April 25, 2012

Backlog Of Offers In Compromise

The IRS faces a 28% increase in the number of requests for Offers In Compromise. The requests by Californians and others behind in their tax payments to pay "pennies on the dollar" has reached almost 60,000 for 2011 when the data was last analyzed.

Why are Offers up? In part the struggling U.S. economy is responsible, and in part it’s the IRS’ own doing. Since the National Taxpayer Advocate labeled the offers in compromise program as one of the most serious problems facing taxpayers from 2001 through 2009, the IRS has been trying to improve and promote the program. It made the OIC form (Form 656) simpler, created a YouTube informational video and began a “streamlined” process for taxpayers with incomes of $100,000 or less and liabilities of $50,000 or less to make deals. A “Fresh Start” initiative is also bringing in more taxpayers to the OIC program.

At the end of last month, the U.S. Treasury published a report entitled "Increasing Requests for Offers in Compromise Have Created Inventory Backlogs and Delayed Responses to Taxpayers" which is available by clicking here.

Forbes Online also has a good explanation of what's going on at the IRS with regard to the OICs which is available at this link.

Get help from a tax attorney. Call Mitchell A. Port at (310) 559-5259.

April 20, 2012

Power of Attorney

When Is a Power of Attorney Not Required?

A power of attorney is not required in some situations when dealing with the IRS. The following situations do not require a power of attorney.

Representing a taxpayer through a nonwritten consent.

Allowing the IRS to discuss return information with a third party designee.

Allowing a tax matters partner or person (TMP) to perform acts for the partnership.

Providing information to the IRS.

Allowing the IRS to discuss return information with a fiduciary.

Authorizing the disclosure of tax return information through Form 8821.

Providing information to the IRS. If you are merely providing information to the IRS at the request of the IRS, a power of attorney is not required.

Disclosure of tax return information. You do not have to file a power of attorney to authorize the IRS to discuss and provide specific confidential tax return information to any organization you designate through the use of Form 8821, partnership, corporation, firm, trust, or individual. You may file your own tax information authorization without using Form 8821, but it must include all the information that is requested on the form.

Form 8821 is strictly a disclosure authorization form and cannot be used to designate an individual to represent you. If you want to name a representative, you should use
Form 2848.

With a Federal tax matters, like income or payroll taxes, you have the right to represent yourself or have someone represent you before the IRS. If you want someone to represent you before the IRS file form 2848, Power of Attorney and Declaration of Representative, with the IRS office where you want your representative to act for you. The most recent form has been revised as of March, 2012. Your representative must be a person authorized to practice before the Internal Revenue Service; I am an authorized representative. Your signature on Form 2848 allows the individual or individuals named to represent you before the IRS and to receive your tax information.

Call for proper representation. Call for a free phone consultation. Speak with Mitchell A. Port at (310) 559-5259.

April 9, 2012

The Tax Court

The United States Tax Court is a court established by Congress under the Constitution. When the Internal Revenue Service has determined a tax deficiency and has sent the notorious 90-day letter, the so-called Notice of Deficiency, you may dispute the deficiency in the Tax Court before paying any disputed amount.

The Tax Court’s jurisdiction also includes the authority to order abatement of interest, award administrative and litigation costs, review certain collection actions, determine relief from joint and several liability on a joint return, redetermine worker classification, adjust partnership items, redetermine transferee liability, make certain types of declaratory judgments, and review awards to whistleblowers who provide information to the Commissioner of Internal Revenue.

The U.S. president appoints all 19 Tax Court judges. Trials are conducted and other work of the Court is performed by those judges. All of the judges have expertise in the tax laws and apply that expertise in a manner to ensure that you are assessed only what they owe, and no more. The main Court is in Washington, D.C., while the judges travel all over the country to conduct trials in various designated cities such as Los Angeles, San Francisco, San Diego and Fresno (where only small tax cases are heard).

DO NOT miss the filing deadline to start a case in the Tax Court. File your petition early. The Court cannot extend the time for filing which is set by law.

A $60 filing fee must be paid when the petition is filed. Once the petition is filed, payment of the underlying tax ordinarily is postponed until the case has been decided. Keep in mind that interest and some penalties continue to run while your Tax Court case is pending.

If you don’t think you’ll ever appeal your case beyond the Tax Court, then consider using the Court's simplified small tax case procedure. Trials in small tax cases generally are less formal and result in a speedier disposition. In certain tax disputes involving $50,000 or less, you may elect to have your case conducted using this procedure.

Cases are calendared for trial as soon as practicable (on a first in/ first out basis) after the case becomes at issue. When a case is calendared, the parties are notified by the Court of the date, time, and place of trial. Trials are conducted before one judge, without a jury, and you are permitted to represent yourself if you desire. Taxpayers may be represented by practitioners admitted to the bar of the Tax Court.

Most cases are settled by mutual agreement without the necessity of a trial. However, if a trial is conducted, a report is usually issued by the presiding judge laying out findings of fact and an opinion. The case is then closed.

Speak with a tax attorney about your rights in the Tax Court. Call Mitchell A. Port at (310) 559-5259.