Author Archives: c12651926

IRS Agent showed up at my Home

Breen Associates, EA, PC Plaistow , NH 03865

By Michael T. Breen, EA Plaistow, NH

When an IRS Agent shows up at your home, he or she is more than likely a Revenue Officer from a local IRS District Office looking to collect past due taxes or unfiled tax returns or both. During the initial contact, the Revenue Officer is required to provide their title, last name and employee identification number. The Revenue Officer is required to ask if you received Publication 1 Your Rights as a Taxpayer and if you had any questions. If you feel uncomfortable conducting this meeting with the Revenue Officer, you have the right to retain representation to conduct this meeting for you at a later date. If you have retained representation, you are not required to be present at any meeting with the IRS unless a summons is issued. If for some reason you decided you would take this meeting with the Revenue Officer and during this meeting you felt you were over your head, you can stop the meeting at anytime. Once you indicate that you want to stop the meeting to consult with a representative, the Revenue Officer is required to suspend the meeting to permit such consultation. The Revenue Officer will allow up to 10 business days to permit such consultation with a representative and advise you of the consequences if you or the representative fails to contact the Revenue Officer within this timeframe.

During the initial contact with the taxpayer the Revenue Officer is required to do the following:

  1. Request immediate full payment of taxes due. If full payment cannot be made a partial payment will be requested.
  2. Request immediate filing of all past due tax returns.
  3. If the taxpayer indicates the liability is incorrect, the Revenue Officer will allow the opportunity to file an amended tax return or trace payment
  4. Determine if the taxpayer is making estimated tax payments if self-employed

If the Revenue Officer cannot resolve the matter during this initial home visit, he or she will discuss a realistic plan for resolution. Once this plan is discussed with the taxpayer, the Revenue Officer will prepare Form 9297 Summary of Taxpayer Contact which provides the details of the plan which is very specific. For example, file Form 1040 for 2012, 2013 and 2014 no later than August 24,2016, complete Collection Information Statement Form 433-A no later than September 1, 2016. The Revenue Officer will have the taxpayer sign the form and warn them of the consequences of not meeting the specific time frames. The consequences for missing deadlines, are wage levies, bank levies and summons.

If the Revenue Officer arrives at your home and you are not there, he or she will leave Form 2246 Field Contact Card which is used to advise taxpayers how to contact them. As a general rule, the time frame for a taxpayer to respond should be two business days.  IRS Revenue Officers work out of  local district offices. In New Hampshire, the primary district offices are located at 80 Daniel Street, Portsmouth, NH and 1000 Elm Street, Manchester, NH. In Massachusetts the primary district office is located at 1 Montvale Avenue, Stoneham, MA.









IRS Summons

Breen Associates, EA, PC Plaistow , NH 03865

By Michael T. Breen, EA Plaistow, NH

IRS Summons is a tool utilized by the IRS when a taxpayer will not produce the desired records or other information voluntarily. Under the law the IRS has the authority to issue a summons to any person to produce for examination books, papers, records or other data, and to require such person to give testimony, under oath, as may be relevant or material to the determination or collection of any tax. An IRS summons is commonly issued by Revenue Officers when a taxpayer fails to deliver completed tax returns or a collection information statement that was promised to them by a specific date. A common mistake taxpayers make is as their deadline to produce either a collection information statement or complete tax returns closes in, they realize they need more time to complete the documents and fail to contact the Revenue Officer and request additional time. In many cases the Revenue Officer will grant additional time to furnish the information as long is it is reasonable under the circumstances. By not communicating with the Revenue Officer, he or she has no idea where you stand on furnishing the information as a result a summons is served.

Under the law, an IRS summons must be served in hand or by leaving it at the taxpayer’s  last and usual place of abode. The time and place for appearance and examination must be reasonable. The date for appearance shall not be on a Saturday, Sunday, or legal holiday and be less than 10 full days from the service. Legally, it is sufficient to require the summoned person to appear on the 10th day. However, the IRS usually waits until the 11th day to avoid any questions regarding the 10 day waiting period. The IRS summons must describe with reasonable certainty the documents including the timeframes sought. The IRS may not levy a taxpayer’s property on the day the taxpayer is required to appear in response to a summons.

