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IRS Tax Problem Solving  —  Tax Controversy Resolution

The IRS is the most powerful bill collector in the country, and maybe in the world.

While other creditors have to go court and persuade a judge that you owe money, the IRS can simply issue an assessment based on its own calculations.

The IRS gets to play judge, jury, prosecutor, and executioner in declaring that you owe tax money.

No separate judge, no jury, no law suit, no judgment, no fuss, no muss (for the IRS!).

But an IRS assessment that you owe tax money can be a huge fuss for you, the taxpayer!
It's easy for the IRS, but it's hard for the rest of us.

Once the IRS has decided that a taxpayer owes money, if the debt it has assessed is not paid promptly, the IRS can then go ahead to collect on that debt by seizing almost anything you own, such as

  • bank accounts,
  • wages,
  • cars,
  • houses,
  • jewelry,
  • accounts receivable,
  • even your valuable Willie Mays baseball card from 1964.

 

The IRS can take almost anything of value that belongs to the taxpayer to satisfy the tax debt the IRS has declared and assessed is owed.

And again, unlike other creditors, the IRS does not have to sue the taxpayer, it does not have to go to court, it does not have to persuade a judge or jury that it is right, it does not have to get a judgment from a court.

Instead, the IRS gets to decide for itself whether you owe it money and how much is owed. Once it decides that you, the taxpayer, do owe it money, it can unleash its extraordinary power to collect, to take your money and your stuff.

But even when it looks bad, really bad, there are solutions to IRS tax problems.

  • Sometimes, the IRS makes a mistake and the taxpayer does not really owe the money.  (Who ever heard of a large, governmental bureaucracy ever making a mistake? The government never, ever makes a mistake, does it?)

  • Sometimes, the IRS has taken too long to try to collect, and time has run out. If time has run out on the IRS, the taxpayer can be released from ever paying what the IRS had earlier claimed was due.

  • Sometimes, a taxpayer just does not have the income or the assets to pay, even if he or she were allowed to take months or even years to make smaller payments over time.  If a taxpayer is in this situation, the IRS can agree to take less, sometimes much less money than what it says the taxpayer actually owes.

  • Sometimes, a taxpayer does not have the money to pay the whole bill right away, but can pay what he or she honestly does owe in installments, over time.

  • Sometimes, there are other situations that enable a taxpayer to show that the tax debt is not as big as the IRS says it is, or that the IRS does not need to put its claws into everything the taxpayer owns to get its due.

 

Let us help you find the right solution to your tax problem, and end your IRS nightmare.

Finding the solution to your IRS tax problem is what we do.  This is called IRS Problem Solving, and is sometimes known as IRS Tax Controversy Resolution.

We help individuals and businesses who are in trouble with the IRS solve their tax problems.

When the IRS comes knocking on your door, saying you owe money and threatening to seize your bank account, garnish your paycheck, your jewelry, art collection, baseball card collection, your house or your car, you want a strong advocate to fight for you and find a better solution.
Let us talk to the IRS for you, so that you don't have to!

Once you hire us to represent you, you won't have to fear getting phone calls from the IRS or surprise visits from their agents.  You will have a lawyer to talk to them for you
We can help.

Services we provide — We can help you with:

 
Federal Tax Lien Release

Once the IRS determines that a taxpayer owes tax, a lien on all of his or her property, income, and assets is automatically created.

If the IRS then makes this lien public by filing it with the appropriate public record recording authority (such as the County Clerk), the Federal Tax Lien will show up on the taxpayer's credit report and damage his or her credit rating.

Just try getting a loan once the IRS files its Federal Tax Lien with the County Clerk!

Getting a mortgage or home equity loan or automobile loan becomes difficult or impossible.  This can cause enormous problems if the taxpayer is trying to buy or sell an apartment or a house.

Action must be taken.

If you have received a deficiency notice or if you have been assessed for taxes due, or a Federal Tax Lien has been filed, please call us to make an appointment to discuss what can be done to resolve this serious but solvable problem.

 
IRS Levy Release

When the IRS determines that a taxpayer owes taxes money, and assesses the taxpayer for that tax debt, the IRS then has the power to take possession of the taxpayer’s property without going to court to get a judgment.  This is known as the IRS's power to “levy.”

The IRS can levy a taxpayer's money or property or both, whether it is real estate or personal property.  It can be your car or jewelry, your paycheck, debts owed to the taxpayer, accounts receivable — almost anything that you, as a taxpayer own or expect to own in the future.

