irs collections

Episode 26:  In this episode, Timalyn explains what happens when the IRS pursues payment from you for back taxes.  She’ll discuss some of your taxpayer rights, even when you’re behind on your tax payments.

Special Note:  This episode’s launch will mark the podcast’s 1-year anniversary.  Thank you for your continued interest and time.

As we get started, please note the abbreviation CDP refers to Collection Due Process.  Timalyn may use this abbreviation throughout this episode.

When You Can’t Pay Your Taxes

When this episode is released, the individual tax filing deadline will almost be here.  Unfortunately for many, the tax liability may be more than they have set aside to pay taxes.  People question whether they should file if they can’t pay.  What will the IRS do if they don’t pay?  Will they go to jail?  There are many reasons anxiety and stress begin to take over.  However, that’s not the time to freeze and simply do nothing.

Timalyn explains that the Taxpayer Bill of Rights ensures you have the right to due process when it comes to IRS collection enforcement. You have protections from asset seizure, such as your property or money in your bank account.

IRS Collection Due Process Hearing

Under this process, IRS collection actions that have occurred or have been proposed can be reviewed by way of an appeal. 

For instance, if you’ve received a notice of a federal tax lien filing, you have a right to appeal it.  This also applies to a final notice (IRS notice of intent to levy).

Taxpayer Appeals

If you appeal an IRS action, the appeals process is handled by a department independent of the Internal Revenue Service collection department. It’s meant to provide the taxpayer with a fair and objective review of the situation.  The objective is to ensure the IRS follows the rules.

Remember, the IRS is authorized to levy your accounts.  Social Security recipients can actually have their monthly checks levied before they are deposited into the recipients’ accounts.  The IRS can garnish wages.  Even though the IRS is a federal entity, it can grab your state tax refund, in addition to any federal tax refund you may be anticipating.

Requesting a Collection Due Process Hearing

In addition to the above situations, you also have other times during which you can request a CDP Hearing, as a taxpayer.

●      Have you received a Notice of Jeopardy Levy?  You have a right to appeal.

●      Have you received a Notice of Levy on your state tax refund?  You have the right to appeal.

●      Have you received any other form of IRS Levy?  Again, you have the right to appeal

To request a hearing, IRS Form 12153 must be submitted by the taxpayer.  This is the Request for Collection Due Process Hearing or Equivalent.  It must be submitted within 30 days of the date on the notice, not the day you received it.

How Many Times Can You Request a Hearing?

Timalyn clarifies that you are eligible to request per tax period, per action.  For instance, if you’ve received a Notice of Intent to Levy after a Notice of Intent to issue a tax lien.  In other words, you can make 2 separate requests, for the same tax period. 

Collection Statue Expiration Date

Remember the IRS can collect on any tax debt up to 10 years from the date it was assessed.  The specific date that collection right expires changes if you request a hearing (i.e. make an appeal).  The IRS is unable to proceed while the appeal is being reviewed.

However, the time the pause lasts will get added back onto the 10-year collections window, once the appeal has concluded.  For more information on this topic, refer to Episode 5 where Timalyn explains the Collection Statute Expiration Date (”CSED”).

What Happens in a CDP Hearing?

This is the opportunity for you, as a taxpayer, to tell your story.  Timalyn explains you are able to propose collection alternatives at the hearing.  It’s a good tool for you to use.

You’ll need to be prepared.  This means having receipts and paperwork in order.  You may be able to propose an installment agreement, instead of having the levy imposed.  You could propose an offer in compromise and request the time required to submit the offer.  You could possibly propose you be placed in the Currently Not Collectible status. 

What if I Don’t Agree with the Decision of My CDP Appeal?

Timalyn explains you still have another option.  You can appeal the decision in court.  Once again, this 2^nd appeal will pause the collection enforcement.  However, as Timalyn discussed above, that time will be added back onto the 10-year window the IRS has to collect a tax debt.

If you are going to submit the IRS Form 12153, be sure to send it to the address on the notice you received. 

Equivalent Hearing

If you decide to pursue your appeal, but you’ve exceeded the 30 days from the date on the notice you received, there’s still an option.  You actually have 1 year from the date on the notice to request an equivalent hearing.

The most significant difference between the Collection Due Process Hearing and the Equivalent Hearing is that you can’t take the decision of the latter to court.  In Timalyn’s experience, most people are able to reach some type of agreement during either of the hearings.   

Does It Feel Too Complicated or Overwhelming?

For some individuals, this can be a very intimidating situation.  It’s understandable.  If this is you, remember, you also have the right to representation.  There are tax professionals who can represent you.  Check out Episode 23 for the full story.  In short, an enrolled agent (such as Timalyn) is licensed to represent taxpayers in all 50 states.  Certified Public Accountants (CPAs) and tax attorneys can also represent you.

An EA (enrolled agent) or a CPA can represent you in the actual Collection Due Process hearing.  Understand that if you take your CDP appeal decision to court, you’ll need a tax attorney to represent you in that venue.   

