DARRIN T. MISH: Good morning and welcome to the IRS Solution Attorney show I am THE IRS Solution Attorney Darrin T. Mish.
KATRINA MADEWELL: That he is and I’m your co-host Katrina Madewell welcome to the show.
DARRIN T. MISH: How are you doing today?
KATRINA MADEWELL: Doing great, doing great Darrin how are you?
DARRIN T. MISH: I’m doing wonderful. We have a pretty interesting topic today we are going to talk about the IRS Taxpayer Advocate Service what it is, what they can do for you and when you should use them.
KATRINA MADEWELL: I like it I think it’s a great topic that many, many people can get value out of.
DARRIN T. MISH: Absolutely. You know the taxpayer advocate service is actually an independent branch of the IRS, which sounds a little bit weird you know, Independent branch what does that really mean? Well it means they are part of the treasury department, they are part of the Internal Revenue Service but they are not governed by the IRS, in other words, their job is to act as a go-between, between the taxpayer and the IRS.
KATRINA MADEWELL: So who are they regulated by?
DARRIN T. MISH: Well they are part of the Internal Revenue Service I’m pretty sure their paychecks come from the Internal Revenue Service but I think it’s a little bit like when I was a public defender, you know I worked for the State of Florida as a public defender for a couple of years early on in my career and so one of my favorite, favorite things, least favorite things actually was when I was representing an inmate typically and the inmate would say well I don’t want you Mr. Public Defender because you get paid by the State of Florida, you and the judge and the state attorney are all on the same side and I don’t want anything to do with you. Quite frankly that didn’t upset me all that much because that just meant that I had one less case but I think that it’s a little bit like that in that the people who work at the taxpayer advocate service although technically work for the Internal Revenue Service, there’s what we call a Chinese wall. There’s a wall between the taxpayer, advocate and the service. So we will get into some examples later but when they handle taxpayer cases they actually have to call the IRS just like we do. Now they probably have a little bit better, faster you know phone number then we do.
KATRINA MADEWELL: Hopefully they have the Bat Line.
DARRIN T. MISH: Yeah hopefully they have a little bit faster…
KATRINA MADEWELL: The idea is though like the taxpayer should have rights and they are there to support them or help them right? Isn’t that the idea?
DARRIN T. MISH: Absolutely you know and it’s a good point…
KATRINA MADEWELL: I mean isn’t that the whole reason why they exist?
DARRIN T. MISH: Exactly the office of the taxpayer advocate was actually formed after the taxpayer bill of rights to was passed by Congress in 1996 and so prior to 1996 the IRS, actually prior to 1998 actually the IRS had lots and lots of documented instances of just pure abuse. I mean just abuse at the hands of employees of the IRS and finally what happened is Congress just decided to put an end to it there was big hearings, they had experts come in, I know some of the experts who actually testified and they testified about these abuses that the revenue officers and different employees of the IRS were doing to taxpayers.
KATRINA MADEWELL: It’s a little bit off topic but it’s a relevant question but I’m curious cause that is pretty recently like 1998 is not that long ago.
DARRIN T. MISH: It depends on how old you are.
KATRINA MADEWELL: Well yes here we go back to this conversation but you said they were put in place after 1998 I’m just curious what it took to actually get to that place that said yep there is definitely a problem we’re going to have to do this like I’m wondering there had to have been like a movement of some attorneys or some people who were really pushing.
DARRIN T. MISH: Well I will give you an example of some of the abuses that were going on. Revenue officer is an IRS employee who works in a field office and goes out to people’s houses and does like in person investigations, much more intense investigations then if you are dealing with the phone center so revenue officers used to really abuse people. I will give you some examples now after you know post 1998 a punitive seizure is illegal, a punitive seizure would be a seizure for example of somebody’s vehicle and there really just seizing the vehicle to punish somebody for their alleged bad behavior you know their alleged behavior for not paying the taxes or not filing or what not and pre-1998 punitive seizures were very common…
KATRINA MADEWELL: So they would just go take whatever?
DARRIN T. MISH: Revenue officers would just basically call the tow truck, they would go get into the tow truck, they would hook up all their vehicles and they would take them away and they would sell them for nothing and there was no net gain to the service, in fact in many cases it cost the service money to do this but they did that to punish people, you know punish taxpayers and to teach them a lesson.
KATRINA MADEWELL: And the impact wasn’t that great I’m sure.
DARRIN T. MISH: Well there was no financial impact. In some cases, I’m sure there was a negative financial impact to the government. Let me give you an example let’s say the car is worth $500, it cost you know $250 to pay the tow truck driver, then you sell it at auction and you get $100 or you get nothing.
KATRINA MADEWELL: Yeah.
DARRIN T. MISH: And then it costs some time for the revenue officer to be out there, let’s say it’s after hours.
KATRINA MADEWELL: Which you are paying for.
