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What is the Taxpayer Advocate?

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The Taxpayer Advocate helps taxpayers resolve problems with the IRS. The Taxpayer Advocate also recommends changes to help prevent problems in the future. The advocate handles those tax problems that are causing significant financial difficulty; when you or your business are facing immediate, adverse threat; and when you have tried to contact the IRS repeatedly to no avail. The Taxpayer Advocate is a member of the Taxpayer Advocate Service (TAS).

Key Takeaways

  • The mission of the Taxpayer Advocate Service is to help taxpayers resolve their tax problems and recommend changes to help prevent future tax problems.
  • You must qualify to receive help through the Taxpayer Advocate Service. The next section outlines the eligibility requirements of the service.
  • The Taxpayer Advocate Service is a free service. The assistance is tailored to meet each taxpayer’s need and it is available for businesses as well as individuals. Each state houses at least one Taxpayer Advocate.

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IRS Taxpayer Advocate – What it Does

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The IRS Taxpayer Advocate helps taxpayers resolve problems with the IRS. The Taxpayer Advocate also recommends changes to help prevent problems in the future. The Taxpayer Advocate handles those issues when the tax problem is causing significant financial difficulty; when you or your business are facing immediate, adverse threat; and when you have tried to contact the IRS repeatedly to no avail.

Key Takeaways

  • The IRS Taxpayer Advocate helps taxpayers resolve problems with the IRS. The Taxpayer Advocate also recommends changes to help prevent problems in the future.
  • The IRS Taxpayer Advocate will particularly help you if the IRS has failed to respond by the date promised.
  • It is important to note that the IRS Taxpayer Advocate will not handle all of your problems or attempt to resolve all of your difficulties.

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Who Qualifies for Legal Aid – Part One

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A list of free legal clinics is available on your local and state Bar Association website and through Volunteer Attorney programming. Local entities also offer neighborhood legal services and legal aid clinics. In addition, university law programs offer free legal aid. Consult your local websites and universities for more information. In general, qualifying for free legal aid is based upon a number of factors related to income, health status, safety, location, and civil and/or criminal issues. The following sections provide insight into those categories that are specific to qualifying for legal aid.

Key Takeaways

  • A list of free legal clinics is available on your local and state Bar Association website and through Volunteer Attorney programming. Local entities also offer neighborhood legal services and legal aid clinics.
  • If you have been accused of a crime, you may qualify for legal aid. You may be eligible to receive legal services from a court-appointed attorney or public defender.
  • If you are poor or needy, as defined by the appropriate court, you may qualify for “indigent representation.” “Under indigent representation, you may have to partially reimburse the court for the cost of legal services given to you” (HireALawyer.com, FindLaw.

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Who Qualifies for IRS Legal Aid?

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Click here for the previous section about legal aid.

Disabled Veteran Status

If you are a disabled veteran, you may qualify for free IRS legal aid. Eligibility is based upon issues that may range from rental assistance to child visitation matters. To determine if you are eligible, contact your local veterans association. The association will help you to determine if you or a member of your household qualifies for a number of services and free legal aid.

Key Takeaways

  • If you are a disabled veteran, you may qualify for free IRS legal aid. Eligibility is based upon issues that may range from rental assistance to child visitation matters. To determine if you are eligible, contact your local veterans association.
  • Most agencies and organizations offer free IRS legal aid services to immigrants and noncitizens that need help with visa applications, green cards, deportation proceedings, and work authorizations (“Do You Qualify for Free Legal Aid?”).
  • You may be eligible to receive free IRS legal aid if your issue falls under civil rights, or lack thereof.

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S Corporation Reasonable Compensation

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Brotman Law

There are categories of business entities responsible for paying shareholder-employee reasonable compensation. An S Corporation[1] is one such corporation. An S Corporation is defined as a type of corporation that elects to be taxed under a section of the U.S. Internal Revenue Code. “S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation before non-wage distributions may be made to the shareholder-employee” (IRS.gov, “S Corporation Compensation and Medical Insurance Issues,” 8/31/2013). The shareholder cannot receive an amount of S Corporation reasonable compensation that exceeds the amount the shareholder receives either directly or indirectly.

Key Takeaways

  • There are categories of business entities responsible for paying shareholder-employee reasonable compensation.
  • The IRS bases provisions with regard to S Corporations on multiple court cases.
  • Determining S Corporation reasonable compensation must first be established by evaluating what the shareholder-employee did for the S corporation.

