Newport Beach tax attorney Daniel Layton defends Orange County clients in IRS and FTB audits & collections, criminal tax defense, tax fraud & evasion cases, FBAR penalty defense, and foreign account disclosures (e.g., streamlined procedures).
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In a press release last updated November 4, 2020, the IRS made the following statement: WASHINGTON — The Internal Revenue Service today announced a number of […] The post IRS makes it easier to set up payment agreements; offers other relief to taxpayers struggling with tax debts appeared first on Tax Attorney Newport Beach CA| Orange County| DWL Tax Law - Daniel...
In a press release last updated November 4, 2020, the IRS made the following statement:
WASHINGTON — The Internal Revenue Service today announced a number of changes designed to help struggling taxpayers impacted by COVID-19 more easily settle their tax debts with the IRS.
The IRS assessed its collection activities to see how it could apply relief for taxpayers who owe but are struggling financially because of the pandemic, expanding taxpayer options for making payments and alternatives to resolve balances owed.
“The IRS understands that many taxpayers face challenges, and we’re working hard to help people facing issues paying their tax bills,” said IRS Commissioner Chuck Rettig. “Following up on our People First Initiative earlier this year, this next phase of our efforts will help with further taxpayer relief efforts.”
“We want people to know our IRS employees are committed to continue helping taxpayers wherever possible, including offering many options for those struggling to pay their tax bills,” said Darren Guillot, the IRS Small Business/Self-Employed Deputy Commissioner for Collection and Operations Support. Guillot discussed the new relief options in a new edition of IRS “A Closer Look.”
Taxpayers who owe always had options to seek help through payment plans and other tools from the IRS, but the new IRS Taxpayer Relief Initiative is expanding on those existing tools even more.
The revised COVID-related collection procedures will be helpful to taxpayers, especially those who have a record of filing their returns and paying their taxes on time. Among the highlights of the Taxpayer Relief Initiative:
The IRS offers options for short-term and long-term payment plans, including Installment Agreements via the Online Payment Agreement (OPA) system. In general, this service is available to individuals who owe $50,000 or less in combined income tax, penalties and interest or businesses that owe $25,000 or less combined that have filed all tax returns. The short-term payment plans are now able to be extended from 120 to 180 days for certain taxpayers.
Installment Agreement options are available for taxpayers who cannot full pay their balance but can pay their balance over time. The IRS expanded Installment Agreement options to remove the requirement for financial statements and substantiation in more circumstances for balances owed up to $250,000 if the monthly payment proposal is sufficient. The IRS also modified Installment Agreement procedures to further limit requirements for Federal Tax Lien determinations for some taxpayers who only owe for tax year 2019.
In addition to payment plans and Installment Agreements, the IRS offers additional tools to assist taxpayers who owe taxes:
Temporarily Delaying Collection — Taxpayers can contact the IRS to request a temporary delay of the collection process. If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer’s financial condition improves.
Offer in Compromise — Certain taxpayers qualify to settle their tax bill for less than the amount they owe by submitting an Offer in Compromise. To help determine eligibility, use the Offer in Compromise Pre-Qualifier tool. Now, the IRS is offering additional flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted offer in compromise.
Relief from Penalties — The IRS is highlighting reasonable cause assistance available for taxpayers with failure to file, pay and deposit penalties. First-time penalty abatement relief is also available for the first time a taxpayer is subject to one or more of these tax penalties.
All taxpayers can access important information on IRS.gov. Many taxpayers requesting payment plans, including Installment Agreements, can apply through IRS.gov without ever having to talk to a representative.
Other requests, including this new relief, can be made by contacting the number on the taxpayer’s notice or responding in writing. However, to request relief, the IRS reminds taxpayers they must be responsive when they receive a balance due notice.
“If you’re having a tax issue, don’t go silent. Please don’t ignore the notice arriving in your mailbox,” Guillot said. “These problems don’t get better with time. We understand tax issues and know that dealing with the IRS can be intimidating, but our employees really are here to help.”
Throughout COVID-19, the IRS has continued to adjust operations to help ensure the health and safety of employees and taxpayers, including the extensive and temporary relief of the IRS People First Initiative. More information and background on the collection relief and procedures can be found in “A Closer Look.”
“While it’s been important for us and the nation to resume our critical tax compliance responsibilities, we continue to assess the wide-ranging impacts of COVID-19 and other difficulties people are experiencing,” Guillot said.
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Will the US Tax Court Stay Proceedings If There Is a Potential Criminal Case Pending? If there is a legitimate fear that a criminal case could […] The post DWL Tax Law’s New FAQ’s – July 2020 Edition appeared first on Tax Attorney Newport Beach CA| Orange County| DWL Tax Law - Daniel...
