Trust fund recovery penalty: The uncollectible defense

The trust fund recovery penalty can cause financial havoc for anyone involved in a business that did not pay over its employee withholdings to the IRS.  Internal Revenue Code Section 6672 allows the IRS to investigate those in the business who were part of the decision not to pay the IRS and hold them personally [...]

IRS allowances: Expenses you may not need to verify in settling your tax debt

When negotiating a resolution to a tax problem, expect the IRS to ask for verification of your living expenses.  After verification, the IRS will likely match the amount you spend to their tables of allowances.
The IRS wants to know how much you can repay them – and the government relies on their standard expense allowances [...]

Real example: When can my taxes be discharged in bankruptcy?

I do alot of IRS and bankruptcy work for my clients, and receive many questions about  it works.  Bankruptcy is a valuable tool to eliminate IRS liabilities.
To help in understanding taxes and bankruptcy, I thought it would be helpful to provide real life examples, starting here with a “bankruptcy timing” question I recieved from an enrolled agent [...]

I owe back taxes to the IRS. Now what? Part I of II

Every IRS problem has a solution.  Some solutions are quick.  Other workouts require more creativity, planning and patience.  When meeting with a client  - or during an initial telephone consultation – I like to discuss the following options and how each might fit in towards the ultimate goal of a fresh start:
1.   Offer [...]

How much IRS debt is uncollectible?

The IRS Taxpayer Advocate, Nina Olsen, reported in her recent testimony to the House Ways and Means Committee that the IRS classified nearly $20 billion in tax debt as “currently not collectible” in 2008.   This is more than the amount the IRS collected on taxpayer delinquent accounts, including installment agreements and offers in compromise [...]

What to expect when an IRS Revenue Officer comes calling to your home or business.

IRS Revenue Officers are the most experienced and sophisticated collection employees within the IRS. They work high dollar cases identified by the IRS to be of significance.  Focus is often given to business cases, employment tax liabilities, repeat offenders and non-filers.  
The Revenue Officer function is localized, with their offices located near your home or business.  Revenue Officers [...]

How does the IRS approach collecting unpaid employment taxes from a closed business and its officers?

I received this question from a reader about a closed business that owes employment taxes to the IRS, and her personal liability for the taxes:
The IRS is trying to collect on employment taxes from a company that has been out of business for several years. As an officer, I have already been held liable.  Can [...]

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 [...]

When is the IRS prohibited from taking collection action? Part I.

The list of when the IRS cannot take property is fairly extensive, so I will do this in parts to break it down simply. Here is Part I of when the IRS is prohibited from taking collection action:

When there is insufficient equity in the property.  There must be sufficient net proceeds from the sale to [...]

IRS by the numbers

IRS enforced collection activity continues to heat up.  Compromise settlements are down by 70% while bad debt accounts continue to accumulate.  Here are the numbers:
1.     779,000 taxpayer accounts were assigned to the IRS collection queue.
2.     The number of offers in compromises accepted by the IRS declined by 70% from 2001 (38,643) to 2007 (11,618).
3.     [...]