Comprehensive Review of Your Rights to a Collection Due Process Hearing Before the IRS

Under certain circumstances and upon the Internal Revenue Service issuing certain collection notices, you have the right to request a Collection Due Process Hearing. Requesting and holding a Collection Due Process Hearing before the IRS Appeals Office can be a very beneficial tool in resolving an outstanding tax liability. The article below provides detailed information relating to a Collection Due Process Hearing.

What is a Collection Due Process Hearing?

A Collection Due Process Hearing is a right afforded to a taxpayer when the IRS has proposed a levy or enforcement action to collect on a tax debt. The hearing allows the taxpayer to work with an impartial appeals officer towards a collection alternative to resolve the debt as opposed to the proposed levy action by the IRS.

When Can a Taxpayer Request a Collection Due Process Hearing?

The most common time a taxpayer has the right to request a Collection Due Process Hearing is upon the IRS issuing a Final Notice of Intent to Levy. A Final Notice of Intent to Levy is also known as Letter 11 (L 11) or Letter 1058 (L 1058). A taxpayer has 30 days from the date on the Final Notice of Intent to Levy to request the hearing.

How Does a Taxpayer Request a Collection Due Process Hearing?

The taxpayer makes the request by filing Form 12153 with the service center or revenue officer who issued the Final Notice of Intent to Levy. Form 12153 is completed with the taxpayer’s general information, the tax periods of which the Final Notice of Intent to Levy was issued upon or included on the notice, the reason the hearing is being requested, and the proposed collection alternative. The hearing request can be faxed and/or mailed to the appropriate party within the IRS.

What Are the Benefits or Potential Benefits of Requesting a Collection Due Process Hearing?

While there are many benefits to requesting a Collection Due Process Hearing, perhaps the biggest or most advantageous benefit is the stay or hold on enforcement action that is afforded the taxpayer when a timely hearing request is filed. When a taxpayer timely requests a collection due process hearing, there is an automatic hold on IRS collection actions such as bank levies, wage garnishments, and other asset seizures. Please note that the automatic stay on enforcement action may not apply when the taxpayer owes 941 employment taxes and the taxpayer is not in compliance with the current quarter. This stays on enforcement, which allows the taxpayer time free of levies and seizures to prepare for the hearing and make a proposal to resolve the outstanding tax liability based upon their current financial circumstances.

Once a Collection Due Process Hearing is Requested, What Can I Expect?

Generally, the taxpayer will receive a notice from the IRS Appeals Office within 30-60 days from requesting the hearing that their hearing request has been received, and an appeals officer will contact the taxpayer once assigned to the case. Thereafter, the taxpayer will receive a notice from the appeals officer assigned calling an initial hearing or conference date. The initial hearing or conference date can be adjusted by the taxpayer, but the taxpayer must contact the appeals officer to reschedule the hearing date. The notice from the appeals officer will generally request additional information the taxpayer wishes to present and produce during the hearing relating to the resolution proposal the taxpayer is proposing. This information could be financial statements and information relating to an installment agreement, an offer in compromise, or perhaps a request that the liabilities be placed in a currently non-collectible status.

What is the Procedure or Process of Working With the IRS Appeals Office?

First, the appeals officer will verify that the IRS has taken all required and legal steps towards a collection of the debt and that the taxpayer has received their proper due process. Further, the appeals officer verifies that they have had no prior involvement with the applicable case or taxpayer and are a true impartial party to the matter. Upon establishing the hearing or conference date, the taxpayer will need to compile the necessary information, documents, and statements to submit to the appeals officer along with their proposal to resolve the tax liability. If the taxpayer was an individual and owed individual income tax, they would draft an individual collection information statement, also known as Form 433A, and compile all of the necessary attachments such as W-2s, income statements for self-employment income, bank statements, current statements for stocks, bonds, 401(k)s, mortgage statements, etc., to verify the income, expenses, and assets stated on the financial statement. If the taxpayer was a business or the applicable individual owned a business, the taxpayer would also need to compile Form 433B, which is a collection information statement for businesses. The taxpayer would use the financial statements and documents to propose an installment agreement or request their liabilities be placed in a non-collectible status. A taxpayer can also request a settlement, known as an offer in compromise, through the hearing process. If a taxpayer requests an offer in compromise through the hearing process, the offer will be submitted by the appeals officer (usually) to the IRS Offer in Compromise Unit, and the appeals officer will maintain the file while the IRS Offer in Compromise Unit makes an initial determination on the offer. If the determination on the offer needs to be appealed to the appeals office and the taxpayer appeals the initial offer determination, the appeals officer will then have control or jurisdiction of the appeal. Inevitably, through the appeals hearing process, the appeals officer will make a determination relating to a resolution of the liabilities.

What Are the Potential Outcomes of Holding a Collection Due Process Hearing?

