A taxpayer who met with a Revenue Officer at an Internal Revenue Service office on Long Island successfully sued the IRS for $862,000 after he was injured by tripping over a phone cord.
William Berroyer claimed in his lawsuit that he could no longer play golf or have intimate relations with his wife more than once a month after he fell during a 2008 conference with a Revenue Officer at an IRS office in Hauppauge, NY, according to the New York Post. He had visited the IRS to work out a payment agreement for a $60,000 tax bill when he tripped on the phone cord and fell against a cabinet.
After leaving the IRS, he telephoned the IRS Revenue Officer from the parking lot to inform him that he had lost the sense of feeling in his leg and was suffering from shoulder pain. He then spent 17 days in hospitals and rehabilitation centers recovering from his injury.
In his lawsuit he claimed $10 million in damages. Attorneys for the IRS claimed he was exaggerating his injury, but the judge ultimately awarded him $862,000 for pain and suffering. And the big prize is because this was for pain and suffering, he won’t have to pay taxes on the damages!
So now that the IRS has tucked away all their telephone cords, how can taxpayers who owe the IRS avoid collection action?
- Offer In Compromise. This is a formal application to the IRS requesting that it accept less than full payment for what you owe in taxes, interest, and penalties. An offer in compromise may allow you to settle back taxes or IRS liability at a substantial discount on the basis of doubt as to collectability, liability, or effective tax administration. In addition, while your offer is under consideration, the Internal Revenue Service is prohibited from instituting any levies of your assets and wages. Most people do not have the necessary skills or knowledge of the IRS collection process to make an offer in compromise that is in their best interest and can be processed by the IRS. Government figures show that 75% of offers are returned at the beginning due to forms being filled out incorrectly, and of the 25% that are processed, approximately 50% are rejected.
- Installment Agreement. Allows you to pay IRS debt in full in smaller, more manageable amounts, usually in equal monthly payments. The amount of your installment payment will be based on the amount you owe and your ability to pay that amount within the time available to the IRS to collect tax debt from you. However, be aware that because you are financing your liability with IRS, interest and penalties will continue to accrue. Most installment agreements are set up with level monthly payments but there are also different types and terms of installment agreements which if you qualify may be more suitable for you. The variations are not publicly offered by IRS – only a seasoned tax attorney would know to ask for them.
- Uncollectible Status. Occurs when the IRS has determined that they are presently unable to collect the taxes from the taxpayer by full payment, through an Installment Agreement or by way of an Offer in Compromise. Once the account is placed on a Currently Uncollectible (“CNC”) status, the IRS does not pursue collection activity against the taxpayer and the statute of limitations on the tax liabilities will continue to run. Generally, unless the taxpayer’s financial situation changes, the account will remain on a CNC status until the tax liabilities expire. However, if the taxpayer’s financial situation improves the account will be taken off of CNC status so that the IRS can collect the taxes through full payment or an Installment Agreement. CNC although temporary could provide interim relief to taxpayers who all of a sudden run into financial hardship.
A consultation with the Law Offices Of Jeffrey B. Kahn, P.C. can help you determine what the best strategy is for you.
Description: The Law Offices Of Jeffrey B. Kahn, P.C. has helped many people avoid collection action by the IRS and State tax agencies. Working with a tax attorney in Los Angeles is the best bet for reducing or eliminating the amount you owe.
Taxpayers who are facing a potentially large IRS penalty for late or unpaid taxes may be eligible for relief through the First Time Abate policy. This provides an opportunity for people who have fallen behind to become current on their tax obligations while eliminating any penalties from a previous tax issue. The First Time Abate program allows a person to work with an IRS attorney to relieve the stress in their lives.
In order to qualify for the First Time Abate program, a taxpayer needs to have not had a previous delinquency with the IRS. You will want to work with an income tax attorney to determine if your case qualifies for the First Time Abate policy, as not all types of tax filings are eligible to have penalties waived. Examples of event filings that could qualify include:
- Form 706 U.S. Estate Tax Returns
- Form 709 United States Gift Tax Returns
- Form 1120 U.S. Corporation Income Tax Returns
You’ll need to be current with your taxes in order to be eligible to have your penalties waived through the First Time Abate policy. This means that if you have taxes that aren’t fully paid off but you are on a payment plan negotiated between your tax attorney in San Jose and the IRS, you can still qualify.
The First Time Abate policy gives you a second chance at resolving a tax problem. If you are facing penalties but can’t prove “reasonable cause” that you can’t afford the penalties, the Law Offices Of Jeffrey B. Kahn, P.C. believes you should consider the First Time Abate policy.
Owing back taxes doesn’t mean that you have to live in fear of penalties, the garnishment of wages or even criminal prosecution. If you live in the Bay Area and owe back taxes, it makes sense to work with a tax attorney in San Francisco to find a way to settle your debts. The IRS has several options available for taxpayers who owe back taxes and one of the easiest to enter into an installment agreement with the IRS. Before you reach out to a tax settlement attorney, learn a bit more about this option.
With an installment agreement, you pay off your tax debt in monthly installments. It eases the burden on you and allows you to pay off the debt in a comfortable manner. If you fail to make a payment, you do run the risk of going into default; setting up an automatic payment method such as direct withdrawal can help you to avoid this. Most installment agreements are set up with level monthly payments but there are also different types and terms of installment agreements which if you qualify may be more suitable for you. Before you set up an installment agreement, you’ll want to contact an IRS audit attorney to determine what type of installment agreement would be best.
An installment agreement isn’t always the perfect option. For example, if you owe a large amount of money and can only afford to make minimum payments each month, you might find yourself paying for years without making a major dent into the principal amount that you owe. In this case, an option like an Offer in Compromise might be the better choice for you. Contacting the Law Offices Of Jeffrey B. Kahn, P.C. can help you in evaluating your options.
Effective January 1, 2014, the user fee charged by IRS to establish a payment plan has been increased from $105.00 to $120.00.
If you cannot pay all that you owe now and do not qualify for an offer in compromise, an IRS installment agreement may be your next best option. Payment Agreements allow you to pay IRS debt in full in smaller, more manageable amounts, usually in equal monthly payments. The amount of your installment payment will be based on the amount you owe and your ability to pay that amount within the time available to the IRS to collect tax debt from you. However, be aware that because you are financing your liability with IRS, interest and penalties will continue to accrue.
The IRS has different types of plan available and some even allow the IRS to refrain from filing a Federal Tax Lien which if filed would adversely effect your credit. Additionally, the IRS cannot levy against your property (1) while your request for a Payment Agreement is under consideration, (2) while your agreement is in effect, (3) for 30 days after your request for an agreement has been rejected, or (4) for any period while an appeal of the rejection is being evaluated by the IRS.
Most people do not have the necessary skills or knowledge of the IRS collection process to propose a payment plan that can meet IRS standards and be within a person’s budget.
The tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. have extensive experience with getting reasonable payment plans processed by the IRS for the lowest possible monthly payment and secure a final acceptance with IRS.
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