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Tax Levies and Property Exempt IRS Levy

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Introduction to Tax Levies

The IRS can be fairly aggressive when it comes to adverse collection action. The IRS uses certain tactics to usher taxpayer compliance and to reduce the size of balances that are owed on taxpayer accounts. Tax levies are one of these collection tactics. The general rule with tax levies is that the IRS can levy all property that belongs to the taxpayer in order to satisfy the outstanding obligation. However, certain property is exempt from an IRS levy and cannot be seized by the IRS.[1]

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Payment Plans: Partial Pay Installment Agreements

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Introduction to Partial Payment Plans

The IRS expects that taxpayer will pay any back taxes that are owed in full at the time that they are due or will get on a payment plan for the amount in question. However, the IRS does not like to wait long for funds and payment plans are generally granted only in circumstances where the taxpayer can set up a payment plan to pay the balance owed, plus applicable penalties and interest within five years or prior to the expiration of the Collection Statute Expiration Date (CSED), whichever is first. However, there are some instances where this is not possible and the IRS is forced to consider the alternative. In these instances, the IRS will sometimes consider a partial payment plan for the taxpayer.

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IRS Payment Plan Requests – Form 9465-FS

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Introduction to IRS Payment Plans and Form 9465-FS

There are numerous options available to a taxpayer trying to resolve a balance due with the IRS.[1] One of the more prevalent options is to work out an IRS payment plan to pay down the liability in installment payments. When a taxpayer sets up a payment plan, they agree to make a specified monthly payment over a set period of time based on their ability to pay (as calculated by the IRS). In exchange for the taxpayer entering into their IRS payment plan, the IRS agrees to hold off on any adverse collection activity, including wage garnishments or bank levies, for the life of the installment agreement. Taxpayers can make a request for a IRS payment plan by filing IRS Form 9465-FS with the IRS.

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IRS Interest Abatements

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Introduction to IRS Interest Abatements

Any balance due that is owed to the IRS government will continue accrue interest on the amount of the outstanding tax obligation. The interest rate is generally pretty low in comparison with other types of debt,[1] but over time the amount of interest can add up and turn a small liability into a sizeable one. Unfortunately there is not too much to be done about your liability accruing interest and it is simply the cost of doing business with the IRS. However, there are certain mitigating circumstances where a taxpayer is able to do an IRS interest abatement in order to avoid the accrual of interest on some or all of the liability. When an IRS interest abatement occurs then the interest on a balance due can be abated altogether or just specific periods of time can be excluded from the interest calculation.

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IRS Currently Non-Collectible Status

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Introduction to IRS Currently Non-Collectible Status

There are many ways to resolve a tax liability. You can set up a payment plan[1], attempt to settle a tax debt with an offer in compromise, or pay the balance that you owe in full. However, there are some instances where any amount of money would create an unfair economic hardship on the taxpayer. As a result, the IRS created a temporary hardship status known as IRS currently non-collectible status. This may be also referred to by the IRS or by tax practitioners as “CNC status” or 53ing an account (the code the IRS enters into the account to place it in it IRS currently non-collectible status. By placing an account in IRS currently non-collectible status, the IRS essentially halts all attempts at collection activity on an account until it feels that the taxpayer is ready to make payments again. IRS currently non-collectible status generally lasts anywhere from six months to over two years.

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Streamlined IRS Payment Plans

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Introduction to Streamlined IRS Payment Plans

One of the ways that you can resolve a liability is with an IRS payment plan. The IRS generally accepts payment plans when the taxpayer does not have sufficient assets available to pay their liability in full. Payment plans are seen as a method of compromise by the Service that the taxpayer to avoid any adverse collection activity (assuming they remain true to the conditions of the payment plan) while paying down their liability to the government. However, IRS payment plans can be difficult to negotiate, in part because the IRS usually requires a complicated financial statement on the part of the taxpayer. A little known trick to taxpayers though is that you are sometimes able to set up a payment plan and it is virtually guaranteed to be accepted without having to undergo much of the financial disclosures generally required by the IRS. These are known as streamlined IRS installment agreements or streamlined IRS payment plans.

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IRS Revenue Officers and Strategies for Dealing with Them – Part Five

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IRS Revenue Officers Tip # 6 – Knowing When to Get Tough

This is one of the most difficult things for me to advise you on how to do properly and effectively. Experience and knowledge of tax procedure have seasoned me throughout the years on when is an appropriate time to get tough with your revenue officer. The fact of the matter is that some revenue officers will try to take advantage of your weakened position and, if you let them, they will walk all over you. Some will go on a fishing expedition by requesting a ridiculous amount of documentation to substantiate the positions on your financial statement or for them to conduct their investigation. Some will take a hard line position by insisting on good faith payment amounts or monthly installment payment amounts that are too difficult for the taxpayer to meet without them suffering financial hardship.

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IRS Revenue Officers and Strategies for Dealing with Them – Part Four

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IRS Revenue Officers Tip #5 – Manage Your Expectations

One of my favorite IRS revenue officer sayings is that “the IRS is not a bank.” I find this slightly humorous in light of how many people have outstanding tax liabilities, but it also is a key takeaway about the mindset in which revenue officers approach their cases. IRS revenue officers are tasked with achieving the best possible resolution for the government, which means having the taxpayer satisfy their liability as soon as possible and/or squeezing as much money out of the taxpayer over the long run as they can without putting the taxpayer in financial hardship. Do not think for a second that they are going to sway from this purpose. In addition, revenue officers have a manager look over and approve all resolutions before they become final. If they slack in their job, they will hear about it from their managers.

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IRS Revenue Officers and Strategies for Dealing with Them – Part Three

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IRS Revenue Officers Tip #3 – Get on the Revenue Officer’s Good Side by Making Life Easy For Them

Whatever your occupation, there are just some people that we encounter over the course of our chosen professions that make life difficult for us. They may turn in things that are substandard and require a lot of your time to make right. They may require constant follow up in order to get the things that you have asked for or miss appointments or deadlines without notifying you in advance. You may be one of these people to someone else, but absolutely do not be that person to your revenue officer. Getting on the revenue officer’s bad side is never a good thing. They will be generally less inclined to give you the resolution you are seeking and will make interactions with them more stressful and more difficult for you.

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IRS Revenue Officers and Strategies for Dealing with Them – Part Two

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IRS Revenue Officers Tip #1 – Be Aggressive in Getting Everything Ready BEFORE the Revenue Officer Gets Involved.

There are two things that an IRS revenue officer judges themselves on when it comes to their own job performance: how much money they can collect toward the satisfaction of the liability and how fast they can close a case out. From the taxpayer standpoint, the most important objective other than a successful resolution to your account is to get them out of your life as soon as possible. No one likes the IRS looking over their shoulder and the longer that they linger than the more opportunity exists for them to make your life miserable. So do not let them.

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