Taxpayers who have received a notice of levy, or have already been levied, can take steps to prevent the levy, or to undo one that has already taken place.

 
IRS Seizure Defense

Levies on a taxpayer's property can be divided into two categories.  When the IRS acts to collect on taxpayer's tax debt by taking real or tangible property which the taxpayer possesses, such as the taxpayer's car or jewelry or house, this is often referred to as a "seizure," as in "the IRS seized his car and it seized her emerald bracelet."

When the IRS acts to take money, that action is often called a “levy” as in “the IRS levied her checking account and now we are working to persuade the IRS to release the bank levy.” Or, if instead the IRS orders a taxpayer’s employer to take money from the taxpayer’s paycheck, this type of levy is called a “garnishment.”

Despite the IRS's broad powers to levy, garnish, and seize, taxpayers do have defenses to prevent seizures or undo them.

A taxpayer facing seizure of property needs to act with the help of a professional who can analyze the situation and fight for them to prevent the seizure, or undo it, or minimize the IRS's efforts to separate you from your property.

Wage Garnishment Defense

If the IRS determines that a taxpayer owes taxes, assesses the taxpayer for that tax debt, and the taxpayer fails or neglects to pay, the IRS has broad power to levy or seize the taxpayer’s money and property to pay that tax debt.

This power of the IRS includes the power to force the taxpayer's employer to pay the IRS out of the taxpayer's paycheck instead of paying the taxpayer himself or herself!

Taxpayers can take steps to prevent their paycheck from being garnished or to reduce or minimize the pain of a wage garnishment, but the problem cannot be ignored.

In fact, the IRS has extraordinary power when it comes to wage garnishments which extend far beyond those of ordinary creditors.

An ordinary creditor generally has the power to seize no more than 10% of a debtor’s pay check. And the ordinary creditor can only do that after it 1) sues the debtor in court, 2) wins the case, 3) gets a judgment from the court, 4) takes that judgment and dockets it with the County Clerk.

The IRS, on the other hand, which is no ordinary creditor, can skip steps one through four, and along with skipping ahead to collection, in most circumstances, the IRS can attack a paycheck and compel the taxpayers employer to hand over to the IRS much, much more than 10% of the taxpayer’s paycheck.

This can be an enormously intrusive and life-disrupting act by the IRS which can destabilize a person’s very livelihood and take away any financial security.

Contact us to start coping with this threat to your financial security and your paycheck.

 

Trust Fund Recovery Penalty Defense

When a company withholds payroll taxes and FICA taxes from its employees, it is obligated to then pay the tax money it has withheld to the IRS.  If it does not, the Government must cover the missing money for the employee who had his or her wages withheld.

Because the United States guarantor for an employee's withheld wages, the IRS is highly motivated to collect the taxes which have been withheld, or should have been withheld, but have not been paid to the Government.  In short, the Government does not want to get stuck with the bill.

To avoid getting stuck with the bill that should is properly the employer's responsibility, the IRS's ordinarily broad power to collect tax debts are especially broad here.
The IRS can levy against individuals in a company to collect on for the company's "trust fund" tax debt

Not only can the IRS use its levy power against the employer company, it can also seek payment from individuals involved in running the company.

The IRS can seek payment from individuals personally, even if the company is a corporation.  The IRS does not have to go to court to persuade a judge to "pierce the corporate veil" the way an ordinary creditor would to collect a company debt from an individual.

Ordinarily, it is very difficult for a creditor to hold an individual at a corporation responsible for the company's debts.  But, for the IRS it's easy.

The IRS can hold officers and directors personally responsible for the Trust Fund Recovery Penalty.  It can hold shareholders personally responsible.

It can even hold employees responsible, even if they do not own a single share of stock in the company!

If the employee has decision making power over which creditors get paid and which do not, or which get paid first, and which are delayed, the IRS can consider holding the employee personally responsible for the company's failure to pay withheld trust fund money to the IRS.

If the employee was involved in deciding to pay some creditor other than the IRS before paying the IRS, the employee might be held liable.

Because the IRS is especially motivated to collect on the Trust Fund Penalty Recovery, it is especially important to have representation to protect you if the IRS claims that the Trust Fund money is due.

 

Penalty Abatement

When the IRS determines that taxes are owed, and they are late, the taxpayer is assessed not only with the tax, but with additional penalties that are tacked on and increase the total balance due. Frequently, penalties added on makes the tax bill much, much larger.

Sometimes, even if the IRS's calculation of what the actual tax due is correct, the taxpayer can get the penalty charge reduced or even waived totally.

