Despite many years of dealing with IRS levies and seizures, this year has been different. We didn't have any of the so-called "Christmas" levies. That's good but don't be lulled into thinking that the IRS has gone away. They will be back with a vengeance in January. A new administration, a struggling economy, and no sympathy for the tax delinquent all means that the pressure will be ratcheted up soon.

I have been blessed with a wonderful family (if I do say so myself) so we thought we would make this short little video wishing you and yours a most wonderful Christmas and blessed and Happy New Year! Remember all of your blessings and don't dwell only on the negative.

 

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Many taxpayers hire CPAs or Enrolled Agents to handle their IRS problem cases. I guess they think that tax attorneys are too expensive or they fear the (often deserved) reputation of attorneys in general. But the IRS announcement of two new IRS appeals programs may cause you to think twice about who you hire to handle your Offer in Compromise or Trust Fund Recovery Penalty (TFRP) case.

With the announcement of nonbinding mediation and binding arbitration in Offer in Compromise and Trust Fund Recovery Penalty cases, yet another arrow in the tax attorney's quiver has been added. Just think about the different types of training the three types of tax professionals receive.

CPAs are primarily trained in the area of accounting. That's great. We need CPAs to perform a wide range of financial services. But how much training in the area of dispute resolution are they required to take? None. And these two types of new IRS appeals are in the area of alternative dispute resolution to boot! Alternative dispute resolution is a fancy way of describing settling cases out of court or short of going to trial. I can almost guarantee you that any CPA you have spoken with has never received ANY training in this area whatsoever.

Now let's turn our attention to enrolled agents. What's an enrolled agent you ask? Good question. An enrolled agent is a person licensed by the IRS to represent you before the IRS. Think about that for a second….let it really sink in. Ok. So they're licensed by the IRS and a person can achieve this status one of two ways. First and most common, they worked for the IRS for five years or more. Great does that qualify them to represent them in mediation or arbitration? Well technically yes…because the IRS says so. Does the IRS have taxpayer's best interest at heart? You decide.

Tax attorneys quite the contrary often have significant experience in the resolution of disputes. In law school for the past couple decades, law students have studied alternative dispute resolution. And the new IRS appeals programs are much more akin to court proceedings than anything we have ever had available to resolve IRS problem cases (short of filing suit against the United States of America.) Tax attorneys are trained in critical thinking and advocacy. Furthermore they have taken an oath to protect their clients interests no matter what.

In closing, I think that taxpayers with IRS problems should think long and hard before choosing anyone other than an experienced well-versed tax attorney to handle their IRS problem matter. There is no such thing as an easy, open and shut IRS problem case. You never know where it might lead or what procedural steps might be necessary to prevail.

The IRS has announced the formation of two new appeal programs. This is exciting news because it allows taxpayers more opportunities to be heard by high level, well trained IRS employees with considerable discretion. Unlike most field level IRS employees (especially those that work in call centers) IRS appeals personnel have considerable training and discretion when working on a taxpayer's case.

Both programs will put into place post-IRS appeals mediation and arbitration. Since most people got those two terms confused, please allow me to explain. Mediation is a method of dispute resolution that focuses on a collaborative approach with no clear "winner" or "loser." Arbitration is more akin to a court or a trial. The benefits of arbitration is that it is generally much less expensive and faster than waiting for the courts to decide a matter.

The two types of IRS problem scenarios subject to the new IRS appeals programs are in the area of Offer in Compromise and Trust Fund Recover Penalty cases. Either the taxpayer or IRS appeals may request nonbinding mediation. The taxpayer may decline such a request for mediation. IRS appeals will evaluate the taxpayer's request based upon criteria outlined in Revenue Procedure 2002-44 and Announcement 2008-111.

A request for binding arbitration must be made jointly by the taxpayer and IRS appeals. The new programs do not create any additional authority for settlement for IRS appeals but as a practical matter, I feel that it will help facilitate resolution in many cases.

In a mediation case, the process can help decide both legal and factual issues while the arbitration is limited to factual issues only. In a mediation, the mediator has no authority to legally bind the parties while in arbitration, the decision of the arbitrator is binding upon both parties. However it is important to note that the arbitrator does not have the authority to decide that the Offer in Compromise should be accepted or that the taxpayer is not liable under IRS §6672.