It is important to know, that a summons cannot require the taxpayer to do anything other than appear on a given date to give testimony or produce existing books, papers and records or both. A summons cannot require a taxpayer to prepare or create documents, including tax returns, that do not currently exist. However, a taxpayer may be required by a summons to appear and give testimony that would allow a Revenue Officer to obtain answers to all the questions or blanks on a Collection Information Statement for that taxpayer or produce records to complete a tax return for that taxpayer. Therefore, if you show up at the IRS on the date of the summons with the summoned documents and not a completed document such as a tax return or a collection information statement you can expect your day to go as follows:

Non Filed Tax Returns  For instance you have a small business and didn’t file tax returns for 2012, 2013 and 2014. The IRS will have one of their employees from the IRS Examination Division usually a Revenue Agent meet with you to prepare the tax returns. The Revenue Agent will have in their possession transcripts of all the income reported to the IRS from 1099s issued from your customers. The Revenue Agent will examine the documents you provided such as bank statements, general ledgers in conjunction with the income documents they already have, your testimony and prepare your tax returns. Showing up to this meeting unprepared with a box of disorganized paperwork is going to make a long day for both you and the Revenue Agent. Generally, the IRS will expect the Revenue Agent to complete the tax returns that day. Therefore, if your paperwork is a mess, the Revenue Agent may have no other choice but to utilize estimates in completing your tax returns. These estimates may result in the Revenue Agent computing a higher tax liability. Therefore, although you are not required to prepare any tax returns in response to a summons it may be in your best interest to do so. Your computed tax liability will be more realistic and you will avoid a long day sitting with a Revenue Agent preparing your tax returns. Keep in mind that you have at least 10 days to prepare the tax returns before you have to show up for the summons. If on the day of the summons, you show up with your completed tax returns, you are in and out of there in 10 minutes.

Collection Information Statement  The Revenue Officer may have you raise your right hand and swear that the testimony you are about to give is true and complete. The Revenue Officer will begin to prepare the Collection Information Statement by reviewing the summoned documents that verify your income and necessary living expenses. The Revenue Officer will ask you to answer questions from the Collection Information Statement as well as information about your income and necessary living expenses. The reason the Revenue Officer is preparing the Collection Information Statement in the first place is to make a collection decision. Generally, there are only a handful of possibilities and are as follows:

1.You can full pay the liability and will demand payment,

2. You have insufficient assets and income to pay anything presently and will be placed in a category called currently not collectible,

3. You have the ability to pay the liability in full by making monthly payments which is referred to as an installment agreement

4. You have no ability of ever being in a position to pay the liability in full. The Revenue Officer will discuss the provisions of an Offer in Compromise which is an opportunity to settle the liability for an amount that is less than actually owed.

As mentioned earlier a summons cannot require a taxpayer to prepare any document, such as a Collection Information Statement. However, it may be in your best interest to have it prepared in advance of meeting with the Revenue Officer, especially when a collection decision is going to be made based on this document. The Revenue Officer will be expected to have this Collection Information Statement completed on the day of the meeting. If your records are in disarray, it could mean the difference in you being set up on an installment agreement when in fact you should really be submitting an offer in compromise. You have 10 days to put together a Collection Information Statement from the date of summons. When a  Collection Information Statement is filled out completely with all the supporting documentation, it will make your meeting with the Revenue Officer very efficient. You won’t be spending hours with the Revenue Officer preparing the Collection Information Statement. Instead, you will be reviewing the completed document and discussing the plan for resolution of you tax matter.

Enforcement of Summons When a summons is issued to a specific taxpayer, that taxpayer must appear with the available documents and be prepared to give testimony. The taxpayer’s representative cannot go in place of the taxpayer to this meeting. However, the taxpayer’s representative may attend this meeting with the taxpayer. If a taxpayer does not show up on the date of a summons, the law provides enforcement action that may be initiated by applying for an attachment for an arrest against a person who has failed to obey a summons to a district judge or magistrate judge. When the person is brought before the district judge or magistrate judge, the judge will issue whatever order is deemed proper to enforce compliance with the summons and to punish such person for default or disobedience.