DARRIN T. MISH: Right so, so you know they would do punitive seizures and you know I’m happy to say they don’t do that anymore after 1998. So the passage of the law that created the taxpayer advocate in 1996 was one of the steps that Congress was trying to take to try to clean up this system. Prior to 1998 as well, there was no, there was basically very, very few safeguards and there was essentially a denial of due process. The IRS could just do things and seize things without any opportunity for taxpayer to dispute it, there was no redress.
KATRINA MADEWELL: They realize this is not American, this is unconstitutional they are kind of playing God.
DARRIN T. MISH: Yeah absolutely the IRS was just making lateral decisions. There is a great book about this that I’ve read where it was written by a revenue officer and all he did was tell stories of all the abuses that he did to taxpayers and you know he has complete immunity under the law, can’t sue him and good luck suing the IRS so post 1998 I’m happy to say these things are much less common.
KATRINA MADEWELL: Yeah so I mean I just thought they existed a lot longer than that so that’s what I’m is that’s less than 20 years that’s not that long.
DARRIN T. MISH: Absolutely, you know it’s relatively you know in the overall scheme of the history of the United States it’s relatively recent.
KATRINA MADEWELL: So their primary role is really just to support the tax payer and make sure they get a fair shake in the due process in whatever the issue is.
DARRIN T. MISH: Well let me explain a little bit better what the tax payer advocate does, what they do is they offer free help to guide you through the confusing process of resolving some tax problems that you haven’t been able to solve on your own so they are not really there to give you due process that just came up in our conversation, they are really there, the way I typically explain what the taxpayer advocate does is they are there to resolve bureaucratic snarls, that’s what they are the best at. Let me give you an example I have a…
KATRINA MADEWELL: Love your choice of words, bureaucratic snarls I love it.
DARRIN T. MISH: You know what I mean like when you are trying to get something done with the IRS and all you do is maybe you called 3 times you got 3 separate answers, nobody will help you. When you call the IRS you can’t typically speak to the same person, you get a new person, a new ID number and you are going to get varying answers because there’s really no way to ensure that quality control and so when you work with a tax payer advocate at least you have one contact person and then they will reach out to the nearest call center that appropriate. I will give you an example of something that they do really pretty well, if you have a missing payment, I have one of these right now, I have a check that I wrote to the IRS for $200, not a lot of money, but 200 bucks and they cashed the check and it hasn’t shown up where it was supposed to go and so what you do is you take a photocopy of the front and back of the check, you get that from the bank and then you can send that to the taxpayer advocate and they can help you locate that check and determine where that money is supposed to go. Sometimes the money gets misdirected quite honestly and the office of the taxpayer advocate will be a very good way, that’s free to get that done.
KATRINA MADEWELL: Are they allowed to just misdirect it and change it?
DARRIN T. MISH: Absolutely not. They are not allowed to just misdirect it but you know in the IRS’s defense as big an undertaking as it is to collect all the tax revenue for the United States of America I mean there is going to be stuff that goes wrong, there is going to be things, innocent mistakes happen and you know the taxpayer advocate can help you with that kind of thing.
KATRINA MADEWELL: So how does the average taxpayer advocate service like how can they help the person listening?
DARRIN T. MISH: Well what I say is we direct a lot of people to the taxpayer advocate for very, very small problems. So we get calls on a regular basis somebody owes $1500 or they have a misdirected payment for example or they want to know where their tax refund is, you know those are the types of cases that we send to the taxpayer advocate, we think they are better at handling smaller…
KATRINA MADEWELL: The simple things.
DARRIN T. MISH: The simple things, the way that I like to explain it is the way you get involved with the taxpayer advocate is you fill out a form 911 you can download that from the IRS site…
KATRINA MADEWELL: Really?
DARRIN T. MISH: Yeah it’s a 911 like an emergency, you download that from the IRS website at irs.gov and you fill it out. It’s really pretty simple form the top third is biographical, who are you like you know where do you live and what’s your social security number? The second portion is what’s the problem ok and the third portion is what do you want us to do about it? So the way that I typically explain this is when you are going to use the taxpayer advocate you want to explain your problem and what you want them to do in very, very, very clear terms. Example I typically use is if a 10-year-old can understand what the problem is and what you want done, then you are in really pretty good shape now if you try to do what a lot of people do is make things convoluted and confusing and you send that in I don’t think you have a chance because human beings gravitate towards you know simplicity not complexity and so if you make it simple you have a reasonably good chance if it’s complex then you are just not going to be able to get the help you need because the taxpayer advocate although there to help you I mean they are not licensed to, you know they are not licensed attorney’s, CPA agents they are not there to handle the complicated stuff they are there to handle the really straight forward stuff.
KATRINA MADEWELL: And they are probably handling just some of the small stuff in general, we talked about the difference in some of the revenue officers and so forth. You are listening to the IRS Solution Attorney show we have to take a quick break, when we come back after the break we’re going to talk about some problems you would never take to the taxpayer advocate service. Back in a minute.
DARRIN T. MISH: Welcome back to the IRS Solution Attorney show I am your host THE IRS Solution Attorney Darrin Mish.
KATRINA MADEWELL: And I am your co-host Katrina Madewell. Thanks for sticking with us through the break.
