On your terms. At your pace.
All IRS Back Tax Help comments are in blue. This post is about whether or not taking the IRS to court is a good idea when disputing the Trust Fund Recovery Penalty (TFRP) collection process. If you have questions about this post, please reference: BP #41.
If you know you need to take action, read my thread about whether or not you should hire someone (You should not automatically.) titled “Owe IRS back taxes? When, who, and how do I hire IRS back tax help?” before you do anything else.
Our source and full text for this public record:
http://www.leagle.com/xmlResult.aspx?xmldoc=In%20TCO%2020111219E39.xml&docbase=CSLWAR3-2007-CURR
The excerpts below are heavily edited so click on the link above if you want to see every thing that happened. Potential clients often want to sue the IRS for the enforced collection actions they are experiencing (i.e. tax lien, bank levy, asset seizure, etc…) People get so mad at the IRS’ actions; they lose sight of the goal which is getting this tax problem solved so you can move on with your life. In this case, the amount of back taxes owed is not in dispute, only the manner in which the IRS attempted to collect the Trust Fund Recovery Penalty.
Business owner closed a business with trust fund taxes still owed, roughly $10.3mm in past due trust fund tax. The IRS made the “willful & responsible” determination and personally assessed business owner and CFO for overdue corporate tax. IRS then filed tax lien and proceeded to set levy process in motion. Business owner then sued IRS for procedural violations and won.
Business owner and CFO owe the IRS $10.3 million dollars. No difference. In the time it took to get to this result, they entire liability could have been handled, and today they would debt free from the IRS. Instead, today, a decade later, they still owe the entire Trust Fund Recovery Penalty. Don’t get caught up in the “fairness” of the collection methods. There are no surprises with the IRS collection process, they tell you what they are going to do, how they are going to do it, and then they do it.
Instead, focus on a real tax solution that will solve the IRS problem for good. Excerpts will be in quotes and in black text. Our comments are in blue.
“Conway was National’s chief executive officer (CEO), its president, and chairman of its board of directors during the tax periods at issue. Nakano was National’s chief financial officer during the tax periods at issue.”
The IRS “…determined that petitioners were responsible for National’s failure to pay the excise taxes. On March 14, 2003, respondent notified petitioners that he proposed to assess TFRPs against them. On May 9, 2003, petitioners filed protests of the proposed TFRP assessments with IRS Appeals. Almost 3 years later, on March 23, 2006, IRS Appeals notified petitioners that it had rejected their protests. Five days later, on March 28, 2006, TFRPs were assessed against petitioners.”
The IRS “sent Nakano a Form 1058, Final Notice—Notice of Intent to Levy and Notice of Your Right to a Hearing (levy notice). The levy notice reflected respondent’s intent to levy on Nakano’s property and rights to property to collect the TFRPs assessed against him.”
“Nakano and Conway timely requested CDP hearings on June 16 and July 3, 2006, respectively, to contest the proposed levy and NFTL filing. At the request of petitioners’ counsel, they received a joint CDP hearing. In their CDP hearing requests, petitioners claimed the following: (1) The TFRP assessments were invalid and (2) respondent failed to issue notice and demand for payment within 60 days of the assessments, thus precluding him from collecting the TFRP assessments via lien and levy.6 ”
If you owe back trust fund taxes to the IRS, the corporate veil has been pierced, and the Revenue Officer is seeking to personally assess you with the Trust Fund Recover Penalty, your attorney’s primary responsibility is to monitor the proceedings and capitalize on errors made; at all times, keeping their eye on the ultimate goal of settling the IRS tax debt. However, it appears in this scenario that all parties got involved in the fight and lost sight of what was best both for the government and the taxpayer.
All IRS Back Tax Help comments are in blue. This review is a further and more in-depth discussion on changes to the IRS tax lien filing policies including what the new dollar thresholds for filing an IRS tax lien, speeding up the time it takes to get a tax lien removed, and getting an IRS tax lien withdrawal once you’re in a direct debit IRS installment agreement.
If you know you need to take action, read my thread about whether or not you should hire someone (You should not automatically) titled “Owe IRS back taxes? When, who, and how do I hire IRS back tax help?” Here’s the link:
As usual, If you like the tone of these posts, contact me for consultation. I can be reached at irsbacktaxhelp@gmail.com. Before you email me, please click on and read “About irs back tax help”.
Here is the link to irs.gov:
“The Fresh Start changes increase the IRS lien filing threshold from $5,000 to $10,000… The IRS will not retroactively apply the new $10,000 lien filing threshold and automatically withdraw a previously filed lien.” We have seen no change to the IRS’ actual behavior in this regard. We continue to see IRS tax lien filings well below these levels for both overdue 941 payroll tax as well as 1040 income tax. After the date of this announcement, it is enforceable depending on circumstances.
“The IRS may now issue a withdrawal of a filed Notice of Federal Tax Lien after the lien has been released. If you wish to have the Notice of Federal Tax Lien withdrawn, you must request the withdrawal in writing. Please use Form 12277, Application for Withdrawal, (PDF). In item 8, Reason for requesting withdrawal, check box d, the best interest provision.” Please note they say you “must” request the IRS tax lien withdrawal. You cannot trust they will get this done on their own. I have encountered more than one person who was astounded to find out the lien was in place years after they settled their IRS back tax debt. Make sure you keep copies and send the application for tax lien withdrawal certified.
“If you are a qualifying taxpayer and meet the eligibility requirements, you may have your lien withdrawn after entering into a Direct Debit installment agreement. Your request for lien withdrawal must be in writing. Please use Form 12277, Application for Withdrawal (PDF). In item 8, “Reason for requesting withdrawal,” check box b, the “entered into an installment agreement” provision.” This is the biggest news in our industry in years. The IRS used to never remove a tax lien unless it was their mistake, we proved the lien was poorly perfected, or paid in full. This option is available for individuals that owe 1040 income tax, businesses that owe income tax (not over due 941 payroll tax) , and out of business companies with any type of tax.
In order to qualify you must owe $25,000 or less, have everything paid off in 5 years or less or prior to the statute expiring, all your filings are complete, and you have never defaulted on a direct debit installment agreement previously.
If you’re already in a regular IRS installment agreement, you are allowed to convert to a direct debit installment agreement as long as you meet all of the conditions above. Here’s the IRS phone numbers you’ll need:
| Individuals (Wage & Salary Earners) | 1-800-829-0922 |
| Individuals (Self-Employed) | 1-800-829-8374 |
| Businesses | 1-800-829-0115 |
As I’ve mentioned in other posts, if you owe $50,000 or more, or the IRS’ actions are not making sense, get some professional help. Contact me and I will give you some guidance or encourage you to hire me depending on what will help you the most.
irs back tax help 