Will the US Tax Court Stay Proceedings If There Is a Potential Criminal Case Pending?
If there is a legitimate fear that a criminal case could be impacted by ongoing civil proceedings, many courts, including the United States Tax Court, may stay the civil case, at least temporarily. Click here for more…
Doctor, Doctor, Give Me the News: Handling IRS Summonses for HIPAA Medical Records.
Although doctors, dentists, and others in the medical profession are familiar with the requirements of HIPAA, some IRS Revenue Officers and Revenue Agents are not well-versed in the privacy protections of the act. When a doctor, dentist, or psychiatrist receives a request for medical records (e.g., by way of an IRS summons) it will be incumbent on the health care professional to ensure that the IRS request complies with the disclosure requirements for HIPAA or to educate the agent on the acceptability of alternative (or redacted) records. Click here for more…
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CSED (IRS)- Understanding the IRS Collection Statute Expiration Date. What is CSED (IRS)? CSED is the IRS acronym for Collection Statute Expiration Date as it appears […] The post What is CSED (IRS)? appeared first on Tax Attorney Newport Beach CA| Orange County| DWL Tax Law - Daniel...
What is CSED (IRS)? CSED is the IRS acronym for Collection Statute Expiration Date as it appears in many IRS internal computer transcripts of taxpayer accounts, which tells the IRS collections officer what the IRS system has computed as the statutory expiration date for collection of the tax. Although the computer’s CSED date is sometimes inaccurate, it is still generally relied on by IRS employees in practice.
Almost any time the IRS is prevented from collecting by law, time is added to extend the IRS’s statute of limitations period (the allowed time per law) to collect. Some common actions extending the IRS’s time to collect include Requests for IRS Installment Agreement or Payment Plan, requesting an Offer in Compromise, requesting a Collection Due Process Hearing, or filing Bankruptcy.
The general rule is that the IRS must collect taxes within 10 years of the date of assessment. The assessment date is the date of the filing of the return (or 4/15 if later) or the date audit/exam liabilities are entered as assessments in the IRS’s records. However, bankruptcy and requests for installment agreement, among other things, can extend the statute of limitations pursuant to Section 6503 of the Internal Revenue Code. Certain actions extending the CSED, IRS favorably, are discussed below. For more specific information, a tax professional should be contacted.
Installment agreements: Section 6331(k) of the Internal Revenue Code prevents the IRS from enforced collection actions while the installment agreement is pending and for 30 days after denial or termination. The collection statute expiration date is tolled (extended) during the “pending” period plus 30 days.
Offer in Compromise based on Doubt as to Liability, Effective Tax Administration, or Doubt as to Liability: The statute of limitations for the IRS to collect is extended for the amount of time the Offer in Compromise is “pending” plus 30 days. For this reason, if a taxpayer’s account is not under immediate threat of collection, it may be preferable for some taxpayers to pursue either audit reconsideration, file an amended return, or file a claim for refund instead of an OIC based on doubt as to liability.
Collection Due Process Hearing (CDP): The CSED for the IRS’s collections is extended from the date the request for a Collection Due Process hearing is received by the IRS for as long as it is pending. If it is withdrawn, the date of the withdrawal is the last date for computing the extension. If a determination is made by the IRS, the last date for computing the period of extension is when it goes “final.” The filing of a Tax Court petition keeps the determination from going final until the Tax Court case is resolved. The final day is generally the date of the determination letter plus 30 days. One exception is where there is less than 90 days left on the limitations period when the CDP determination becomes final, then they get 90 days regardless.
Bankruptcy: With respect to a bankruptcy proceeding under Title 11 U.S.C., the running of the CSED period is suspended for the period during which the government is prohibited from collection (the duration of the bankruptcy proceeding unless a stay is lifted by motion of a creditor) plus 6 months thereafter.
The IRS can file suit to foreclose or reduce a tax liability to judgment at any time before the end of the IRS’s collections period. For that reason, waiting out a CSED for the taxes to expire is a risky proposition. In any event, the law requires taxes to be paid and, if possible, full payment (including through payment plans or offer in compromise) is the one way to make sure the balance due disappears forever.
The above is not an exhaustive list of the statutory collection time extension or tolling rules, but are applicable in many cases, but not to all cases. This can be a very technical area of law, with serious repercussions if the precise rules applicable to a taxpayer’s case are not personally evaluated and applied with great attention to detail. A tax professional should be consulted before making any decision that relies on or may affect the IRS’s CSED.
Daniel W. Layton, Esq., is a former IRS trial attorney, former federal prosecutor, and currently the principal of DWL Tax Law in Newport Beach, Orange County, California.
Updated 03/28/2021 by Daniel Layton.
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