Tax Seminar #3 – December 3 2012

Under New Rules, the IRS Will Now Remove the Lien
So, has the IRS truly taken action to
reduce lien filings in IR-2011-20? Probably
not, because existing policy generally would
not have the IRS placing liens on taxpayers
entering into streamlined installment agreements.
Actually, for this group of taxpayers
(those owing less than $25,000 and entering
into a streamlined agreement), the requirements
to avoid a lien may have been
increased by the requirement for a DDIA.
Will the IRS now routinely assert liens for
those owing less than $25,000 who enter
into an SIA if a DDIA is not elected? The
answer is currently unknown to the public.
Who gets the biggest benefit from the
new rules? In my mind, it is those who were
not getting into a streamlined installment
agreement and being unresponsive to the
IRS. Such unresponsiveness would have led
to the IRS placement of the lien upon the
taxpayer. Under the new rules, the IRS will
now remove the lien when the taxpayer enters
into an SIA/DIA and gets through the
probationary period. Previously, the removal
of the lien prior to full payment was virtually
impossible.
2. “Making it easier for taxpayers to
obtain lien withdrawals after paying a tax
bill.”
No specifics were mentioned here.
Currently, it is not particularly difficult to
secure a lien withdrawal after payment. Such
can be done at walk-in centers if timing is
pressing or through a centralized lien hotline.
Will the IRS really make it easier? That
remains to be seen.
3. “Withdrawing liens in most cases
where a taxpayer enters into a Direct Debit
Installment Agreement.”
See the discussion in sections A and B
above. And, even if this is true, the IRS is
getting a bigger benefit through the increase
in the rate of compliance of those entering
into DDIAs as compared to those who enter
into an agreement to, hopefully, mail in the
check each month.
4. “Creating easier access to Installment
Agreement for more struggling small
businesses.”
See discussion in section B above.
5. “Expanding a streamlined Offer in
Compromise program to cover more taxpayers.”
IR-2011-20 goes further, stating
that the IRS is expanding the availability
of streamlined offer in compromises
(OIC) to taxpayers with annual income
of up to $100,000 and those owing up to
$50,000 (doubled from the previous limit
of $25,000). There is just one catch here.
I haven’t found anyone who understands
how a “streamlined” OIC program is different
from the normal Offer in Compromise
system. When one searches “streamlined
Offer in Compromise” on the IRS Web site,
the only entry that comes up is IR-2011-20!
Also, the concept of a streamlined OIC is
not mentioned in the OIC regulations under
§7122.
Revised: Form 12153, Request for a Collection
Due Process or Equivalent Hearing
For the first time since 2006, the IRS has
revised form 12153, Request for a Collection
Due Process or Equivalent Hearing.
The form, now available on www.irs.gov, requests
more information from the Taxpayer
and provides much better guidance on the
use of the form. Kudos to the IRS on providing
very helpful information as to when
and where to file the form. Also, very specific
information is provided to assist taxpayers
on what takes place in a Collection Due
Process (CDP) hearing and what issues can
be addressed in such hearings. The following
changes have been made to the form itself:
n Separate contact information is requested
for the taxpayer and spouse.
n The form now has language encouraging
the submission of financial disclosure
information (forms 433A and 433B) if a
taxpayer wants to discuss collection alternatives.
It should be noted that the IRS will
not allow the transfer of a case from a Service
Center Appeals office unless such financial
disclosure forms are provided in advance.
n The form makes it clear that you
must provide a reason for your dispute and
that failure to do so will result in your request
for a CDP hearing not being honored.
The instructions provide an entire page of
examples of reasons.
n A new box has been added to designate
that the CDP hearing will be held with
one’s representative.
n The instructions make it very clear
that liens may be filed during the pendency
of a CDP regarding a proposed levy action.
157
As a side note, at press-time, the IRS
had nine sections on the form, numbered 1
through 8 (two items marked #5).
E. Martin Davidoff, CPA, Esq., is a sole proprietor
in Dayton, N.J., with more than 30 years
experience practicing as a CPA and tax attorney.
He founded the IRS Tax Liaison Committee of
the American Association of Attorney-CPAs and
is a past president of the AAA-CPA. Contact him
at emd@taxattorneycpa.com.
REVIEW QUESTION
True or False? Form 12153 has
CPA TAX
UNIVERSITY
been revised to include language
that encourages including forms
433A and 433B if a taxpayer wants to discuss
collection alternatives.
Answer: True
The form now has language encouraging the submission
of financial disclosure information (forms 433A and 433B)
if a taxpayer wants to discuss collection alternatives. It
should be noted that the IRS will not allow the transfer
of a case from a Service Center Appeals office unless such
financial disclosure forms are provided in advance.
By Practicing CPAs ... For Practicing CPAs APRIL/MAY 2011 I 7