The outcome or determination issued by the appeals officer through the hearing process may be dictated by the resolution proposed by the taxpayer. If the taxpayer has proposed an installment agreement and the appeals officer and taxpayer agree on the terms and conditions of an installment agreement, the appeals officer will issue a determination that an installment agreement has been reached, and thus, the levy action proposed by the IRS is not sustained. In short, if the taxpayer and appeals officer come to a collection alternative, then the appeals officer will issue their determination stating the agreement that has been reached and that collection action is not sustained. However, if an agreement or resolution cannot be agreed upon with the appeals officer, the determination made by the appeals office will state that the proposed levy action by the IRS is sustained, and thus, the taxpayer is open to enforcement such as levies once the file or case is returned to IRS Collections or the IRS revenue officer.

What if I am Unable to Establish a Formal Agreement Through the Collection Due Process Hearing?

If you cannot come to an agreement with the appeals officer, it does not mean an agreement is not possible. You are still able to enter into an installment agreement or submit an offer in compromise through the IRS Offer Unit, but you would do so outside of the context of the appeals hearing or appeals office. The key would be to work on formalizing or proposing an agreement as quickly as possible after the appeals hearing concludes because, technically, once the matter is back before the IRS Collections Department or the revenue officer, you are subject to enforcement because there is no longer a stay or hold on enforcement.

Marriage

Several factors may impact your tax bill if you’re planning to get hitched. You’ll need to consider whether you plan to file jointly or separately and what kind of benefits you might qualify for. If you’re filing jointly, you’ll also need to determine whether you’ll claim any dependents and, if so, how many. Finally, you’ll need to assess your income level before deciding whether to file as single or head of household.

Education

School can be expensive, especially if you go to college. But there are ways to get financial aid and reduce those costs. You may qualify for federal grants and loans, and state programs may offer scholarships. There are also tax breaks available to students. For example, you can deduct up $2,500 of tuition and fees from your income when filing your taxes. And if you’re still paying off student loans, you can deduct the interest paid on them.

In addition to tax benefits, there are other perks to obtaining professional certifications. For example, the American Society of Mechanical Engineers (ASME) offers a $1,000 stipend for those pursuing certification through its ASME Certification Program. The National Institute of Standards and Technology (NIST) provides a $2,500 grant for those seeking NIST certification. The American Board of Medical Specialties (ABMS) offers a $5,000 stipend for pursuing ABMS certification. And the National Association of Realtors (NAR) offers a $10,000 grant for real estate agents pursuing NAR certification.

Having a Child

A baby can help you save money. You can claim several tax credits when you have a baby, including a child tax credit and a dependent care credit. These credits will lower your taxable income and make you pay fewer taxes. A baby can also give you access to other benefits like the EITC.

A Job Promotion or Change

A work raise is an increase in salary that comes with a corresponding tax decrease. If you get a raise at work, you could pay higher taxes if you’re already in a high-income bracket. You should check the IRS withholding calculator to see your current rate after getting a raise. Then, you can update your W-4 form to reflect your new number.

Purchasing or Selling a Home

If you buy a home, you can deduct all kinds of expenses when selling it. If you file jointly, you can also get tax breaks on up to $500k in capital gains.

Becoming a Widow or Widower

If you die in 2022, your representative will need to file a final tax report in your name, just like if you were still alive. If you have a surviving spouse, then your spouse can file a joint tax return for that year. Depending on the size of your assets, an inheritance tax return may also need filing. After the estate assets are distributed, it becomes the responsibility of your beneficiaries to file their tax reports that include any inherited assets.

At McGuire Law Firm, we aim to provide the best experience possible when you file your taxes. That means asking you enough questions to start and then helping you complete your return. 

Gaining an inheritance

Inherited funds are not subject to taxes when distributed to beneficiaries. However, if you inherit real estate, you may owe capital gains tax on any appreciation in its value since the decedent’s death. You also may need to pay additional taxes on any increase in the cost basis of the inherited property.

McGuire Law Firm provides IRS representation and tax law services. Contact us today for your legal tax needs and to speak with a Denver tax attorney or Denver business attorney.

work through a number of IRS tax issues and implications. Over the past 5

years, John has provided sound advice, guidance and tangible business

options that helped my company dig through the paperwork, and language

which helped me to create a viable and reasonable path towards resolution.

He was also instrumental during a tax audit laying out a tested blueprint for

the approach and never failed to accompany me during the audit meetings.

John is trustworthy, dependable and knowledgeable about all tax matters, but

adds value in his ability to understand and appreciate the small business

owner and the challenges we face in running a business. Through our entire

business relationship, John has been responsive and detail oriented, allowing

me to stay focused on my business and not getting distracted with legal

details.

“Thank you for your professional services!

