Federal Tax Collection Procedure—Defensive Measures, written by Steven R. Mather, Esq., of Kajan Mather and Barish, and Paul H. Weisman, Esq., analyzes in depth the procedures available to defend against IRS collection actions.
Taxpayers are not without defenses to enforced tax collection by the IRS. Taxpayers (and, in some situations, other third parties) have a variety of administrative and judicial procedures available to postpone or curtail collection activity by the IRS. This Portfolio discusses at length such procedures, including appeals, installment agreements, and offers in compromise and bankruptcy.
The Portfolio also addresses other miscellaneous collection issues, including employee versus independent contractor cases, IRS summons in aid of collection, Freedom of Information Act requests, techniques for dealing with revenue officers, and attorney-client privilege.
The Worksheets include a Collection Due Process chart, sample IRS billing and collection notices, Effective Tax Administration Offers in Compromise under §7122, and IRS Form 53: Report of Currently Not Collectible Taxes.
Federal Tax Collection Procedure—Defensive Measures allows you to benefit from:
This Portfolio is part of the U.S. Income Portfolios Library, a comprehensive series that includes more than 200 Portfolios, which covers every federal tax topic with expert, in-depth analysis, and offer commentary on a wide range of federal taxation topics, including Compensation Planning, Deductions and Credits, Partnerships and Corporations, Special Pass-Through Entities, Corporate Reorganizations, Real Estate, Procedure and Administration, and more.
Detailed Analysis
I. Introduction
Introductory Material
A. Collection Process: In General
B. Role of IRS Branches and Other Agencies
1. Revenue Officers
2. Technical Services
3. Office of Chief Counsel
4. Justice Department
5. Summary of Collection Process
C. Overview of Defensive Measures
II. Assessment, Statute of Limitations and Payment Issues
A. Summary Assessment
B. Deficiency Procedures
1. Definition of Deficiency
2. Notice of Deficiency
a. Last Known Address
b. Joint Income Tax Returns
c. Erroneous Assessment of a Deficiency
3. Statute of Limitations
a. In General
b. Pass-Through Entities
C. Non-Deficiency Cases
1. Employment Taxes
2. Penalty Assessments
D. TEFRA Partnership Cases
E. Jeopardy and Termination Assessments
1. Elements of Jeopardy
a. Departure from Country
(1) In General
(2) Certificate of Compliance
(a) Resident or Nonresident Alien with No Taxable Income
(b) Resident Alien Whose Taxable Period Is Not Terminated
(c) Nonresident Alien Whose Taxable Period Is Not Terminated
(d) Resident or Nonresident Alien Whose Taxable Period Is Terminated
b. Concealment of Assets
c. Insolvency
2. Administrative Procedures
a. Jeopardy Assessment vs. Termination Assessment
b. Jeopardy Assessment of Non-Deficiency Taxes - § 6862
c. Administrative Approval
d. Written Statement of Basis of Assessment
e. Notice of Deficiency
3. Administrative Appeal
4. Judicial Review of Assessment or Levy
a. Procedural Issues
b. Discovery
c. Burden of Proof
d. Appeal
5. Tax Court Review of Deficiency
6. Collection Issues
a. Jeopardy Levies
b. Jeopardy Bond
c. Stay of Sale
7. Special Issues
a. Possessor of Cash - § 6867
b. Civil Forfeiture
F. Issues Concerning Application of Payment
1. Voluntary and Involuntary Payments
2. Prepayment of Tax vs. Deposit
a. Deposit Procedures
b. Refund Issues
3. Stray Payments
G. Expiration of the Statute of Limitations
H. Innocent Spouse Relief
I. Request for New Audit
J. Abating Penalties
III. Administrative Appeals
A. Collection Due Process Appeals
1. Request for Hearing After NFTL Filing
a. Notice
b. Request for Hearing
c. Hearing
d. Jurisdiction Retained by Appeals Office
e. Hearing Result and Judicial Appeal
f. Equivalent Hearing
2. Pre-Levy Request for Hearing
B. Collection Appeals Program
C. Taxpayer Assistance Order
IV. Injunctive Relief
V. Determining Whether Fair Tax Collection Practices Were Followed