DARRIN T. MISH: Today we are talking about the taxpayer advocate service and what they are and what they do and how does it work.
KATRINA MADEWELL: And surprisingly enough in the first segment we just talked about that they were just created in 1998.
DARRIN T. MISH: 1996 but…
KATRINA MADEWELL: 96.
DARRIN T. MISH: Yeah they have only been around for about 20 years and I really do think that they do serve a crucial, critical role in dealing with primarily bureaucratic snarls when you have a problem with the IRS.
KATRINA MADEWELL: We talked about how that can help you and in a few minutes we are going to go into what are some things that is not a good idea to help you with. Before we do that if you would like to catch the show in its entirety you can do that the whole thing will be available on a podcast.
DARRIN T. MISH: It’s called the IRS Problem Solver it’s available on ITunes and other podcast sort of networks. You can also download or app on Android and the ITunes store and it’s also called The IRS Problem Solver.
KATRINA MADEWELL: I loved how he looked at me when he said because he is an IPhone user and I’m an Android user so he looks at me like what do you use exactly for your podcasts by the way?
DARRIN T. MISH: Exactly that’s why…
KATRINA MADEWELL: And actually there’s a bunch of other 3d party apps sites like Pocketcast, Podcast Kicker like, I like Pocketcast. Very simplistic, nice little flow, the app I think is a dollar or two.
DARRIN T. MISH: I think we have somewhere around 50 episodes on the podcast so there is a lot of information and we try to do shows that are about different topics every week.
KATRINA MADEWELL: And you have your app.
DARRIN T. MISH: Yeah absolutely it’s called The IRS Problem Solver app.
KATRINA MADEWELL: And if you have a question or you just want to be a great guest or you have something that we should cover on the show you can reach out to Darrin at 888-get-mish we would love to have your suggestions and your thoughts and your ideas.
DARRIN T. MISH: That’s 888-get-mish, 888-438-6474 or you can visit the website at getirshelp.com.
KATRINA MADEWELL: So we are talking about the taxpayer advocate service what they do, how they can help but there are certain instances and certain problems that you would never take to them right Darrin?
DARRIN T. MISH: Yeah there are some problems that you wouldn’t take to them and I would say the bigger more complicated problems well let me give you a fact pattern that I don’t think fits the taxpayer advocate and it’s kind of common. So let’s say you are a non-filer, you are self-employed and you haven’t filed tax returns in 10 years or whatever and you think you are going to owe you know 10-15,000 dollars a year and so by the time you file that last 6 years of returns which is going to be what’s required you are going to owe 60 to 100 to 150,000 dollars something like that and then ultimately you think the goal is to file an offer and compromise so you could make a deal to settle for less and you ultimately get that all resolved for you know much less headache and much less money. That’s not a taxpayer advocate case I mean straight up there’s way too many moving parts, there’s way too much.
KATRINA MADEWELL: A lot of complexity to that sounds like.
DARRIN T. MISH: Yeah there’s way too much architecture that has to be sort of built out in order to get that result, that’s something that you would go and talk to a pro about is somebody to help you get that done. The office of the taxpayer advocate, I’ll tell you where we would use them in the context of an offer and a compromise, so when you file an offer and compromise you list all the years that you owe taxes for on the form 656 and then what’s supposed to happen is once that offer is determined to be what’s called processable which means like you filled it out correctly and they have everything that they need…
KATRINA MADEWELL: They have all the information they need to process it.
DARRIN T. MISH: Yeah then they put a collection hold on the account you know all collection notices are supposed to stop, there’s not supposed to be any levies, liens you know any collection action. Well, on a lot of cases what happens is let’s say you are missing 2014-2015 and we filed those and even there, you know they’ve posted and they are in the IRS computer and then we filed the offer and compromise. What’s happening right now systemically throughout the IRS is those last years that you filed there are still collection notices popping out and they are not getting those collection codes inputted correctly.
KATRINA MADEWELL: So it’s a computer oversight?
DARRIN T. MISH: It’s yeah, it’s like they have a systemic problem like the system is not working correctly and so we are using the taxpayer advocate quite a bit right now for those types of cases it’s like we file a 911 what’s our problem. Problem is 2014 and 2015 we are still getting collection notices what do you want to happen? We want the notices to stop.
KATRINA MADEWELL: Oh gotcha.
DARRIN T. MISH: Ok relatively simple.
KATRINA MADEWELL: So they can help you with some back end simple stuff.
DARRIN T. MISH: That’s relatively simple but that’s the type of thing. There’s also the office of the taxpayer advocate, I didn’t mention this, there is an appointed executive sort of official called the taxpayer advocate her name is Nina Olson she’s been the taxpayer advocate for many years I want to say.
KATRINA MADEWELL: We should have Nina on the show that would be fun.
DARRIN T. MISH: That would be fun and she is actually a real person I have spoken to her you know and once a year she puts out what’s called the annual report to Congress and those of us in this business we always read it because she often takes the IRS to task about things that they are not doing correctly but the point of me explaining who Nina Olson is is there’s also a way to correct what are called systemic problems so you can file a systemic advocacy request like in the example I just gave you and…
KATRINA MADEWELL: Where they were continuing collections and should not have been.