How to Get an IRS Wage Levy Released

Breen Associates, EA, PC Plaistow , NH 03865

By Michael T. Breen, EA Plaistow, NH

An IRS wage levy is usually served to a taxpayer’s employer not only as a means to collect back taxes, it is also used as a tool by IRS to get the taxpayer’s attention to take some type of action. In many circumstances an IRS wage levy is served because the taxpayer did not respond to mail from the IRS, had contacted the IRS and made a commitment to take some type of action, such as filing back tax returns, provide a collection information statement, submit an offer in compromise by a certain timeframe and failed to do so. Serving the wage levy assures the IRS that the taxpayer will be contacting them to resolve their IRS matter. The IRS uses the wage levy as leverage to get the taxpayer to perform the action they are seeking from the taxpayer, such as filing back tax returns, providing a collection information statement or submitting an offer in compromise. The quickest way to get your wage levy released is to contact the IRS, offer an explanation as to why you missed your deadline, establish a new deadline and deliver on it. This approach usually produces good results in getting your wage levy released. However, in some cases that doesn’t always hold true. However, under the law when certain circumstances are present, the Internal Revenue Service must release the wage levy and are as follows:

The Statute of Limitation on Collection has Expired – Generally, the statute of limitations the IRS has to collect from a taxpayer is 10 years from the date of assessment. If for example, you filed your Form 1040 for the year 2005 on July 24, 2006 and the IRS assessed the tax on the same day, the collection statute would be scheduled to expire after July 24, 2016 which is 10 years from the assessment date of July 24, 2006. Therefore, if you still owed the IRS $15,000 on July 1, 2016 when an IRS wage levy was served, by operation of law that wage levy must be released after July 24, 2016 as the tax of $15,000 is no longer legally due. It is important to know that certain actions such as filing an offer in compromise, filing bankruptcy and requesting a collection due process hearing will extend the statute of limitations.

The Release of Levy will Facilitate Collection  In example, Donald owes the IRS $5,000. His employer was served with a wage levy. Donald has an available home equity line of credit of $20,000 that he cannot access because he is 3 days late on his payment as a result of the wage levy. If the IRS released the wage levy, Donald could make the payment on his home equity line of credit, then have access to the line of credit and pay the IRS in full.

Bankruptcy prohibits a wage levy. Generally, levying on the wages of a taxpayer violates the automatic stay and the wage levy must be released.

Collection Due Process Hearings prohibit a wage levy from being issued while the taxpayer’s Collection Due Process Hearing is pending.

Economic Hardship means the taxpayer will be unable to pay their reasonable necessary living expenses. An IRS wage levy is required to be released when the IRS determines the levy is creating an economic hardship. To make your case for release, financial information will be required to be submitted to the IRS by phone or correspondence. The IRS may require you to furnish supporting documentation to determine if an economic hardship exists. Generally, if you are dealing with a Revenue Officer, you will complete a Form 433-A Collection Information Statement for Individuals  and provide verification of the last three months necessary living expenses such as copies of rent, mortgage, utilities, car payments, car operating expenses, health insurance, etc. If you are dealing with the IRS/ACS Automated Collection Services, you will be more than likely giving this financial information over the phone to the IRS/ACS employee. They may request that you fax them proof of documents. If you are dealing with the IRS/ACS division of the IRS plan to spend a few hours on the phone. Although time consuming, it is time well spent because in most cases you will get your decision right then and there. Generally, wage levy releases are mailed to the taxpayer’s employer. However, when time is of the essence such as another paycheck is due in a few days, the IRS may fax the release to your employer. Make sure you have the appropriate contact information for your employer’s  Human Resources Department  and a fax number before you make the call to the IRS.

IRS Wage Levy Relief

An IRS wage levy has the potential to put a family out in the street if they or their employer don’t understand IRS practice and procedure with respect to wage levies. Unlike other levies, an IRS wage levy is continuous and attaches to future paychecks until it is released by the IRS. Wage levies are served to the taxpayer’s employer by Revenue Officers working out of an IRS District Office. New Hampshire has IRS District Offices in Portsmouth, Manchester and Nashua. The major District Office in Massachusetts is located in Stoneham, MA. Also, your employer may be served a levy from branch of the IRS known as ACS (Automated Collection Services) which is a call site that collects non-filed tax returns, sets up installment agreements and issues levies.

Once your employer receives Form 668-W Notice of Levy on Wages, Salary and Other Income they are required to have you complete part 3 “Statement of Exemptions and Filing Status” and return it to the IRS within 3 days. You absolutely want to take action right away in completing this document to assert your right as to how much of your paycheck the IRS is entitled to under the law if any. There is a provision in the law that mandates a portion of a taxpayer’s earnings are exempt or protected from an IRS wage levy. There may be a very good possibility that once you fill out this document, you may discover the IRS is not entitled to any amount of your paycheck or a very small portion. If the “Statement of Exemptions and Filing Status” is not completed and returned timely, the exemption from levy will be calculated as married filing separately with one exemption resulting in the IRS receiving much more of your paycheck. However, if this deadline is missed the employee can always give the statement to the employer to make the appropriate change at a later date.

