IRS Issues
Richard G. Furlong, Jr.
Senior Stakeholder Liaison
Small Business Self-Employed Division
Main Line Association for Continuing Education
Penn State Great Valley Conference Center
October 16, 2014
Issue 1: Taxpayer Bill of Rights
Ten broad categories:
1. Right to Be Informed
2. Right to Quality Service
3. Right to Pay No More than the Correct
Amount of Tax
4. Right to Challenge the IRS’s Position and
Be Heard
5. Right to Appeal a Decision in an
Independent Forum
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Taxpayer Bill of Rights (cont.)
Ten broad categories (cont.)
6. Right to Finality
7. Right to Privacy
8. Right to Confidentiality
9. Right to Retain Representation
10. Right to a Fair and Just Tax System
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Issue 2: The Collection Process
• Begins when a return is filed without paying
the debt in full
• Paying your taxes
– Options for paying in full
– Options if you can’t pay in full now
• Installment agreement
• Offer in compromise
− If you need more time to pay
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Collection Appeals Options
• Taxpayers can appeal most collection
actions.
• Main options:
− Collection Due Process
− Collection Appeals Program
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The Collection Process
• Penalties
− Failure to file
− Failure to pay
• Interest
• Abatement
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Issue 3: Online Payment Agreement
Application
• Streamlined
• Less financial info required
• Maximum time to pay 72 months
• Immediate approval notification
• Eligibility (all required returns filed)
– Individuals less than or equal to $50,000
tax and penalties
– Businesses less
tax and penalties
than or equal to $25,000
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Online Payment Agreement
Application
When applying online, be ready to provide:
authentication information, tax return data
and basic financial information.
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Online Payment Agreement
Application
• Application fees (as of Jan. 1, 2014)
– $120, standard agreement
– $52, direct debit agreement
– $43, applicant meets low income guidelines
• Online system available
– Monday – Friday, 6 a.m. – 12:30 a.m. ET
– Saturday, 6 a.m. -10 p.m. ET
– Sunday, 6 p.m. - midnight ET
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Issue 4: Offer in Compromise
• Five basic requirements:
− Filed all returns
− Made all required estimated taxes payments
− Current with federal tax deposits
− Can’t pay full amount
− Not in bankruptcy
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Offer in Compromise
• IRS may accept an offer on three grounds:
− Doubt as to liability
− Doubt as to collectability
− Effective tax administration
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OIC Pre-Qualifier Tool
The OIC Pre-Qualifier tool helps
applicant s confirm eligibility and prepare
preliminary proposals.
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Offer in Compromise Components
• The completed offer package must include all
of the following items:
– Form 433A or 433B
– Form 656 for each taxpayer
– $186 non-refundable fee
– Non-refundable payment
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Issue 5: Notice of Federal Tax Liens
• Claim against current and future rights to
property
• Once lien exists, controlled by IRC §6322
– Date of origin becomes assessment date
– Exists until liability is satisfied or becomes
unenforceable by lapse of time
• IRS not required to file Notice of Federal Tax
Lien for tax lien to attach
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Notice of Federal Tax Liens
• Filing criteria: Generally, the IRS will not file a
Notice of Federal Tax Lien if the unpaid
balance of assessment is less than $10,000.
• Payoff amount: Call 800-913-6050
• Appeal: Within 5 business days of filing. IRS
will send a Notice of Your Right to a Collection
Due Process Hearing.
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NFTL - IRS Actions
• Release of lien
– IRS has cleared both the lien for the debt
and the public NFTL
– IRS Publication 1450
• Withdraw of lien
– Removes NFTL from public records
– Does not mean federal tax lien is released
or taxpayer no longer liable for amount
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NFTL - IRS Actions (cont.)
• Discharge of lien
– Removes a lien from specific property
– IRS Publication 783
• Subordination of lien
– Allows a creditor to move ahead of the
government’s priority position
– IRS Publication 784
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Issue 6: Audit Reconsideration
Process used by IRS to help taxpayers when
they disagree with the results of an IRS audit of
their tax returns, or returns created for them by
the IRS because they did not file tax returns as
authorized by the Internal Revenue Code
6020(b).