DARRIN T. MISH: Yes a systemic request is like this happens all the time, every time, effecting everyone. You can actually make a systemic advocacy request you know and point out the problem and it’s really cool the taxpayer advocate will actually work to resolve that problem and fix the problem that effects the whole country and I’ve actually filed, I can’t tell you what it was because I don’t remember but in the last decade I have filed successfully a systemic advocacy request and they did in fact fix it for the entire IRS.
KATRINA MADEWELL: That’s good, wow.
DARRIN T. MISH: So we are probably going to go ahead and file a systemic advocacy request for the problem I just told you where we got collection holds are not going out on all years of the offer and compromise.
KATRINA MADEWELL: Right. Is it safe to say, I know you said simple things, but is it safe to say if you have a tax problem like over a certain amount of any sort they are probably not a good place to start?
DARRIN T. MISH: Not necessarily I will tell you another place that a lot of people use the taxpayer advocate is when you get yourself in a situation where you have a levy so they are taking your paycheck or they’ve taken all of your money in your bank account and that levy is causing what’s called an Economic Hardship, an Economic hardship….
KATRINA MADEWELL: Like you can’t pay your housing payment because they took all your money.
DARRIN T. MISH: Yeah exactly an Economic Hardship is by definition something that would cause you to not have housing, food, clothing, health care…
KATRINA MADEWELL: Can’t drive to work.
DARRIN T. MISH: Yeah transportation that kind of thing. If you can demonstrate that successfully to the taxpayer advocate they will actually intercede, intervene, call the IRS and try to get that levy released. Is it the very best way to get that done? No it’s not but the price is right, it’s free. So that could be really good.
KATRINA MADEWELL: But again there’s formulas and that kind of stuff because we have talked about those before on the show that are what they consider allowable expenses.
DARRIN T. MISH: Yeah, they have to follow the same rules that we do and a lot of people use the taxpayer advocate in that sort of an instance where they’re broke they are now being levied and they don’t have any resources to hire anybody because very few people are going to take a promise that you are going to pay them in the future when the levy is released because you know by definition these are the people who haven’t been paying their taxes.
KATRINA MADEWELL: Just out of curiosity have you had or have you seen any or heard any instances where someone hired the taxpayer advocate service and it just did not work out the way they planned it was just an absolute horror story or a nightmare?
DARRIN T. MISH: That’s always a nightmare but sometimes it just falls off the radar or just takes so long that it doesn’t help. I actually filed a 911 for myself recently and I won’t go into the exact details but they just totally dropped the ball they didn’t do anything I had to step in and handle it myself and that was a little bit disappointing but you know you can’t expect the world every time. But again going back to where if you are in a situation where you don’t have the resources to hire somebody or maybe you just don’t trust anybody.
KATRINA MADEWELL: They could at least answer questions couldn’t they?
DARRIN T. MISH: Yeah they can help in a wide variety of circumstances you know if you are, going back to your question is there like a dollar amount where you shouldn’t use the taxpayer advocate?
KATRINA MADEWELL: Right.
DARRIN T. MISH: I don’t think so I mean maybe a million dollars but even if you had a million dollars and you were being levied and that was causing a hardship like you were going to get foreclosed upon or evicted or something then you know…
KATRINA MADEWELL: Is it a phone number that you call to reach them?
DARRIN T. MISH: I am so glad you asked.
KATRINA MADEWELL: I’m just curious is it is that another question behind that you know me.
DARRIN T. MISH: Yeah if you go to the taxpayer advocate website which is taxpayeradvocate.irs.gov you can actually, there’s a map of the United States, you click on your state and then some states are divided up into different sections like for example Florida is divided into a northern and a southern section but they just moved in an office in St. Petersburg so that’s really convenient for us, we have been dealing with Jacksonville primarily for years and years and years and now they have opened a St. Petersburg office which is ironically like a stone’s throw from the studio…
KATRINA MADEWELL: Yes, now can you actually pop in there? It’s probably not suggested but can you?
DARRIN T. MISH: I don’t think the taxpayer advocate is taking non-scheduled appointments either because they, we talked about this a lot the IRS you know service centers, local offices are not actually taking, they are not actually providing the service they are really just office buildings now for IRS employees so they will take you if you have an appointment with them but they don’t provide a lot of services.
KATRINA MADEWELL: So I do have another question but we actually don’t have time to answer it and I’m curious if you can actually ask questions and that type of stuff anonymously but we are going to have to answer that when we come back after the break you are listening to the IRS Solution Attorney show. Stick around and we will be right back and I promise you we have some great information lined up for you. Back in a minute.
DARRIN T. MISH: Welcome back to the IRS Solution Attorney Show I am your host THE IRS Solution Attorney Darrin T. Mish.
KATRINA MADEWELL: And I’m your co-host helping that conversation just flow along and asking those random non-attorney questions Katrina Madewell.
