Automated OIC Appeal Review

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Did you know that if your Offer in Compromise (OIC) is rejected, there is a “self-help tool” on the IRS website that will walk you through a series of steps to help you determine if you should appeal it or not?

This is yet another example of the IRS’ attempt to automate everything they do.  I guess it does make sense to explore all available options for replacing the best and brightest who will be leaving the IRS when they retire.  And I guess it makes sense to try to find cheaper alternatives, given that the IRS is not going to get the kind of funding they need to hire live bodies.  This just seems to cross the line.

I know how complicated and frustrating the OIC process can be.  When an OIC has been rejected, what the appellant really needs is to speak with a good tax attorney.  Or, at a minimum, he needs to be able to talk with a live body at the IRS who will explain the IRS’ determination and who will really consider a taxpayer’s individual circumstances.

It does have some value, don’t get me wrong.  I have spent a little time with this tool and, from what I can tell, it is perfect for identifying errors and oversights made by offer examiners.

Just Over One Month to Go In Tax Season and You Can Finally File Your Tax Return

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Over the weekend, the Internal Revenue Service (IRS) finally completed reprogramming and testing its systems for tax-year 2012. This includes the lingering updates mandated by the American Taxpayer Relief Act (ATRA) enacted by Congress back in January. This final update finally allows all taxpayers to prepare their tax returns. The final updates apply to taxpayers claiming residential energy credits on IRS Form 5695 and taxpayers claiming various business tax credits and deductions on their federal tax returns.

The IRS began accepting tax year 2012 returns in phases as it worked over the past several months to update various forms and make adjustments to processing systems to apply the current tax laws. Finally, with just six weeks to go before this year’s April 15, 2013 deadline, all IRS tax returns can now be filed. And, if you quickly find out that you’re in tax trouble, now that you can actually file your tax return, the tax relief attorneys at Montgomery & Wetenkamp will be able to resolve your IRS tax debt problems, call us toll free at (800) 454-7043.

IRS Nails "Non-filers" Too

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Some of our tax relief clients are concerned about the criminal implications of their case.  They want to know how we plan on helping them dig their way out of their tax debt, but they also want to know if they are going to be able to avoid a criminal investigation or conviction.  Some people (for various reasons) have multiple years of unfiled tax returns, and these are the clients who typically worry the most.  The IRS calls these people “non-filers.”

Do non-filers have to be concerned about being prosecuted for tax crimes?  Yes, they do.

Most people think of tax crimes as falling into one of the following categories:

  • abusive tax schemes
  • identity theft
  • money laundering
  • tax refund fraud

These are the types of tax crimes that get the most publicity.  However, it is important to know that non-filers can go to prison too.  The threshhold for “tax evasion” is lower than you might think.  Of course the IRS does not have the resources nor the desire to prosecute every taxpayer who fails to file.  In fact, most of the time, the IRS simply resorts to the Substitute for Return program rather than involving Criminal Investigation.  But you can’t rule it out!  The rule of thumb is to file your return every year, even if you know you aren’t going to be able to pay.

It's always "hurry up and wait" with the IRS

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It’s always “hurry up and wait” with the IRS.

The Offer in Compromise (OIC) process is a perfect illustration of this point. If a taxpayer finds himself with a tax debt that he cannot pay, one of his options is to file an Offer in Compromise by which he offers to settle with the IRS for less than what he owes. But the IRS will require that the OIC be filed as soon as possible; in fact, the IRS collections department will be poised to levy income sources if the offer is not filed (or some other resolution entered into). It is important to inform Collections of your intention to file an OIC, but they will most likely give you a short due date by which to submit the paperwork.

Once the OIC has been filed, then the waiting begins. It commonly takes several months just for the IRS to assign an offer to be reviewed. Offer examiners have to keep an eye on their caseloads because once a case enters their inventory, they are required to move it along promptly.

When an offer examiner or offer specialist has finished reviewing the offer, things pick back up and the taxpayer has to stay on his toes. Once again, deadlines are given that, if missed, could mean the end of the road. During this period of review the deadlines are typically attached to the submission documents that are required to substantiate details in the personal financial statement.

Once all the information is in and a determination has been made, there is usually additional waiting. The case normally must be submitted to a manager for further review, and that can take some time.

With the coming sequestration and IRS staff furloughs on the horizon, it is likely that the contrast between the hurrying and the waiting will be more pronounced. The IRS has said that furloughs will not begin until after tax season — that’s when we can expect longer-than-normal waiting periods at all levels of the IRS as there will be fewer IRS employees on duty to help.