Notice of Lein

[erchess]

Taxpayer was at one time making a good income and paying his taxes. Then he came down with health problems severe enough he went on Social Security Disability. He never filed for the year he got sick and he definitely does owe the tax. I am trying to negotiate Currently Not Collectible Status since he is indeed living on nothing but Social Security at this point. The last contact we had with the IRS was with a lady who approved CNC but said she had to get her decision approved by higher levels and that they would be in touch. I guess it's been about six weeks and we get this notice of Lien on his home. We had been told that would happen so my question is do I or do I not need to appeal the Lien, and if so, do I want a Collection Due Process Hearing or a Collection Appeals Process Hearing?

[ChEAr$]

Nothing to do. IRS can and will file a lien in CNC cases. They must preserve their interests.
This is not to say that they will levy on the home however.

[taxea]

Have you called for an update? Until it comes through...is your client on an installment agreement?

[appelman]

You want to be careful about CNC's.

For the next 10 years the IRS will glom onto everything that comes their way. I've had at least one client who would have been much better off in the long run if he had made an offer in compromise.

[erchess]

Answers

We have not called for an update. I will do that on Monday.

This taxpayer subsists on nothing but disability social security and he does not have the money for an installment agreement. He has mental problems that all but keep him cooped up in his home and make him spend all his money and time keeping himself and his home clean. He has had a recurrence of his cancer and has in all probability a short remaining life span. He's not going to see an increase in his income.

[erchess]

health update

The tumor they found turned out to be smaller than expected and non malignant so while it does need to come out it isn't a life threatening condition.

Now an OIC is starting to look like a better option but given that he owns outright a house worth slightly more than the debt, would an OIC be approved? His credit is so bad there's no way he can get a loan on the house or pay it off if he got it.

[ChEAr$]

The tumor they found turned out to be smaller than expected and non malignant so while it does need to come out it isn't a life threatening condition.

Now an OIC is starting to look like a better option but given that he owns outright a house worth slightly more than the debt, would an OIC be approved? His credit is so bad there's no way he can get a loan on the house or pay it off if he got it.

An OIC is accepted when IRS believes it can get more this way than simply classifying the debt as CNC.

They so not as a matter of course take a person's house and toss him out on the street.

However... what on earth does he have to even offer IRS?

[Gretel]

Taxpayer was at one time making a good income and paying his taxes. Then he came down with health problems severe enough he went on Social Security Disability. He never filed for the year he got sick and he definitely does owe the tax. I am trying to negotiate Currently Not Collectible Status since he is indeed living on nothing but Social Security at this point. The last contact we had with the IRS was with a lady who approved CNC but said she had to get her decision approved by higher levels and that they would be in touch. I guess it's been about six weeks and we get this notice of Lien on his home. We had been told that would happen so my question is do I or do I not need to appeal the Lien, and if so, do I want a Collection Due Process Hearing or a Collection Appeals Process Hearing?

To preserve your clients options and rights it is always advisable to appeal and ask for a CAP hearing. If it is then not necessary all the better. I just went through this with my client being on disability SS and the IRS dragged their feet terribly. I did not do the appeals (several years of tax returns) but now know better. I also now would prefer to take CAP route only instead of getting so very much frustrated with the collection department at the IRS.

[taxea]

i THOUGHT YHOU HAD TO GO THROUGH EACH STEP TO SHOW IT WASON'T POSSIBLE for the client to comply before you could take it to a higher step. They won't consider an OIC, which takes time unless the TP has an installment in place or has shown he can't even pay installments.

sorry for the caps...

[appelman]

Part of the OIC application process

Wouldn't that be part of the OIC application process?

[OtisMozzetti]

he owns outright a house

...but given that he owns outright a house worth slightly more than the debt, would an OIC be approved? His credit is so bad there's no way he can get a loan on the house or pay it off if he got it.

Am I correct that the residence house is not part of his "reasonable collection potential" if an OIC were processed? It makes sense to me that the IRS has a lien because they deserve first claim before anyone else could inherit or buy the house. I doubt whether he wants to see it happen, but maybe the compromise offer could consist of selling the house and paying the IRS some part of the sale proceeds. He might be able to go live with relatives or friends or else use his share of the home sale proceeds to help pay rent.

I am EA in California, but the above reflects only my reaction to what I hear, not any particular experience with this situation.

[Gretel]

i THOUGHT YHOU HAD TO GO THROUGH EACH STEP TO SHOW IT WASON'T POSSIBLE for the client to comply before you could take it to a higher step. They won't consider an OIC, which takes time unless the TP has an installment in place or has shown he can't even pay installments.

sorry for the caps...

I am not sure myself, but here is what I understand: In any case it is better to request a CAP hearing. Once IRS has received this they can no longer levy. Whereas when you deal with the collection department and they do not process in time it can happen that they levy (even though they shouldn't if it is their fault) and it is almost impossible to have them reverse if it is a bank account. Been there, done that. TAS finally helped. Not to say that IRS never will levy if CAP request is filed but then it is clear that they are in the wrong.

The question still remains, if one can just wait for CAP hearing or has to deal with collection department first or as well.

[taxea]

I am not sure myself, but here is what I understand: In any case it is better to request a CAP hearing. Once IRS has received this they can no longer levy. Whereas when you deal with the collection department and they do not process in time it can happen that they levy (even though they shouldn't if it is their fault) and it is almost impossible to have them reverse if it is a bank account. Been there, done that. TAS finally helped. Not to say that IRS never will levy if CAP request is filed but then it is clear that they are in the wrong.

The question still remains, if one can just wait for CAP hearing or has to deal with collection department first or as well.

Mahalo, Gretel....what I meant was the installment agreement will stop a levy and give one time to do the OIC or whatever really needs to be done. A financial statement could also prove inability to pay.

[erchess]

Financial Statement

I sent in one of those due to the fact they asked for it when I asked on the phone for CNC status.

[erchess]

CNC Approved

I have been told on the phone that CNC is approved. Do I need to press for that in writing and if so whom do I press?

The best news is he has only a non malignant tumor and has been told that while it ought to come out it is not life threatening. Remember he's retired on disability social security as his only income and he is emotionally ill.

I would also appreciate arguments about whether to appeal the lien remembering that he has no resources with which to go for an IA nor anything to Offer in Compromise. (Can we do an OIC for nothing when he does own outright a shack that he bought for $30k [that is a little more than the debt amount] in 2004?)