The amount exempt or protected from an IRS wage levy is calculated by simply adding the amount of your exemptions and standard deduction that you are entitled to when you file your Individual Tax Return Form 1040 and dividing it by your pay period. For example, if you are married and file a joint return and have 2 dependent children and are paid weekly, the amount exempt from levy is calculated as follows:

The exemption amount for 2016 is $4,050 multiplied by 4 exemptions equals $16,200 plus the standard deduction for 2016 married filing jointly of $12,600 equals $28,800 which represents the annual exemption from levy. The weekly amount exempt from levy is $553.85 ($28,800  divided by 52 weekly pay periods). This means the IRS must leave you with at least $553.85 per week. Therefore, if your regular weekly pay check is for $500, the IRS is not entitled any portion of your paycheck because it is less the exempt from levy amount of 553.85. However, if your regular paycheck was $600 per week, the IRS would get $46.15 per week and you would get $553.85 per week. When the IRS issues a Notice of Levy on Wages, Salary and Other Income, they include Publication 1494 which is a table for figuring the amount exempt from levy without doing the actual calculation.

It is important to know that under the law, an IRS wage levy attaches to the taxpayer’s gross income minus the exemption from levy amount, however, the IRS issued Policy Statement 5-29 that went into effect on September 29, 1999 and is still in effect today, that provides taxpayers under a wage levy significant relief from the wage levy.

IRS Policy Statement 5-29 reads in part as follows:

  1. Levy on salary or wages-generally limited to “take home” pay
  2. Except for the statutory exemptions in IRC 6334(a)(8) which is court ordered child support and IRC 6334(a)(9) which is the exemption from levy calculation above, a levy legally attaches to the gross amount of the accrued wages or salary. However, in the interest of administrative expediency, a levy will be considered as attaching only to the “take home” pay of the delinquent taxpayer unless it is determined that the taxpayer is voluntarily allotting his or her pay to an extent that would defeat the purpose of the levy.

The following is an example how your employer should calculate the amount exempt from levy based on the IRS Policy Statement 5-29:

John is married and has two dependent children and pays weekly child support of $100 for a child from a previous marriage. His gross earnings before any deductions for taxes, child support and health insurance is $1,200.00 per week. Before any IRS wage levy John’s weekly paycheck was as follows: Gross Pay $1,200, less payroll taxes of $291.80, less child support of $100, less $50 for health insurance resulting in a net payroll check in the amount of $758.20 per week. This $758.20 is considered the take home pay referenced in IRS Policy 5-29 and is the starting point for applying the exemption from levy. Therefore, in this case John’s employer would be required to send the IRS $204.35 per week, calculated by subtracting from the take home pay of $758.20, the exemption from levy amount of $553.85 that was calculated earlier. If an employer misunderstood how to apply these provisions, the result could be financial devastation for a family. Consider your employer doing a quick read of the Form 668-W Notice of Levy on Wages, Salary and Other Income and calculated the exemption from levy as follows: John’s gross pay $1,200 less exemption from levy $553.85 and sends $646.15 per week to the IRS instead of the required $204.35. Over the course of a month that employer will send $2,797.82 ($646.15 X 4.33 weeks per month) more to the IRS than required. Don’t let your employer put your family at risk. Make sure they have a clear understanding on how to process a wage levy. My next post will be on how to get wage levy released.