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Audit Reconsideration Process
• Step 1:
– Review examination report and attachments;
determine which items you feel are incorrect
– Gather documentation needed to support
your position
– Verify supporting documentation is
information that has not been presented
before; ensure it’s for tax year in question
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Audit Reconsideration Process
• Step 2:
– Make photocopies of documents and attach
them to your letter explaining your request
for reconsideration
– If available, attach copy of examination
report, Form 4549, along with new
documentation supporting your position
– Include a daytime and evening telephone
number and the best time for us to call you
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Issue 7: Information Document
Requests
•
New guidelines to LB&I examiners and
specialists when issuing an IDR during the
information gathering phase on an
examination
• LB&I Directive of Information Document
Requests (LB&I-04-0214-004)
– Requirements for issuing IDRs
– Three-step IDR enforcement process
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Issue 7: Information Document
Requests
•
LB&I requirements for issuing IDRs
– Discuss the issue with taxpayers
– How / why the information is necessary
– One IDR for each issue
– Customize IDR to fit taxpayer or industry
– Provide draft and discuss IDR with T/P
(generally, completed w/n 10 bus days)
– Determine reasonable response date
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Issue 7: Information Document
Requests
•
LB&I IDR Enforcement Process, three
graduated steps:
1. Delinquency notice
2. Pre-summons letter
3. Summons
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Issue 8: IRS Letters to Tax Professionals
• November 2013, IRS began its fifth year of a
hands-on effort to improve the accuracy and
quality of filed tax returns and heighten
awareness of preparer responsibilities
• Contacts are made through letters and visits
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IRS Letters to Tax Professionals
• Letter 5105
– Recommends recipient review all Sch C and
preparer due diligence rules, as well as pay
special attention to Sch C accuracy
• Letter 4810
– Advises recipient that an IRS representative
will contact them to schedule an educational
visit to review their responsibilities in
correctly preparing the Sch C
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IRS Letters to Tax Professionals
• Letter 5271
– Recommends the recipient review all
Additional Child Tax Credit (Sch 8812) and
preparer due diligence rules
• Letter 5272
– Similar to Letter 5271, adding that recipient
should pay special attention to ACTC
accuracy where dependents have an ITIN
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IRS Letters to Tax Professionals
• Letter 4911
– Notifies recipient that IRS Return Preparer
Office (RPO) is aware that they are not in
compliance with their federal tax filing
and/or payment responsibilities
– If matters addressed, no contact required
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Issue 9: EIC Due Diligence
• FY13 improper payments of earned income
credit estimated between $13.3B - $15.6B
• IRS is combating these errors with
– Due diligence requirements
– Due diligence compliance audits
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EIC Due Diligence
• Due diligence requirements:
−
−
−
−
Complete/Submit eligibility checklist
Compute the credit
Knowledge
Recordkeeping
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EIC Due Diligence
• Consequences of not meeting due diligence
requirements
– Penalties
– Suspension/expulsion from IRS e-file
– Disciplinary action by IRS OPR
– Injunctions
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Issue 10: Treasury Inspector General
For Tax Administration
The Treasury Inspector General for Tax
Administration (TIGTA) was established in
January 1999 in accordance with the Internal
Revenue Service Restructuring and Reform
Act of 1998 (RRA 98) to provide independent
oversight of Internal Revenue Service (IRS)
activities.
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What Should Be Reported to TIGTA
• Allegations of violations affecting the integrity
of federal tax administration and IRS programs
• Allegations of improprieties, false claims and
fraud by outside contractors attempting to
defraud the IRS by using deceptive methods
• Allegations of identity theft where any
individual impersonated the IRS or an IRS
employee
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Reporting Complaints to TIGTA
• Complete online form
− By email: Complaints@tigta.treas.gov
− By phone: 800-366-4484
− By fax: 202-927-7018
− By mail: TIGTA Hotline
P.O. Box 589
Ben Franklin Station
Washington, DC 20044-0589
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Contact Information
Richard Furlong, Jr.
215-861-1551
richard.g.furlong@irs.gov
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