If, for example, the taxpayer has a reasonable excuse for how the problem occurred which ended up causing penalties to be imposed (for example, a flood destroyed records which caused a significant delay in preparing and filing a tax return) AND the problem has been solved so that it’s not likely to happen again, AND the taxpayer is now current in filing returns and paying tax, there may be an opportunity to reduce the tax due by getting penalties reduced or removed. This is called "penalty abatement."

We can do a careful analysis of the tax and the taxpayer's circumstances, and get a sense of whether the tax is correct, or not, and whether the penalty might be abated, reduced, or wiped out entirely.

 
Offer in Compromise

If a taxpayer has been assessed for taxes that are just too much to handle, for example, there is not enough income to pay the tax, or even to do so over time.  Or the taxpayer does not have enough savings or other assets to pay.

In plain, blunt language, if the tax payer is too broke to pay, the IRS will sometimes agree to accept less than the full amount owed (or "compromise" the debt) and "wipe the slate clean" so that the taxpayer can make a fresh start without an impossible tax debt hanging over the taxpayer forever more.

Also, the IRS will sometimes agree to accept less than the full amount due if there is genuine doubt that the taxpayer actually owes the money.

The Offer in Compromise program is a truly great solution, but only if the taxpayer qualifies for it.

With an Offer in Compromise, a taxpayer can settle his or her tax debt for substantially less than the full amount due.

Taxpayers should be aware of pie-in-the-sky promises that some tax resolution professionals make.

In fact there are some people who describe themselves as tax resolution specialists who will promise a taxpayer that their tax debt will be settled "for pennies on the dollar," and then take a fee for filing an offer in compromise without determining whether the taxpayer qualifies for this program, or will do so even knowing that the taxpayer does not qualify.

Because there have been a number of self-described specialists who were offering such baseless pie-in-the-sky promises, the IRS issued a consumer alert warning taxpayers to "beware of promoters’ claims that tax debts can be settled for 'pennies on the dollar' through the Offer in Compromise Program."  See IR-2004-130.

Some promoters promise settling a tax debt for "pennies on the dollar" where the promoter or sales person does not determine that a taxpayer qualifies, or even submits an offer in compromise application knowing that the taxpayer does not qualify.

Let us determine if an Offer in Compromise can help you

We will only recommend that a taxpayer submit an offer in compromise if, after a careful analysis of the taxpayer's financial situation, the taxpayer seems to qualify.

We cannot guarantee that an Offer in Compromise will be accepted by the IRS (no one can honestly make that guarantee — only the IRS can decide that).  But we can and do promise to suggest an Offer in Compromise if your situation appears to qualify.  And we of course will not to advise making an Offer in Compromise willy-nilly.

 

Installment Agreements

Sometimes taxpayers really do owe the IRS money.

(We don’t like paying tax either, but we accept the fact that the federal government has the power, and uses that power, to pass laws and rules imposing tax, and to collect taxes due under the law. Note that we disagree with those who contend discredited arguments such as that the income tax is unconstitutional. Court’s have heard and repeatedly rejected these types of argument. People who espouse them have been labeled “tax protestors,” and are treated harshly by the courts. For example, the most famous tax protestor in recent times, Hollywood film star Wesley Snipes has been sentenced to three years in prison for failing to file tax returns based on repeatedly rejected legal arguments.)

Sometimes, when taxpayers do actually owe money to the IRS, they owe less money than the IRS says they do.  But after working through the numbers, whether the amount due is what the IRS originally said, or whether it is some amount less than that a taxpayer may be facing a real bill for taxes due.

We can help you get the IRS off your back by negotiating a reasonable installment agreement which allows you to payoff the debt over time.

Negotiating and entering into an installment agreement can put an end to threats of levies on your bank account, garnishment of wages, seizure of your assets, and all the other things the IRS does to collect on a tax debt.

 

"Currently Uncollectible" Status

Sometimes a taxpayer simply does not have the income or assets to pay a tax obligation.  And there is no prospect of changing that any time soon.

Yet the IRS keeps sending threatening letters, making threatening phone calls, and trying to collect where there just isn't the money to pay.

In situations like this, a taxpayer might be declared as being in "currently uncollectible" status.  This does not make the tax obligation disappear or go away, but it does stop the IRS's collection efforts.

"Currently uncollectible" status is a short-term solution designed to give a tax payer space and breathing room to rebuild their lives, income, and financial resources.

By taking time to "get back on their feet," once the taxpayer has re-established better, more solid financial circumstances, the questions of handling the tax debt can be looked at again, when the taxpayer has more resources and capacity to resolve it.