DARRIN T. MISH: Today we are talking about the IRS Taxpayer Advocate service, what they do, when to use them and how does it work.
KATRINA MADEWELL: And so one of the questions that I had Darrin I was thinking about this and unfortunately we ran out of time, we came upon the last break, but if you call the taxpayer advocate service can you ask them a bunch of random questions anonymously like do you have to give them your name and your Social or like let’s say for example you use the example someone hasn’t filed in 10 years, not a wise idea to call them but let’s say someone was just scared and didn’t want to give them their information could they call and ask a bunch of random things cause I know we go over some details on the show but like if you haven’t filed in 20 years you have to at least file the last 6, can you ask a bunch of random questions on what your rights are?
DARRIN T. MISH: This is how you know that this is not a scripted show I don’t actually know the answer to that question. There is a phone number that you can call for each of the local taxpayer advocate offices that we discussed that you can get on the website, there website which is taxpayeradvocate.irs.gov and there is a phone number so you can call that phone number and I suppose you could try to ask some anonymous questions but I think the problem that you are going to run into there is you are probably not going to get a lot of detailed answers that’s because…
KATRINA MADEWELL: They are going to be as vague as you are?
DARRIN T. MISH: Well in your sort of asking anonymous hypothetical questions right so that would be my guess, I don’t really know the knowledge may vary you know you will see how that worked out but primarily when we file a 911 or taxpayers file 911 there’s a fax number on that website as well so you would fax that 911 to the appropriate office. Interestingly enough the St. Petersburg office fax number is not there, is not there on the website yet but it will be soon.
KATRINA MADEWELL: Nice. What did they decide to add a location to St. Pete? Any idea?
DARRIN T. MISH: My best guess is there was overflow you know from the Tampa Bay area is probably generating so much work is that they were burying Jacksonville. Jacksonville’s lead times often times would be pretty long so when we file a 911 we sort of expect to hear back within a week or so and sometimes you wouldn’t hear back for 3 weeks or more and so especially if it’s really time sensitive like my issue was really time sensitive it was like I needed something done in like 2 or 3 days and now we are at like week 3.
KATRINA MADEWELL: Cause more things were going to like interest or whatever penalties would accrue or compile.
DARRIN T. MISH: Yeah it was just other things, other negative things that were going to happen and I needed an answer in a couple of days and didn’t get it so I had to handle it.
KATRINA MADEWELL: So what are some of the requirements to actually get help from the taxpayer advocate service like is there certain requirements that you have to meet?
DARRIN T. MISH: Yeah we kind of went over some of these but number one would be your problem is causing financial difficulties for you, your family or your business ok so if it’s causing an economic hardship or let’s say in your business you couldn’t make payroll and so if you couldn’t make payroll all your employees will probably going to quit, then you go out of business then that would mean you would have an even less of an ability to pay the IRS back the tax that you owe I mean that would be a relatively good example.
KATRINA MADEWELL: But you could call them and chat with them about that?
DARRIN T. MISH: Yes, number 2 would be….
KATRINA MADEWELL: Just curious what their answer would be hey by the way I can’t make payroll any suggestions like I’m just curious what they would say about that?
DARRIN T. MISH: Another would be you or your business is facing an immediate threat of adverse action like maybe there’s going to be a lien that’s going to be filed and that’s going to put you out of business or it’s going to hurt your security clearance with the government or something like that you might try the taxpayer advocate.
KATRINA MADEWELL: That’s a big deal.
DARRIN T. MISH: And then your mileage is going to vary because the taxpayer advocate actually can issue something called a taxpayer assistance order, I’ve never seen one, I’ve never gotten one thru but a taxpayer assistance order is where a taxpayer advocate actually unilaterally order the IRS to take some action on behalf of the taxpayer so the taxpayer advocate can honestly order them not to file the lien or not to levy them for example, it’s very rare, there’s extraordinary circumstances that need to come into that and typically those things are not handled thru a TAO, a taxpayer assistance order, typically it’s just sort of a more of an informal sort of negotiation where you just get it worked out.
KATRINA MADEWELL: But that was a good point that you made like if someone has government clearance and it’s going to impact their ability to keep their job I can see how that would be urgent.
DARRIN T. MISH: I’ve got a case like that right now where the taxpayer owes about $200,000 by some miracle of god there is no tax lien filed because it’s been outstanding for many years, we filed an offer and compromise, the income actually from the spouse spiked while the offer was pending during the year that the offer was pending the income basically doubled.
KATRINA MADEWELL: Can they look at that?
DARRIN T. MISH: And so now, yeah they can. So now when you do the math on the offer they can afford to full pay and if we enter into an installment agreement the IRS is probably going to try to file a tax lien in order to secure their interest that would be the standard operating procedure makes sense to me but then…
KATRINA MADEWELL: So you might have to file that taxpayer assistance order?
DARRIN T. MISH: I might have to and we might try and prevent that from happening.