Breen Associates, EA, PC Plaistow , NH 03865

By Michael T. Breen, EA Plaistow, NH








Appeal your IRS Tax Audit Results

Appealing your IRS Audit results is an excellent idea if you disagree with the IRS Revenue Agent or Tax Compliance Officer’s findings. Just because the IRS Agent believes you owe an additional amount of money for a particular tax year, doesn’t mean it’s cast in stone. You have the right to appeal the IRS Agent’s tax audit findings. The IRS Appeals Office is the forum for appealing the results of your IRS tax audit. Generally, at the conclusion of an IRS audit, you will receive a notice of proposed examination changes with a cover letter requesting you sign the document and return it to the IRS if you are in agreement with the proposed changes. Alternatively, if you are in disagreement with the proposed changes you will be giving information about appealing the IRS Agent’s tax audit findings.  The IRS Office of Appeals is a separate, independent and impartial forum for settling tax disputes between the taxpayer and the IRS. The Office of Appeals operates very similar to a court, the taxpayer submits his or her case and the IRS submits their case. Instead of a Judge hearing the case an Appeals Officer will be hearing the case. The major difference is the informal nature of an Appeals Hearing. The hearing itself, will be at a local IRS Appeals Office held in a conference room or maybe held in the Appeal Officer’s office. The only people that will be present at the Appeals Hearing will be you the taxpayer and the Appeals Officer. The IRS will not be there to present their case. The IRS’s case has already been submitted to the Appeals Officer and reviewed.  This is your opportunity to discuss with the Appeals Officer one on one as to  why you disagree with the IRS Agent, present your facts and discuss a potential settlement of the proposed examination changes in a relaxed atmosphere. The mission of the IRS Office of Appeals is to settle disputes without a trial. A good presentation before an Appeals Officer is key in reducing proposed examination changes. In order appeal the findings of an IRS Agent at an Appeals Hearing, you must file a protest within 30 days of date of the letter from the Revenue Agent or Tax Compliance Officer that contained the proposed examination changes.

How to Prepare a Protest for an IRS Appeal

Your protest must reached the IRS within 30 days from the date of the letter from the IRS Agent. Whereas, your protest is time sensitive I highly recommend mailing it certified receipt requested mail to the IRS Agent. Your Protest must include the following information:

  1. Your name and address, and a daytime telephone number,
  2. A statement that you want to appeal the IRS findings to the Appeals Office,
  3. A copy of the letter showing the proposed changes and findings you don’t agree with (or the date and symbols from the letter),
  4. The tax periods or years involved,
  5. A list of the changes that you don’t agree with, and why you don’t agree,
  6. The facts supporting your position on any issue that you don’t agree with,
  7. The law or authority, if any, on which you are relying.
  8. You must sign the written protest, stating that it is true, under the penalties of perjury as follows: “Under the penalties of perjury, I declare that I examined the facts stated in this protest, including any accompanying documents, and, to the best of my knowledge and belief, they are true, correct and complete”.

It is a good idea to provide as much information as possible when preparing your Protest, but keep in mind the objective of the Protest is to get you to an Appeals Hearing. You do not have to present your entire case on this document. The reality is that once you file your Protest, you will receive an introduction letter from the Office of Appeals maybe 30-45 days later. Then a subsequent letter from the Appeals Officer assigned to you case maybe 30-60 days after that requesting you contact the Appeals Officer to set an Appeals Hearing date. Once you make contact with the Appeals Officer he or she may not be able to see you for 30 days or more. Therefore, you have time to develop your case before the actual Appeals Hearing, so there is no need to stress out about not being able to have your case fully developed by the protest deadline. Click on the link  to obtain IRS Publication 5-Your Appeal Rights and How to Prepare a Protest If you Don’t Agree




IRS Tax Audit-Preparing your Tax Audit Defense

IRS Tax Audits have the potential to create more serious problems with the IRS if a proper defense is not planned. You have heard the expression, “Fail to plan. Plan to fail”. I say, “Fail to prepare. Prepare for disaster”.  Not being prepared for an IRS audit could end up costing you more money than you could ever imagine. The best IRS help is your ability to prepare your case in advance.

The IRS will send out a letter from a local district office indicating that your tax return for a specific year has been selected for audit. The IRS letter will set an appointment date to meet with a Revenue Agent or a Tax Compliance Officer. This letter will list a number of items to bring to the audit for examination such as bank statements, sales journals, 1099’s issued, business formation documents and proof of specific deductions. What if this list is so large that you can not possibly round up all those documents by the IRS audit appointment date? Call the IRS agent and request a later date. The IRS understands that taxpayers don’t always have all their records readily available and may need to contact the bank for copies of their bank statements. You are in a much better position postponing the IRS audit to a future date that would allow you to show up with all the required documents. Showing up for an IRS tax audit unprepared is a potential train wreck.  Ideally, you want to walk into this IRS audit 100% prepared, confident and ready to defend your income tax return.