 

Delinquent/Late-Filed Returns

Taxpayers who want to solve their tax problems must be up date on their tax returns.

If a taxpayer has forgotten to file one or more tax returns, or have otherwise failed to file, whether they were aware of it or not, the first step to making an agreement with the IRS to get out of trouble is to get current with filing tax returns.

This is generally a necessary prerequisite to entering into an installment agreement or offer in compromise or even getting taxes discharged in bankruptcy (contrary to a common misconception, even among lawyers and accountants, in some circumstances, tax debts can be discharged in bankruptcy).

Like one after another villains in James Bond movies have said to the super-spy, “No deals, Mr. Bond,” the IRS generally takes the same position with taxpayers who have unfiled tax returns: “No deals, Mr. Taxpayer.”

 

Statute of Limitations Analysis — Is Time on Your Side?

After assessing a taxpayer for unpaid taxes, the IRS has only so much time to then collect it.  If it doesn't do so within the time period, all of the powers given to the IRS will not be enough to allow it to collect the tax it assessed.

Like all the king's horses and all the king's men who could not put Humpty Dumpty together again, once the Statute of Limitations runs out, a tax debt which the IRS has assessed cannot be collected.

We can help analyze where a taxpayer stands in relation to a tax debt.  Has time run out for the IRS?  How much time is left?  If very little time is left, how will that affect negotiations with the IRS?  Sometimes, even if the IRS still has time, having only a short time left can help a taxpayer negotiate a favorable settlement.

Call us to find out if the statute of limitations is putting time on your side.

 

Collection Due Process Appeals

The Collection Due Process (“CDP”) Hearing is a very valuable tool taxpayers can use to work out a reasonable resolution to their tax problem with an appeals-level officer at the IRS before the rank-and-file collectors seize money from your pocket, your bank account, or your pay check.

Imagine being able to work out a reasonable resolution, one that is less painful, less disruptive, less onerous than freezing your bank account and seizing it, or garnishing your paycheck: The CDP hearing is designed to make this possible.

But, while all taxpayers have the right to a CDP hearing, these valuable rights are very time-sensitive, and if you are not paying attention, not opening your mail, and if you don’t act quickly, you can give up your valuable CDP rights never to have them again (well, almost never – read about Allan R. Pearlman’s rare and unique victory in getting the IRS to restore a taxpayer’s CDP hearing rights after the IRS wrongly took them away by click here -- see "IRS Backs Down and Apologizes" ).

CDP Hearing rights are useful, valuable, but they are on a short fuse, and the rules can be tricky. If you don't deal with the bureaucrats at the IRS all the time, you can protect your rights by getting the help of a professional who does.

 

Other Tax-Related Appeals and Audit Reconsideration

In addition to Collection Due Process Appeals, there are sometimes other methods available to challenge a decision made by one or another bureaucrats at the IRS. For example, two such methods include a procedure known as a CAP Appeal, and after an audit gone wrong, seeking audit reconsideration.

We examine the possible remedies and use the best methods and procedures for getting a resolution which is called for by a taxpayer’s unique situation.

 

Discharging Taxes in Bankruptcy

Contrary to a common misconception, sometimes taxes are dischargeable in bankruptcy. Many people are surprised about this, even a number of lawyers and accountants. Still, it is true, though somewhat complex. A taxpayer’s unique situation must satisfy several exacting standards for taxes to be discharged in bankruptcy and then there is an array of additional serious factors to consider.

We are able to analyze a taxpayer’s unique circumstances and situation and analyze whether bankruptcy is possible, and if possible whether it’s a good solution.

 

United States Tax Court

Sometimes, after trying to resolve a problem with the IRS using the range of procedures and solutions that exist within the IRS’s problem resolution system, a taxpayer has bring the matter to court to get a judge to decide who’s right, the taxpayer or the IRS. Usually, that means going to United States Tax Court.

In addition to being admitted to the bar of the courts of the State of New York, the federal trial courts in the Southern and Eastern Districts of New York, the federal appeals court at the United States Court of Appeals for the Second Circuit, and the United States Supreme Court, Allan R. Pearlman is admitted to practice before the United States Tax Court and can bring a taxpayer’s case there when appropriate and necessary.

 

Other possible solutions

Sometimes a person’s unique case involves a solution which we just have not thought of yet and have not described here.”



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Law Office of Allan R. Pearlman • 116 West 23 Street, Suite 500, New York, NY 10011 • Tel. (646) 827-4257