KATRINA MADEWELL: I know that on my side like on the real estate side we’ve seen that as well, like we had so many short sales over the last several years especially if someone had a government loan like an FHA or a VA or a USGA loan they couldn’t actually do a short sale on it and have any type of pending balance or like what they call the Internal CAIVRS number they couldn’t clear that it could hinder their government clearance.
DARRIN T. MISH: I learned all about CAIVRS with a sale for my house that didn’t go thru because there was a CAIVRS problem and never knew what that was.
KATRINA MADEWELL: Unfortunately like from the lending side which I don’t do anymore but I’m very familiar with because I owned 3 mortgage companies back in the day CAIVRS the last time is the last thing to get pulled on the buyer even though really it should be one of the first things to happen we would always make it one of the first things because if they are not clearing CAIVRS for one reason or another it’s not going thru.
DARRIN T. MISH: Yeah in my sale that went south they actually pulled the CAIVRS three days before closing and realize there was an insurmountable problem in that entire transaction.
KATRINA MADEWELL: We’ve seen simple things like people that were active military and they buy stuff from the store onsite the AP’s and like if they don’t pay that bill or whatever it will clog their CAIVRS and it will not clear. It’s kind of funny right how that works.
DARRIN T. MISH: If I was on TV just shaking my head there is just more and more complexity with regard to property sales, more than ever there is just more things that can go wrong. It’s almost like the government doesn’t want real estate to thrive.
KATRINA MADEWELL: No, it’s really like you know somebody like me that’s been doing it for 20 years, so we really can help to avoid a lot of those problems because we already knew about them in advance cause we know all the rules and the law and that kind of stuff. It’s no different than you, but with an IRS problem you know how to deal with it and I use like an regular everyday analogy, I tell people it’s kind of like, like real estate is like if you are going to play a game like a board game and then you decide you are going to play the board game with somebody like me that knows all the rules, I play the game a bunch and you’ve never played the game before, well you are not going to win because you have never played the game and I’ve done it for years.
DARRIN T. MISH: Yeah, just yesterday a gentleman came into the office as a prospect and he had his, all his paperwork filled out for an offer and compromise, technically he had the forms filled out pretty close to right and his basic question was WHY should I hire you instead of just filing what you are looking at? I was like well…
KATRINA MADEWELL: I know the rules and I know how to play the game.
DARRIN T. MISH: Exactly and then I’ve seen about a million things go wrong and so I know how to react to something that has gone wrong and still you know salvage the situation versus the taxpayer typically representing himself is going to say oh something went wrong? Oh I guess I lost and this is just out of experience.
KATRINA MADEWELL: It’s knowledge and its experience right there, that’s exactly what I was going to say because you know over the last, you’ve been doing this, what, 20 years now?
DARRIN T. MISH: Yeah that’s one of the reasons you want an experienced doctor or lawyer…
KATRINA MADEWELL: Right.
DARRIN T. MISH: Is because…
KATRINA MADEWELL: They’ve seen the problems they know how to fix it.
DARRIN T. MISH: Yeah and don’t take this the wrong way but we’ve had more failures then other people have even attempted if that makes sense so from every failure if you want to characterize it as that, every failure you learn what not to do in the future and so that’s why you know you want the experienced…
KATRINA MADEWELL: It’s the difference between hiring a new attorney and one that’s got 20 years.
DARRIN T. MISH: You know when I was a new attorney I can remember being out in private practice with about 2 years’ experience I had all kinds of explanations on why you should hire me instead of some old guy but now that I’m the old guy then definitely you should hire us because in the truth we do have more experience, we’ve had more things go wrong then other people have even tried.
KATRINA MADEWELL: Right. So the other thing too, this is another thing that was on the list that I don’t want to forget to mention but if you’ve tried repeatedly to contact the IRS but no one’s responded to you or the IRS hasn’t responded by the date promised.
DARRIN T. MISH: Yeah so that’s a really good point especially the IRS hasn’t responded to you by the date promised, we use the taxpayer advocate quite a bit in those situations where we were promised that they were going to get back with us in 90 days and now it’s been 120 days, you don’t file it on day 91 even though we are trying to be reasonable here but if its day 120 and we can’t reach the contact person cause it’s not a real person or because they are just overwhelmed then sometimes you would file a 911 and you would ask the taxpayer advocate to intervene. Now this leads me to kind of an interesting point now when you fill out that 911, don’t skewer the person that you have a problem with, don’t write a bunch of you know inflammatory stuff…
KATRINA MADEWELL: This person did this.
DARRIN T. MISH: Yeah don’t do that because that person, I don’t know if they see that form or not but certainly it’s going to be transmitted to them in some way.
KATRINA MADEWELL: And it’s not going to do anything anyway because there is no solution involved.
DARRIN T. MISH: And they all work for the IRS so you want to try to keep it as objective and as realistic and as reasonable as you can so what’s your problem, what do you want done? Now the problem can’t be I owe 100 grand to the IRS and I want you to write it off, now that’s going to be a really short case…
KATRINA MADEWELL: Right.
DARRIN T. MISH: Because they are not going to do that unless the statute of limitations has expired which we would use them on occasion for that kind of thing but it has to be a reasonable problem with a reasonable solution then it works.