In the majority of the cases where I have represented taxpayers before the IRS in an audit, the issues are fact based as opposed to a question of law. Therefore, you don’t need to know the Internal Revenue Code, Tax Court Precedents or the Internal Revenue Manual to walk into this IRS audit with a high level of confidence. You do need to know how to present facts clearly in an organized fashion which is simply preparing exhibits and explanations of what the exhibits represent. For example, if you were a real estate agent that sold residential real estate, the IRS would be mainly concentrating on your Schedule C-Profit or Loss from Business. If for example, you reported $76,533 as gross income, your exhibit would include photocopies of 12 months of bank statements that total $76,533 of deposits. What if you discover when you total your deposits from your bank statements you arrive at $86,533 for deposits which is $10,000 more than was reported on your tax return. In that case, the extra $10,000 in deposits may be a gift from a family member or a loan. Part of your exhibit would include some type of documentation attesting to this fact, such as a copy of the cancelled check from the family member or copy of the loan contract. At that point your first exhibit is solid. You will want to take the same approach with your business deductions. For example if you have advertising expense listed as $1,709, you would prepare an exhibit that included copies of all your cancelled checks, credit card and debit card charges that were paid to your  your vendors. When you come up with $1,709 in advertising expense that exhibit is solid.

One of the most troublesome areas is business mileage. The IRS is aware that many taxpayers do not keep very accurate records when it comes to tracking business mileage. I would bet the farm that if you have a deduction for business mileage the IRS agent will ask to review your mileage log. What if I don’t have one? You can reconstruct a mileage log from your daily planner with Google maps using the driving directions section that will calculate the actual mileage. You may even come up with more miles than you reported on your tax return. If that is the case, can you get credit for the extra miles? Absolutely! This may even put you in refund status. In other cases, you may come up with less miles that would result in you owing additional tax, penalties and interest.

After the exchange of tax information between you and the IRS agent, he or she will make any adjustments in their computer system and generate a print out entitled,” schedule of examination changes” for your signature. Be absolutely sure that you are in full agreement with any changes before you sign this document. Once you have signed this document, you have waived your rights for a redetermination at the IRS of Office of Appeals and the US Tax Court. You do not have to sign that document right then and there. If you feel uncomfortable about some of the adjustments, you may want to take a copy of the examination changes to a tax professional for an opinion. What if you find that after consulting a tax professional you discover that you substantially disagree with the IRS. Then you will want to exercise your right of Appeal which will be the topic of my next post.






Five Arrested for IRS Phone Scam

Treasury Inspector General for Tax Administration (TIGTA) announced the arrest of five individuals alleging that they were involved in schemes that impersonate IRS agents and used threat of arrest to obtain money from victims by representing that the victims owed back taxes. The arrests occurred in Miami, Florida on May 23, 2016 without incident. It is estimated that the suspects collected almost $2 million from approximately 1,500 victims. According to court documents, victims received telephone calls from people claiming to be from the IRS, who told them the IRS would arrest them if they did not make payment immediately. The callers pressured their victims to wire money, utilizing MoneyGram and other wire services.

The IRS would never make their initial contact with a taxpayer by telephone for an IRS tax problem like owing the agency money. There is a procedure in place the IRS must follow when contacting a taxpayer for a balance due. Initially, the taxpayer would receive a notice and demand letter approximately 30-45 days after they filed their tax return that serves as an invoice. If the taxpayer does not pay, the IRS will follow up with 5 more letters 30 days apart. Therefore, there would be many contacts by mail before an IRS official would contact a taxpayer by telephone. See TIGTA Press Release

It appears that this was a copy cat crime that mirrored a massive IRS phone scam run through various call centers located in India. The FBI Press Release dated July 8, 2015 from the New York Field Office announced, ” Ringleader of Extortion Ring Sentenced to More than 14 Years in Manhattan Federal Prison for Massive Call Center Fraud Scheme”. Throughout the course of the fraud, telephone call centers located in India hired English-speaking employees to place telephone calls to individuals living in the United States. The ringleader provided the call centers with lists of potential victims. The India based call centers placed thousands of calls to individuals in the United States in the hopes of intimidating the potential victims into making a payment. It is estimated that approximately $1.2 million dollars was extorted from U.S. taxpayers.

If you know you don’t owe taxes or have no reason to think you owe any taxes and the caller is making threats, hang up on them and call and report the incident to the Treasury Inspector General for Tax Administration at 800-366-4484 or online by following the link



Guaranteed Payment Agreement with IRS

If you cannot pay your taxes in full when you file your tax return you may qualify for a Guaranteed Installment Agreement. The law requires the Internal Revenue Service to accept proposals to pay in installments if the taxpayer is an individual who:

  1. Owes income tax of $10,000 or less (excluding interest and penalties),
  2. Has timely filed and paid all taxes during the preceding five years.
  3. Cannot pay the tax immediately. (As a matter of policy the IRS grants guaranteed installment agreements even if a taxpayer can full pay their account immediately)
  4. Agree to fully pay the liability within 3 years.
  5. Agree to file and pay all future tax liabilities when due.
  6. Have not entered into an installment agreement during the preceding five years.

