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Taxpayer Rights

Do you have a problem with your taxes and need to know your rights? Trying to deal with the IRS and understanding tax laws can be cumbersome to say the least. Having Expert help or advice can eliminate many frustrations.

Below are some of the most commonly asked questions about taxpayer rights that have been answered by the Experts.

Can the IRS seize your property if you don't pay your back taxes?

Yes, under certain circumstances, Title 26 grants IRS the right to place a lien against your assets use the proceeds from the sale of those assets to satisfy a tax debt.

You should first receive a "notice of deficiency" from the IRS. A notice of deficiency is a letter stating that you owe back taxes and possibly interest and penalties to the IRS for a prior tax year. You may appeal a notice of deficiency or take the IRS to tax court and challenge the notice.

If you owe a debt to the IRS, you may set up a payment plan with them by filing Installment Agreements with them for a fee. You may also try to file an "offer in compromise", which is an agreement where the IRS accepts, or "settles" for an amount less than the original debt.

What is an offer of compromise?

An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship. Depending on your unique set of facts and circumstances regarding, ability to pay, income, expenses and asset equity.

An offer in compromise is generally approved when the amount offered represents the most that the IRS can expect to collect within a reasonable period of time. It is generally advised to explore all other payment options before submitting an offer in compromise.

Does a state need to notify a person before freezing their bank account in a different state for personal income tax owed?

The state should have sent a notice indicating that money was owed or was in arrears. Some states have reciprocity agreements, whereas one state can levy a bank account for money owed to another state. In addition, prior to the money being taken the bank account, there should have been an Intent to Levy notice. When taxes are owed, the state can act as any other creditor and excise creditor rights by assessing bank liens personal property liens, additional taxes and penalties and take court action.

How can I talk to a real person to set up a payment plan to avoid collections?

If you have a CP Notice, or other correspondence, you can call the telephone number that is on the notice if there is a telephone number to call. If not, you can call 1-800-829-1040 and let the agent know that you wish to set up an installment agreement. There are a few different options for payment arrangements, depending on each individual circumstances.

  • Guaranteed Installment Agreements
  • Streamlined Installment Agreements
  • Partial Payment Installment Agreements
  • "Non-Streamlined" Installment Agreements

Trying to set up an installment agreement can get to be an overwhelming task, you might want to seek the help of a reputable, qualified tax professional to deal with the IRS on your behalf.

If payment arrangements are in place on back taxes owed, how can the payments be modified because of affordability?

You can try contacting the IRS Tax Advocate Office for the state you owe the back taxes.
They offer free, independent, and confidential tax assistance to taxpayers unable to resolve their tax problems through normal channels or individuals experiencing a hardship. The Taxpayer Advocate Service helps individual and business taxpayers resolve problems with the IRS. 

What are a taxpayer rights to dispute the IRS when they say tax is owed on income that wasn’t correct?

You can request copies of your wage and income transcripts from the IRS. These transcripts will show places of employment, and other income information. You can also contact the social security administration for wage information. If there are places of employment listed on the transcripts that you did not work for, you can bring this to the attention of the IRS. You can request the transcripts by calling 1-800-829-1040.

What concessions does the IRS give to taxpayers whose records have been destroyed?

The burden of proof is on you to verify any expenses that you claim. In some cases, the IRS will allow a person to deduct customary and reasonable deductions for their profession or trade. Because of the tax case of Cohan v. Commissioner,39 F. 2d 540 (2d Cir. 1930), the IRS will allow expenses even if receipts and checks are missing. The Cohan case is law, and is followed by the IRS and the U.S. Tax Court.

All you need is a reasonable basis to recreate the expense and credible testimony that you actually spent the money. Use an affidavit to prove the deductions. Lack of documentation or inadequate documentation is the number one reason why the IRS disallows deductions for individual tax return filers. Many times people are told they cannot claim a deduction unless they have some kind of paper trail as proof.
However, usually oral testimony, or, your "word" can be and often is legally sufficient to prove a deduction. When you back up your claims for deductions with your own written statements, signed under penalty of perjury, those statements take the form of testimony, just as if given in a court of law. Such a statement is known as an affidavit. As long as the testimony in the affidavit is plausible, credible, it usually is accepted. By presenting your testimony in writing, you become capable of claiming and proving deductions you are entitled to claim but for which you have no receipt or canceled check.

Is there recourse if an accountant said they filed someone’s business taxes but there is no record with the IRS, and now the accountant has "lost the paperwork" from that year?

From the IRS prospecting, you are responsible for the filing tax return and for all taxes, penalties, etc.
Many times if you can prove that there is a reasonable cause for delay, the IRS may abate the penalty. Otherwise, your relation with the accountant is a civil matter between parties and is based on the service contract either written or verbal.

The many aspects of tax laws can be confusing even for the most experienced individuals. Using these laws to your advantage is the best way to protect your rights as a taxpayer. Often the laws can cause many questions and even procrastination just from lack of knowledge. if you or someone you know has taxpayer right questions and needs help, contact the Experts.

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