Bankruptcy as leverage in an offer in compromise

On more than one occasion I have used the possibility of bankruptcy as leverage in reducing the value of a offer in compromise.  The possibility of bankruptcy can have a big impact on an IRS compromise. 
Here’s why:
1.     A Chapter 7 bankruptcy can “discharge” a tax liability.  
2.     Any taxes that could be discharged by a potential [...]

Can I make the IRS an offer to pay tax only?

I received this question about using an offer in compromise on interest and penalties:
I owe $25,000 in tax, but the interest and penalties have made the amount I owe almost double.  Won’t the IRS be happy just to get the principal I owe back and forgive the interest and penalties?
In an offer in compromise, the [...]

A Tax Court win for the good guys

It really does happen – you can overturn an IRS audit in Tax Court.
My client disagreed with an IRS audit that determined she should pay a 10% tax on early distributions from her retirement account.  She had taken early retirement, and wanted to start taking withdrawals from her retirement account. Ordinarily, this would cause a [...]

The Tax Compromise Improvement Act of 2009

House Ways and Means Oversight Committe Chairperson Charles Lewis and Ranking Member Charles Boustany have introduced H.R. 2343, the Tax Compromise Improvement Act of 2009.
The bill would eliminate the requirement of IRC 7122(c) that lump sum offers must be accompanied by an upfront payment equal to 20% of the value of the compromise.  The bill would also [...]

All of it, or just 15% – IRS manual and automated levies on social security benefits

A reader asks the following regarding IRS levies on social security benefits:
What is the difference between an automated federal levy on social security and a manual tax levy, and why does the IRS choose one over the other?
Here is my response:
1.     Automated Levy (15%).  Pursuant to section 6331(h) of the Internal Revenue Code, [...]

Why a tax lawyer can make a difference

I am often asked by new clients how a tax lawyer can make a difference in an IRS dispute.  Here is my answer:

Once you retain a tax lawyer, the IRS must stop calling you.  The IRS is required to conduct all negotiations – telephone calls, meetings, etc. – through your attorney.  This valuable “buffer” allows [...]