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IRS Innocent Spouse Relief Rules

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Divorce Tax

This article discusses the IRS innocent spouse relief rules. When couples file jointly, the law makes both parties responsible for the entire tax liability. Under tax law, this is called joint and several liability,[1] which is defined as two or more persons who share responsibility with respect to the same liability (i.e., event or act).

Key Takeaways

  • This article discusses the IRS innocent spouse relief rules. When couples file jointly, the law makes both parties responsible for the entire tax liability.
  • With this in mind, the IRS innocent spouse relief rules include both the time to file and reference collection activities.
  • The first of the IRS innocent spouse relief rules governing tax liability awareness is determined by the IRS “examining your return and proposing to increase your tax liability” and the second way is the IRS sending you a notice (“Instructions for Form 8857”).

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IRS Innocent Spouse Relief Requirements

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IRS audit defense guide — Brotman Law

IRS Innocent Spouse Relief Requirements – What is Innocent Spouse Relief?

You and your spouse are jointly responsible for paying federal tax due, interest accrued, and any applicable penalties under the IRS innocent spouse relief requirements. This is especially true if you and your spouse filed a joint return. However, if you believe that your current or former spouse should be solely responsible for a particular item or the underpayment of tax on the joint tax return, then you may be eligible for Innocent Spouse Relief.

Key Takeaways

  • You and your spouse are jointly responsible for paying federal tax due, interest accrued, and any applicable penalties under the IRS innocent spouse relief requirements. This is especially true if you and your spouse filed a joint return.
  • Taxpayers that have filed a joint return may qualify for Innocent Spouse Relief if they meet all three conditions as outlined in Publication 971, Innocent Spouse Relief.
  • Within this context, understated tax refers to the determination of the IRS “that your total tax should be more than the amount that was actually shown on your return” (IRS.gov, “Publication 971,” 8/26/2013).

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IRS National Standards

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IRS National Standards

The IRS has developed IRS national standards as guides for taxpayers responsible for resolving their tax liabilities. The IRS national standards (or IRS Collection Financial Standards) are defined as five categories of necessary expenses developed and used by the IRS to calculate a taxpayer’s payment potential. The standards are used for the purpose of calculating repayment of federal tax liability. “IRS National standards have been established for five necessary expenses: food, housekeeping supplies, apparel and services, personal care products and services, and miscellaneous” (IRS.gov, “IRSNational Standards: Food, Clothing and Other Items,” 8/25/2013). For example, under the category of food, the IRS allows for calculations of both food at home and food away from home. “Food at home refers to the total expenditures for food from grocery stores or other food stores. . . . Food away from home includes all meals and snacks, including tips, at fast-food, take out, delivery and full-service restaurants” (“National Standards: Food, Clothing and Other Items”).

Key Takeaways

  • The IRS has developed IRS national standards as guides for taxpayers responsible for resolving their tax liabilities.
  • The IRS allows taxpayers to calculate their respective IRS national standards by family size.
  • The IRS Collection Financial Standards are also extended to local territories.

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Income and Expense Table and Future Income

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The IRS Income Expense Table

Key Takeaways

  • The IRS Income Expense Table
  • Future Income Potential
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Similar to the asset/equity table, the IRS income and expense table (IET) outlines necessary living expenses, where the taxpayer lists both total income and expenses. The IRS income and expense table is divided into two major categories where the taxpayer eventually calculates the net difference multiplied by one or more amounts to get to “amount that could be paid from future income” (IRS.gov, “Income and Expense Table,” 8/25/2013).

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IRS Offer in Compromise Rules

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IRS Offer in Compromise Rules – Salability of Assets

Salability, or marketability, is defined in terms of liquidity, “the ability to quickly convert property to cash or pay a liability” (IRS.gov, “Discount for Lack of Marketability: Job Aid for IRS Valuation Professionals, September 25, 2009, page 5” 8/25/2013). Under the IRS offer in compromise rules, liquidity is essentially the ability to convert an asset into cash without losing the principal. Conversion is not only specific to the term asset; it may include business, business ownership interest, and/or security.

Key Takeaways

  • IRS Offer in Compromise Rules – Salability of Assets
  • IRS Offer in Compromise Rules – Current Assets: Cash and Cash Equivalents
  • IRS Offer in Compromise Rules – Monthly Cash Flow

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Brotman Law Featured in Inc. Magazine - Fastest Growing Law Firm in California