KATRINA MADEWELL: But kind of like the whole point of today’s show is to let you know as a taxpayer you have rights and the IRS they have to abide by these when you are working together.
DARRIN T. MISH: Absolutely so going back to their website taxpayeradvocate.irs.gov you can, there’s a link on that page that tells you all about what they call the tool kit and there’s all kinds of information there where you as a tax payer can learn what your rights actually are and the next segment of the show I think we are going to go through those rights one by one so you can understand what your basic rights are under the taxpayer bill of rights which was passed in 1998 I believe and….
KATRINA MADEWELL: And then again their local office you can call them toll free at 877-777-4778.
DARRIN T. MISH: Yeah that’s the national taxpayer advocate and that’s where they can direct you to your local taxpayer advocate. If you don’t have access to the web and can’t figure out your local office and who applies to your local office. Some places only have one, for example, I think Mississippi only has one, New Mexico only has one, but your higher population states they are going to be carved up a little bit so that they can handle the workload.
KATRINA MADEWELL: Gotcha. And again you are listening to the IRS Solution Attorney show today’s topic is all about how the taxpayer advocate service works and how it can work for you or not. I’m your co-host Katrina Madewell, Mr. Darrin Mish is the host of the show he is the expert IRS attorney guy and when we come back we are going to talk about the taxpayer bill of rights as Darrin promised. Back in a minute.
DARRIN T. MISH: Welcome back to the IRS Solution Attorney show I am THE IRS Solution Attorney Darrin T. Mish.
KATRINA MADEWELL: And I am your co-host Katrina Madewell and the earlier part of the show we were talking all about the taxpayer advocate service, how it works, how it can help and we left off talking about the taxpayer bill of rights.
DARRIN T. MISH: So the taxpayer bill of rights is kind of like the bill of rights in the Constitution although there aren’t quite as many of them and we are kind of running out of time so I am going to go kind of fast. Ok number 1 is The right to be informed. So you have the right to know what’s going on with regard to your case with the IRS.
KATRINA MADEWELL: Is there a time line on how often they have to update you?
DARRIN T. MISH: Well you have a right to be informed how much you owe and what needs to be filed and that type of thing. So there always, whenever you talk to the IRS you are going to be told when….
KATRINA MADEWELL: What the deadline is?
DARRIN T. MISH: Yeah what the deadlines are and when they are going to follow up with you, sometimes you comply with the deadline but then let’s say you give them a bunch of information for analysis and then they are going to send you back a letter saying ok we are going to get back to you by some date. Usually that date is a fairy tale but they are going to give you something.
KATRINA MADEWELL: Ok.
DARRIN T. MISH: Number 2 is the right to quality service. This one makes me chuckle just a little bit…
KATRINA MADEWELL: Ok.
DARRIN T. MISH: But technically you have a right to quality service at the IRS. Now think about it, the word service…
KATRINA MADEWELL: The word quality service means you.
DARRIN T. MISH: The word service is actually in their name the Internal Revenue SERVICE. I don’t think, well I get quality service in dealing with my clients because I make it happen you know I keep at it until I get quality service. There are varying levels of service at the IRS.
KATRINA MADEWELL: I think that means show up. That’s their level of service, show up.
DARRIN T. MISH: So number 3 is you have the right to pay no more than the correct amount of tax. I think this is legit you know that it happens. So let me give you an example. If the taxpayer doesn’t file a tax return we’ve talked about this many times the IRS will eventually file what’s known as a substitute for return and that substitute for return everybody knows is not an accurate determination on how much the tax is, they just create a number, you have a right as a taxpayer to file an accurate return subsequent to that substitute for return and that tax will generally go down so you have a right to pay no more than the accurate or the correct amount of tax.
KATRINA MADEWELL: Even though they are going to add on some penalties and interest but you know.
DARRIN T. MISH: But that’s a little bit different.
KATRINA MADEWELL: Right.
DARRIN T. MISH: Number 4 is the right to challenge the IRS’s position and be heard. Ok that’s pretty simplistic. Before 1998 you did not have that right remember we talked about the lack of due process…
KATRINA MADEWELL: Yes.
DARRIN T. MISH: Before 98 you did not have that right but now you absolutely have that right to challenge the IRS. They can do very, very few things unilaterally just on their own say so without having the opportunity to say you know to dispute it.
KATRINA MADEWELL: So this right to be heard does that mean coming in and hiring an attorney, writing a letter what does that mean?
DARRIN T. MISH: The right to be heard means you have the right to dispute it, you have the right for them to consider your position.
KATRINA MADEWELL: Ok.
DARRIN T. MISH: So it doesn’t mean auditorally necessarily.
KATRINA MADEWELL: Just curious.
DARRIN T. MISH: Number 5 is the right to appeal an IRS decision in an independent forum. That’s the appeals office of the IRS is the independent forum so now it’s just the taxpayer advocate service that we are talking about today they are an independent branch of the IRS, they cannot have what are called ex parte conversations or communications, they can’t talk to the IRS if counsel or taxpayer is not present so that’s sort of important they are independent. A lot of times they don’t get any different answer but they are independent. So number 6 is the right to finality.