It remains to be seen if the IRS will use these new programs to actively settle cases or if it is yet another method to stonewall, delay and prevent justice to taxpayers. We will see.

This is a real excerpt from an email that I received the other day. I get emails like this just about every day but I found this one to be especially poignant. I have also posted my response in the hopes that it will help someone else before this happens to them!

Today I was financially raped by the IRS.

I am up to date on all my yearly tax returns.

Due to cashing out of a 401K in 2005, I owed roughly $9K to the IRS. They have Obviously been intercepting my federal tax returns which are about $3K a year. This year, they seized my economic stimulus check of $900.

They say since I have never formally setup a payment plan for the $9K, they had every right to take $1705.00 out of my checking account today 11/14/2008. It brought my bank account to zero and items starting bouncing now.

In my checking account, I recently deposited a check for $1200.00 from my home owners insurance for a claim regarding a tree falling and damaging my roof. That money was obviously for the average estimates of repair, for my roof repair claim.

As of today, currently I have less then -$22 to my name.

When I called them on teh afternoon of (11/14/2008) to get back the $1705, or at least the $1200 from my insurance company, the agent no longer wanted to deal with me because she stated I was \"venting\" and \"raising my voice\" and \"interrupting her\".

Our connection was not good (I was on a cell phone) which I apologized for and stated I was very financially devastated today. I am a single father of two teenage boys, I just got paid on Wednesday 11/12/08 and the IRS, after receiving at minimum $3,900 already this year, just took another $1705 out of my checking account leaving me with no ability to feed my family.

If the IRS recordings of my call where reviewed, I firmly believe it would show that the IRS agent was clearly the one not letting me finish my sentences. The recordings would also reveal that the IRS agent (Ms. Greer) lacked common courtesy and even an ounce of compassion. Finally, the recordings would show that she just \"didn\'t want to deal with me\" and in her words \"we don\'t normally give back what we have taken, but I was going to see if a portion could be returned, but I am not going to do that because you vented on me\".

I am totally blown away, and feel that I was financially raped by the IRS on Friday, November 14th, 2008.

They came in like thieves in the night and stole food from my children’s mouths. They took my ability to put gas in my car so I could make a living for my family and to pay the wretched IRS back.

Answer-I'm sorry to read about what happened. I want to strongly urge you to visit this webpage: http://www.irs.gov/advocate/article/0,,id=147000,00.html

There you can find the contact information for your local Office of the Taxpayer Advocate. You need to download a form 911 from the IRS website and fill it out. Then fax it to the Sacramento Taxpayer Advocate office. You need to indicate on the form 911 that your bank account has been levied, and that this has created an "economic hardship" for you. That they took the $1200 that was intended to fix the roof from the tree damage. It may take a week or so but I am confident that you can get the money back. Also indicate to the Taxpayer Advocate that you want an Installment Agreement in the amount of $150 per month. They should take that.

We can't really do anything about the bounced check fees. The IRS most likely had the right to do what it did. It would have been far better to have worked this out in advance but you didn't really know that at the time.

Take care,

Darrin Mish

Today the gloves come off! If you have a serious IRS Problem, the last thing you should be worrying about is, "does my representative even know what he's doing?" That's a common problem that I see. I get many many cases after some other local representative (often an enrolled agent but then again sometimes an attorney or a CPA) has made a good old fashioned mess of things. This is a practice that you can't (or shouldn't) "dabble in."  IRS practice and procedure changes almost daily and certainly weekly and monthly. The way an Offer in Compromise is handled today is absolutely nothing like it was handled a year ago and odds are, next year will bring dramatic changes as well. What you should be looking for is a tax professional who does this work day in and day out. Don't let them figure this stuff out at their leisure while your financial life goes down the tubes. Look…no matter who you hire, you're spending your own hard earned cash, you might as well get the best representation money can buy. So ask the tax pro that you're thinking of hiring these questions. Not many will pass your test. How do I know? Because I'm already catching  flack from Enrolled Agents around the country for exposing these secrets. But you know what?  I'm a big boy I can take the heat. It's important that you're equipped with the tools you need to make the right decision for you and your family.

 

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