years before the bankruptcy is commenced. The key is to be careful to include extensions of time to file in calculating the due date of the return, especially starting in 2009.   
Until [...]