Section 7122 on Offer in Compromise is a valuable tool for taxpayers in distress. However, this path requires careful preparation and a clear understanding of the obligations involved. Consulting with a tax professional can enhance the chances of a successful application.
What would lead to the IRS to levy your bank accounts or other property? The legal seizure of your accounts or property is an extreme measure the IRS could take to satisfy a tax debt. If you have been ignoring the IRS when it comes to filing tax returns or making payments on your taxes, this extreme measure may be used to get your attention. Nothing will quite get your attention as your bank stating that your accounts are essentially frozen due to an IRS levy.
3. Gather Documentation: An EA will help you to identify the relevant documents, including tax returns, payment records, and any correspondence with the IRS. The proper documentation is essential to building a case with the IRS.
4. File a Written Protest: After careful review of all the information and if you disagree with the notice, an EA will prepare to file a written protest. The protest will clearly state the reasons for disagreement and provide supporting evidence. The more comprehensive the protest the better. Make sure the protest is timely filed.
5. If Needed, Request an Appeals Conference: An EA can represent you in an appeal conference. The IRS Independent Office of Appeals operates separately from the collections division and aims to resolve disputes impartially. During the conference, your EA will present your case and any additional evidence.
6. Explore Alternative Solutions: If appealing the notice is not feasible, explore other options like installment agreements or an offer in compromise, which allows you to settle your tax debt for less than the full amount owed.
What are the types of Penalty Abatement?
First-Time Penalty Abatement (FTA): Available to taxpayers who have a clean compliance history for the past three years and have not previously requested penalty abatement
Reasonable Cause Abatement: If you can demonstrate that your failure to comply was due to circumstances beyond your control, such as natural disasters, serious illness, or other significant life events.
Administrative Waivers: Sometimes, the IRS provides administrative relief for specific groups of taxpayers or under certain conditions.
1. Hire a Tax Professional: An Enrolled Agent (EA) that specializes in tax resolution matters can review your circumstances and assist you in taking the proper steps to resolve this tax matter.
2. Gather Your Documents: Collect all tax returns and relevant financial documents, including W-2s, 1099s, receipts, and any other records that support your income, deductions, and credits for the tax year in question.
3. File Your Original Return or Accept the IRS Prepared Return: Depending on your circumstances, you may not even need to file the original return. Each case is different, especially if you have several years of unfiled tax returns.
4. Respond to the IRS: Work with your tax professional to timely respond to IRS notices. I recommend sending any mailings certified with with a return receipt.
Taking these steps can help fix the situation and potentially reduce your tax liability. Always aim to file your returns on time to avoid the complications of an SFR.
Next, if it is determined the tax bill is wrong, contacting the IRS to discuss the issue will sometimes resolve misunderstandings or errors. If the
initial contact does not resolve the issue, a formal challenge
the assessment would be next.
Taxpayers have the right to request a review of the penalty before it is assessed. If the penalty has already been assessed, Marcelino Dodge, EA, CTRC can help you request a penalty abatement either before or after the penalty is paid.
If the abatement request is denied, you can appeal the decision. An appeal is sent in writing to a different IRS office. This written request for consideration by IRS Appeals is an impartial reconsideration because your request is being seen in an IRS office that did not initially review your case.
Should the appeal not resolve the issue, the next option is to take your case to Tax Court. Sometimes though after you file the petition to Tax Court, your case may be settled before even going to court. If you do go to court and the court finds in your favor and determines that the IRS’s position was largely unjustified, you may be eligible to recover some of your administrative and litigation costs.
Navigating any tax dispute can be complex, so it’s helpful and recommended to consult with a tax professional who can provide guidance tailored to your specific situation. Remember, you have rights and options to ensure fair treatment by the IRS.
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