Timalyn comments that her accounting firm, Bowens Tax Solutions, specializes in representing taxpayers at the CDP hearings.  They can actually handle this for you, so you don’t have to appear at the hearing or equivalent.

If you truly feel overwhelmed, you still have options.  Remember, back taxes shouldn’t ruin your life.

As we conclude Episode 26, we encourage you to connect with Timalyn on social media. You’ll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.  

Remember, Timalyn Bowens is America’s Favorite EA and she’s here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today’s episode.

For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.

 

Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 18:  In this episode, Timalyn provides information on how to temporarily delay IRS collections.  Notice, these delays are temporary, not permanent.  The holidays can be difficult for many people.  There are people who have felt so overwhelmed that they chose suicide as a way out from the weight of their back taxes. Timalyn hopes this episode will provide some light and hope so that won’t be an option for you.

Before Timalyn begins, she reminds listeners of a valuable resource, if you are considering ending your own life:  National Suicide Prevention Hotline:  1-800-273-8255 (available 24/7).  There is also a Crisis Text Line available.  Just text HELLO to 741741. 

Currently Not Collectible

This is the formal name for the status you’ll request to temporarily delay IRS collections.  This doesn’t mean the debt will go away.  It simply means the IRS agrees that you currently can’t afford to pay your tax debt. 

Your definition of can’t afford to pay and the definition used by the IRS are often different.  Timalyn explains you’ll have to prove a substantial change in income and provide your expenses.  If you’ve downloaded Timalyn’s Back Tax Negotiation Checklist, you know that you should also look at the national standards for living expenses.  These standards show what the IRS will allow for certain expenses, based on your family size and where you live. 

Proving Your Income

If you’re self-employed, you may use a merchant processing system, such as Square or PayPal.  This system can make it easier to track your income.  Before you contact the IRS, make sure you have your paystubs and the merchant processing report.  You’ll also need to be able to prove how many people are living in your home.  This may be indicated on your previous year’s tax return.  Remember to be ready to explain a death in the household or birth that has increased the number of people in the household. 

IRS Collection Actions

Once your tax account has transitioned to currently not collectible, the IRS will not enforce collection activities.  Again, this is temporary.  This hold does prevent a tax levy, which Timalyn explained in Episode 5.  However, this may not prevent a tax lien.  This topic was discussed in Episode 3. 

Your Tax Debt Will Grow

Timalyn explains that even though you may temporarily avoid further collection actions, your IRS tax debt will grow.   Tax penalties and interest will accrue.  Still, the IRS has a limited amount of time to collect a tax debt.  It generally has 10 years, unless a tolling event extends that window of time.  In Episode 7, Timalyn covered the 10-year limit and discussed tolling events. 

Currently not collectible status is not considered a tolling event.  It does not extend the time the IRS has to collect the tax debt.  The clock is ticking and may work to your advantage.

IRS Forms You May Need

The IRS may require you to submit IRS Form 433-F, the Collection Information Statement.  Business owners will also be asked to submit IRS Form 433-B, Collection Information Statement for Businesses.  These statements will include your assets, income sources, and expenses.  Again, you’ll want to compare your expenses to the national standards. For a list of forms and things, you should take into consideration download your free copy of the Back Tax Negotiation Checklist today.

Can I Handle This by Myself?

Timalyn comments that some individuals may be able to complete and submit these forms successfully.  Having an experienced tax relief specialist on your side can certainly help you to avoid mistakes like accidentally submitting the wrong information. 

You can contact the IRS at 1-800-829-1040.  When you eventually get connected with an IRS representative, he/she may be able to help you to determine if you qualify for currently not collectible status.  Completing the IRS Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals will help you to determine if you’re eligible, without having to wait on hold with the IRS.  If you’re not eligible, you’ll need to set up a payment plan.  Timalyn explained setting up an IRS installment agreement in Episode 10.

If your debt is under $25,000 and you think you can afford to pay it off within 36 - 72 months you may qualify for a guaranteed payment plan. If that’s the case you can download a copy of Timalyn’s E-book, Guaranteed Payment Plan, where Timalyn walks you through how to set up that arrangement online or by phone.

The Taxpayer Advocate is a free resource available through the IRS.  They can also help you through this process.  They can be reached at 1-877-777-4778. 

Hire a Tax Professional

If this is the option you want to choose, the advice and service won’t be free, but it will be worth your while.  For a detailed explanation of what you should consider when hiring a tax professional, listen to Timalyn in Episode 16. 

Whichever route you choose, it’s important that you keep the faith and take action to resolve your tax debt.  There are numerous resources provided in the show notes for this episode.  As Timalyn commented at the beginning of this episode, people can feel overwhelmed.  Those feelings can build and result in tragic choices.  It doesn’t have to be that way.  Please consider sharing this episode with your network of contacts and friends.  Back taxes shouldn’t ruin your life and they definitely shouldn’t end your life.

As we conclude Episode 18, we encourage you to connect with Timalyn on social media. You’ll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.  

Remember, Timalyn Bowens is America’s Favorite EA and she’s here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today’s episode.

For more information about tax relief options, visit https://www.americasfavoriteea.com/ .

If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.

 

Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.