– Individual & Business Tax Planning

– IRS Tax Debts, IRS Tax Audits and other IRS Problems

– Analyzing the tax implications of business transactions such as the sale of business assets, stock, business interests and other business acquisition matters

– The application of the tax law to the gifting of property whether at life or death

– Preparation of Tax Returns

Please view the video below to meet John and hear more about the services John provides as a tax lawyer.

You can contact The McGuire Law Firm at anytime to schedule a free consultation with a tax lawyer in Denver or Golden, Colorado.

–          Tax audits & disputes before the IRS

–          Tax Debts before the IRS

–          Individual Tax Planning

–          Business Tax Planning

–          The tax analysis of specific business transactions

–          Tax implications of business formations & structures

–          Tax implications of gifting assets to family and friends

Mr. McGuire has successfully represented many individual and business taxpayers before the Internal Revenue Service regarding IRS tax debts, IRS tax audits and other tax disputes.  Additionally, Mr. McGuire has worked with many businesses from their formation and structure to the sale or transfer of a business or business assets.  Of course, as Mr. McGuire works with these businesses he consults and advises the business and business owners regarding the individual & business tax implications of certain transactions and matters.  In addition to his law degree, Mr. McGuire obtained his LL.M. in taxation from the University of Denver, which is an advanced degree in taxation.  Mr. McGuire feels that such degree not only furthered his knowledge regarding tax law but benefits his clients in regards to their tax and business legal matters.

The video below will provide additional information regarding the services Mr. McGuire provides to his business and individual clients.  If you feel you have the need to speak with a tax attorney, please feel free to contact The McGuire Law Firm at anytime.  The firm allows a free consultation with a Denver tax attorney for all potential clients, and would welcome the opportunity to meet and speak with you.

In June 2014 the IRS is beginning a program that will assist small businesses with retirement plans that owe penalties for not filing certain reporting documents.  These small businesses can be avoided by filing current and prior year forms during this IRS pilot program.  The IRS may actually reach out and contact certain small business that have retirement plans, and appear to be unaware of their reporting requirements for their plans.  The Internal Revenue Service hopes that this contact and overall program will bring certain businesses into compliance with their filing requirements.

Form 5500 (or Form 5500 series) can lead to large tax penalties when not filed.  Plan administrators or a plan sponsor can incur penalties from the IRS up to $15,000 per return.  If  a business has already been assessed a penalty for late filing, the business would not be eligible for a penalty abatement or waiver through the current program.  It is also important to note that the current program only applies to retirement plans maintained by certain business and not all businesses will be eligible.

A small business can include multiple returns that would be late within a single submission, and penalty relief may be available to the small business for more than one year or tax period.  Currently, the IRS is not charging a filing fee to request penalty relief through the program.

For more information regarding this penalty relief program, you can review Revenue Procedure 2014-32.

June 15 is typically the day for US citizens and residents aliens living abroad, or those serving in the military to file their tax returns.  In 2014, it was June 16^th because of the calendar.  In order for a taxpayer to claim the two month extension, they must attach a statement to their 1040 individual income tax return stating which situation applies to them.

In regards to foreign income, United States federal law requires all US citizens and resident aliens to report worldwide income, which includes income from foreign bank accounts, foreign security accounts, foreign trusts and other foreign income on their 1040 individual income tax return.  In addition to such reporting, US taxpayers with foreign accounts of which the aggregate exceeds $10,000 at anytime during the tax year (in 2013) are required to file electronically with the Treasury Department a Financial Crimes Network Form 114, which is titled Report of Foreign Bank and Financial Accounts.  The FBAR laws have recently been established to prevent the evasion of tax by taxpayers who earn foreign income that is not reported to the IRS.  For example, a Swiss bank may not report interest income on a 1099 INT that a US Bank would and thus the taxpayer earning interest in such Swiss bank account may not report the interest as income to the Internal Revenue Service.

This Form 114 has replaced TD 90-22.1, which was the previous FBAR form used by the IRS.  The Form is due to be filed with the treasury on or before June 30^th, and it must be filed electronically.  The form can be obtained online at the BSA E-filing System, and individuals with foreign accounts should note that the June 30^th deadline cannot be extended such as for other income tax returns.

If you have questions regarding any of the above tax matters, you can speak with a Denver tax attorney by contacting the McGuire Law Firm.  The McGuire Law Firms offers all potential clients a free consultation with a tax attorney.

Contact The McGuire Law Firm to schedule a free consultation with a tax attorney.  The McGuire Law Firm has law offices in Denver and Golden, Colorado.

Contact The McGuire Law Firm to schedule a free consultation with a tax attorney in Denver, Colorado or Golden, Colorado.

Schedule a free consultation with a tax attorney in Denver or Golden Colorado by contacting The McGuire Law Firm.

Contact The McGuire Law Firm to schedule a free consultation with a tax attorney in Denver or Golden Colorado.