VI. Installment Agreements
A. In General
B. Financial Analysis
C. Alteration, Modification and Termination of Agreement
D. Effect of Agreement on Collection Activity
VII. Extensions
A. Short-Term Extensions
B. Long-Term Extensions
VIII. Offers in Compromise
A. Offer in Compromise Based on Doubt as to Liability
B. Offer in Compromise Based on Doubt as to Collectibility
C. Offer in Compromise That Promotes Effective Tax Administration
D. Submission and Consideration of Offer in Compromise
E. Rejection of Offer in Compromise
F. Levy While Offer in Compromise Pending
G. Offers Determined To Not Be Processable or Submitted Solely for Purposes of Delay
H. Effect on Collection Statute of Limitations
I. Acceptance of Offer in Compromise
1. Binding Effect
2. Default
J. Collateral Agreements
1. Future Income Collateral Agreement
2. Agreement to Reduce Basis
3. Agreement to Waive Losses
4. Agreement to Waive Deductions
5. Co-Obligor Agreements
K. Sample OIC Scenarios and Analysis
IX. Bankruptcy
A. Overview
1. Available Bankruptcy Proceedings
2. Creation of Bankruptcy Estate
3. Exempt Property
4. Proof of Claim
b. IRS Proof of Claim
c. Bar Date
d. Objections to Proof of Claim
5. Classification of Tax Claims
a. Secured Claims
(1) General Rule
(2) Nonpecuniary Loss Penalties
(3) Equitable Subordination
(4) Setoff
(5) Interest
(6) Undersecured Claim
b. Unsecured Priority Claims
(2) Interest
c. General Unsecured Claims
d. Post-Petition Administrative Claims
6. Priority for Payment
a. Chapter 7 Cases
b. Chapter 11 Cases
c. Chapter 13 Cases
B. Stopping or Reversing IRS Enforcement Actions
1. Automatic Stay
a. Effect of Automatic Stay
b. Duration of Automatic Stay
c. Violation of Automatic Stay
d. Relief from Automatic Stay
e. Limitations Period Tolled
2. Recovery of Property by the Bankruptcy Estate
a. Turnover
b. Preferential Transfers
c. Fraudulent Transfers
d. Assumption/Rejection of Contracts
e. Claim for Refund by Bankruptcy Estate
C. Discharging or Reducing Tax, Interest and Penalties
1. Discharge and Exceptions to Discharge for Individuals
a. General Rules for Nondischargeable Taxes.
(1) Priority Taxes
(2) Unfiled or Late-Filed Returns
(3) Fraudulent Return
(4) Willful Avoidance of Payment
(5) Nonpecuniary Loss Penalties
(6) Unscheduled Liability
(7) Interest and Penalties on Nondischargeable Tax
(8) Effect of Earlier Bankruptcy
(9) IRS Burden of Proof
b. Chapter 7 Cases
c. Chapter 11 Cases
d. Chapter 13 Cases
2. Discharge and Exceptions to Discharge for Partnerships and Corporations
D. Deferring and Designating Payment
E. Obtaining Relief from Federal Tax Lien
1. Avoiding Lien
2. Effect of Discharge on Perfected Tax Lien
F. Determining a Tax Liability
G. IRS Motions to Convert or Dismiss
H. Miscellaneous Tax Issues in Bankruptcy
I. Examples: Bankruptcy as Defense to IRS Collection
X. Miscellaneous Collection Issues
A. Employee v. Independent Contractor Cases
B. IRS Summons in Aid of Collection
C. Freedom of Information Act Requests by Taxpayers
D. Additional Rights
E. Techniques for Dealing with Revenue Officers
F. Attorney-Client Privilege
Working Papers
Table of Worksheets
Worksheet 1 Interplay Between § 6320 and § 6330 - Collection Due Process Chart
Worksheet 2 Dischargeability of Taxes in Bankruptcy (Chart)
Worksheet 3 IRM 5.8.11 - Effective Tax Administration Offers in Compromise Under § 7122
Worksheet 4 IRM 5.15.1 - Financial Analysis - Allowable Expenses and Questions and Answers to Assist in Financial Analysis (Excerpts)
Worksheet 5 Collection Financial Standards - Monthly National Standards for Food, Clothing, Other Items, Out-of-Pocket Medical and Transportation
Worksheet 6 IRS Form 53, Report of Currently Not Collectible Taxes
Worksheet 7 Sample IRS Billing and Collection Notices
Worksheet 8 Publication 1660, Collection Appeal Rights, Administrative Collection Appeal Rights (CAP Program)
Bibliography
OFFICIAL
Statutes and Regulations:
Regulations:
Committee Reports:
Treasury Rulings and Procedures:
Cases:
UNOFFICIAL
Periodicals
1998
1999
2000
2001
2002
2003