KATRINA MADEWELL: And that means?
DARRIN T. MISH: You have the right to have a final decision and know when that final decision is and what that final decision is. Number 7 you have a right to privacy so it’s actually against the law for IRS employees to disclose your private information to third parties in those circumstances. There are some circumstances where they can disclose limited amounts of your taxpayer information but they can’t for example just you know, an IRS employee cannot just access your records unless they have a reason to access them.
KATRINA MADEWELL: Right.
DARRIN T. MISH: So that’s one of the things that was going on with these scandals with the IRS and the different political groups where the IRS employees were actually illegally accessing information for political purposes that they weren’t allowed to.
KATRINA MADEWELL: Right.
DARRIN T. MISH: Now nothing happened, nothing came about that but….
KATRINA MADEWELL: A lot of stuff has changed with policy’s in regards to privacy policies over the years.
DARRIN T. MISH: So you have the right, number 8 is the right to confidentiality, fairly similar to the right of privacy that we just discussed and number 9 is the right to retain representation so you absolutely have a right to retain a lawyer, CPA or an accountant for a representative.
KATRINA MADEWELL: Is that at any time?
DARRIN T. MISH: You have absolutely have that right and they can’t say well no we are not going to allow you to use any of your money to retain that representation, you have a constitutional right to have a representative and the last is number 10 is the right to a fair and just tax system. The jury’s out on that still I’m not sure if it’s a fair or just tax system but it is in the taxpayer bill of rights. So that’s about…
KATRINA MADEWELL: I’m sure you will bring that up and argue that at some point in the future. So it’s about that time.
DARRIN T. MISH: It’s about that time, it’s time for the IRS train wreck of the week. This is the segment of the show where we talk about somebody who came into the office and frankly their tax situation was a complete mess, it was a train wreck and we talk about what happened and how we resolved it. In this particular case, I had a nice couple that had come in and they hadn’t filed tax returns for about 5 years I believed. They ended up, one of the biggest problems that they had was an early withdrawal from a 401k. I mean this is pretty common right…
KATRINA MADEWELL: Right.
DARRIN T. MISH: They have some kind of emergency situation, sometimes people do kind of interesting things with early withdrawals, they’ll make an early withdrawal from their 401k to pay off their house for example and it leaves me scratching my head it’s like ok you have to pay the tax on that…
KATRINA MADEWELL: How ironic is how my husband calling and he took money out for a Ponzi scheme but that is another whole story for a different show. Go ahead.
DARRIN T. MISH: Oh Chris you didn’t, you can lay it out right here anyway so they do things like that they sometimes take out early withdrawals that are inappropriate. In this particular case they ended up owing a tax balance of $50,396 and we filed an offer and compromise and this was not one of those offers that I typically do ok so it wasn’t one of these offers where we were offering $500 or something like that…
KATRINA MADEWELL: Right. Cause that’s pretty strict penalty right?
DARRIN T. MISH: Well no I mean sometimes $500 offers are appropriate but…
KATRINA MADEWELL: But I mean like when somebody withdrawals from a 401k.
DARRIN T. MISH: Well that yeah but that doesn’t really impact this. Really remember to calculate the amount of the offer you take monthly disposable income times 12 plus assets and that equals the amount of the offer so quick example is 100 dollars in monthly disposable income times 12 is $1200, let’s assume they have no assets offer amount would be $1200.
KATRINA MADEWELL: Mmm Hmmm.
DARRIN T. MISH: In this case, I believed they had assets that were worth about $19,587, I remember that their monthly income was really low so in that equation there monthly disposable income was zero but when we got to the assets their assets were worth $19,587. So we went ahead and we offered that amount so almost $20,000 on a balance of right around $50,000 and, this is rare, the IRS came back and accepted that offer as filed, we had to provide some additional documentation and what not but they accepted it as filed and they now have 5 months to go ahead and pay that balance off.
KATRINA MADEWELL: I was going to say do they have to stroke a check and like pay off some stuff or so they’ve got 5 months to pay it.
DARRIN T. MISH: They’ve already put down 20% of that offered amount so that was maybe close to $4000 and then they have 5 months after formal acceptance of the offer to pay that balance so it worked out really well for them and I know that they are really pleased. It’s not 5 cents on the dollar but not every case is like that.
KATRINA MADEWELL: That’s right. Yep. So you are listening to the IRS Solution Attorney show, we ran out of time fast but…
DARRIN T. MISH: We did. There was a lot of information to talk about the taxpayer advocate today and I’m glad that we got that out there so people can understand when and how to use them.
KATRINA MADEWELL: If you’ve got a question you can get Darrin at 888-get-mish.
DARRIN T. MISH: That’s 888-438-6474, 888-438-6474 or you can visit the website at getirshelp.com and visit, hit me up on Twitter @darrin_mish.
KATRINA MADEWELL: Thanks for joining us for this week.
DARRIN T. MISH: We are out.