You can obtain your Guaranteed Installment Agreement by contacting the IRS via phone, online or by completing Form 9465-Installment Agreement Request. In order to avoid the long telephone holds many taxpayer’s opt to complete the Form 9465 and mail it to the IRS at the appropriate address listed in the instructions for Form 9465. You can obtain Form 9465-Installment Agreement request by following this link You can obtain the Instruction for Form 9465 by following this link If you can full pay your account within 120 do not file Form 9465, the IRS will grant you a 120 day extension to pay without incurring a processing fee. Presently, the IRS bases their processing fees based upon how you plan to pay them. If by check, money order, credit card or payroll deduction the fee is $120 and $52 for direct debit. The IRS will let you know that your request is approved by sending you a letter detailing the terms of your agreement and requesting the processing fee at that time. The IRS time frame for responding is usually 30 to 60 days. It is important to note that the IRS is not required to file a Federal Tax Lien on Guaranteed Installment Agreements. However, in some circumstances where a decision to file a Federal Tax Lien has been made by a Revenue Officer, the case file must document the justification in the case history including the Group Manager’s concurrence.

IRS Telephone Scams with a New Approach on the Rise!

Recently I received four calls from clients indicating that they received a voice mail from the IRS requesting a call back.These scammers now keep a data base with potential targets by name and telephone number. When the taxpayer calls back, the scammer requests the taxpayer’s name and telephone number. The scammer then looks in their data base to verify the targeted victim. Once the targeted victim’s information is confirmed in the data base. The conversation goes something like this:

Scammer: My name is John Smith, I am a criminal investigator with the IRS or US Treasury, my badge number is 456812 and the purpose of my call today is to inform you that there has been an action filed in the local court house. You under reported your income on your 2012 tax return and you are being prosecuted. How can I get in contact with your attorney to prepare for trial?

Taxpayer: This is the first I have ever heard of this. I have never received any letters or phone calls from the IRS.

Scammer: We have sent you many letters and left you numerous voice mails. You didn’t respond to either and now have forced us to get the court involved.

Taxpayer: Is there another way to resolve this matter? How much do I owe?

Scammer: No, it’s too late to handle the matter out of court and you owe $4,809.32.

Taxpayer: I don’t have an attorney, I really don’t want to go to court. There must be another way.

Scammer: I can talk to my supervisor and see if he will make an exception. If I can convince my supervisor to settle out of court, it must be done today. Are you willing and prepared to settle this matter today?

Taxpayer: Yes.

Scammer: Please hold and let me see what I can do for you.

The scammer knows that the taxpayer’s anxiety level is off the charts right about now as he or she is waiting to learn their fate and will agree to just about anything to solve this matter once and for all. After about 3-4 minutes, the scammer is back on the line.

Scammer: OK, I was able to convince my supervisor to settle this matter today.

Taxpayer: Can you take a credit card payment?

Scammer: No, I am going to give you specific instructions and you must stay on the line with me during this process. If for some reason we get disconnected before this transaction is completed, the out of court settlement is off and you will be arrested.

Taxpayer: OK

Scammer: I want you to drive to the closest Walmart, CVS or Rite Aid or any other place that you know sells green dot money packs. I want you to purchase 9 green dot money packs for the maximum amount which is $500.00 for a total of $4,500.00. Then I want you to purchase 1 green dot money pack for $309.32. Now read me the serial number on the back of each of the cards you just purchased (Once the serial numbers are disclosed to the scammer, he or she can collect the funds from green dot immediately, even if overseas).

If you get a call from someone claiming to be from the IRS, here’s what you should do:

If you know you owe taxes or you think you might owe taxes, call the IRS at 800-829-1040. The IRS employees at that line can help you with a payment issues-if there really is such an issue. If you feel uncomfortable speaking with the IRS, you have the right to appoint a representative to make that call for you.

If you know you don’t owe taxes or have no reason to think you owe any taxes and the caller is making threats, hang up on them and then call and report the incident to the Treasury Inspector General for Tax administration at 800-366-4484.