Notice of Levy, Payroll

[geekgirldany]

Client received a Notice to Levy dated 11/15/12. Previous to him bringing this by he brought a letter from ACS stating that he owes $3,100 for 941s tax dated back to 2009. Date on letter is 07/12/12 and he brought it to me two weeks ago. He is a new client that started with my in March 2012. He said he did not have any payroll/employees at that time. The prior accountant filled out the "You have not filed 941" letters and mailed them into the IRS for these years.

I have a few questions:

Since the client said he did not have employees during this time, prior accountant responded to letters, can the IRS do substitute 941 returns for those time periods?

The bank listed on the Notice to Levy is not the client's bank. It is in another state. Will AC ask me for his current banking info?


Not sure what is going on. I've never seen a notice like this when the letters were responded to in regards to missing 941 forms. The Federal ID is correct and I am now doing the client's payroll/bookkeeping.

Would appreciate any help.
Dany

[Snaggletooth]

Ye Olde "Ignore" Strategy

Yes, ignore IRS letters and they will go away, right? Did your client think nothing would happen if he ignored the letter from July?

It sounds like you inherited a mess from the prior tax preparer. Give the client the option of straightening this mess out with his former preparer, or paying you a fortune to straighten it out. Client probably doesn't want to return to his old preparer because he has switched to you. But that preparer is still on the hook for this mess, or at least to clear it up. You may also find out that the old preparer may have been working with a difficult client. Maybe, maybe not.

I'm assuming client can bring you his copies of old 941s for the time period involved. If he can't, you have little chance of clearing this mess up. The notice(s) will probably set forth three amounts that they think the client owes: (i) tax (ii) penalty (iii) interest. You will have to understand how they arrived at (i)tax if it is not obvious from the notice(s). This will probably involve a Power of Attorney and a conversation between yourself and IRS. He says he didn't have employees, but I'll bet you will find 941s if you get to the bottom of this.

I'm not advocating a Draconian Fee for helping this guy, but it should be large enough to get his attention and impress upon him how expensive it can become for ignoring problems and letting them get into such a mess.

[geekgirldany]

I really don't understand how people can let things like letters from the IRS go.
It looks like the IRS uses code section 6020(b) to file payroll returns for non-filers. I will just have to find out when I call.

I will give him the option to returning to old accountant. It is only right that I charge because I wasn't doing his payroll then. I believe he thinks I will not charge.

[JohnH]

I believe he thinks I will not charge.

You need to get that misconception cleared up right away.

[Golden Rocket]

New Clients

I get new clients every year and am thankful for them. In most cases, we forge a good relationship and do the best we can to reduce their tax liabilities. Sometimes the methods and procedures are obviously an improvement over what they have been getting, and sometimes they leave their "old" tax preparer for a variety of different reasons.

Sometimes a new client will come and indicate extreme dissatisfaction with his previous preparer. And sometimes his dissatisfaction is well-founded. But as often as not, after working with the client for awhile it becomes obvious why he had problems with his previous preparer. I have even seen books where the previous preparer had not been paid. In such cases, I'm sure the previous preparer lost this client and was glad to be finished with him.

This doesn't have to be the case with the GeekGirl's new client, but wouldn't surprise me.

[John of PA]

Another angle on this: If this may turn out to be a good long-term client, it may be worth helping them out for free, they will always remember how you helped them out and may not be as resistant to your billings going forward. Think of it was a sort of buying a client, or investing in a client. It's a judgement call as to whether this is such a type of client or not.

[ChEAr$]

Another angle on this: If this may turn out to be a good long-term client, it may be worth helping them out for free, they will always remember how you helped them out and may not be as resistant to your billings going forward. Think of it was a sort of buying a client, or investing in a client. It's a judgement call as to whether this is such a type of client or not.

"for free"???? Bite your tongue, John. LOL Once the stage is set for freebies, clients come to expect many more.

IOW, always charge something, even if less than usual.

[Jiggers]

"for free"???? Bite your tongue, John. LOL Once the stage is set for freebies, clients come to expect many more.

IOW, always charge something, even if less than usual.

Absolutely. If your client performed a service for you, would he do it for free? You know the answer.

My dentist doesn't. My insurance agent doesn't. The convenience store that I visit doesn't. My barber doesn't. My A/C serviceman doesn't. All clients.

You get the idea.

[John of PA]

OK, you should not give away your service for free, not even as advertising or PR. Do you read this THE TAX BOOK. Start charging by the click for this message board, according to the 2 above post, one should not be doing anything for free, even as a gester of goodwill for a good future relationship. Also lets start sending each other a bill for our advice to each other. I'm trying to make a point, so I'll just end by saying Happy Thanksgiving to all. Perhaps we just take issues like this on a case by case basis.

[geekgirldany]

If it had not gone to ACS I would not had charge him for it because all it would be is responding to letters. When I have to pickup the phone to call the IRS I have to charge. I do not charge long time clients though for responding to notices as I include this in their tax return fee.

Client's old accountant moved to a suburb of Atlanta and he said it was getting to far to drive every month. So that is why he came to me.... so he says. He could be difficult client. So far it has been okay other than a few remarks.

I'll let you know how it turns out. I am suppose to meet him today.

[geekgirldany]

Currently on hold with ACS with regards to the client in the post. I now have another one that did not pick up a notice about payroll forms not being filed and a lien has been brought against him. He has not received the Notice of Levy yet, a tax resloultion company called wanting to work with him.

When will people learn to pay attention to letters from the IRS.

[smithtax]

Attention Needed

TP is in trouble. Snaggletooth is correct. This will NOT go away. TP needs to understand that there will be representation fees to alleviate his situation. Get a sizable retainer up front. Otherwise there is risk of non-payment.

I do very little "no-charge" representation work. The taxpayers I commonly see are those who either did something they shouldn't have, or didn't do something they should have. In any case, they need your experience and knowledge to resolve the underlying issue(s).

After depositing TP's retainer check, get a POA and use E-Services to 'pull down' Account Transcripts for 2009-2012. Copies of 941s from TP would be nice to have, but not absolutely necessary. TC Code 150 appears for both original and SFR returns, so you will have to ask ACS to clarify, but at least you'll know IF a return has been posted.

The IRS can, and will, prepare substitute returns per §6020(b); however, TP is allowed to submit "replacement" returns since original returns were never received. An SFR is NOT an original return.

ACS will probably want to see bank statements to verify zero "replacement" returns. Be prepared for that.

I'm assuming the $3,100 relates to 941s TP submitted and actually owes(?). If so, and if TP cannot pay in full, an IBTF Express IA is available, and automatic, for 24 months if the amount owed is less than $10K. No CIS, and no lien. (IRM 5.14.5.4).

Was the 'notice to levy' IRS Notice CP504, Form 668-A, Ltr 1058?

If CP504 the levy only applies to state refunds. Bank account will not be affected.

If 668-A, the account has been assigned to an RO and you can negotiate with him/her. But since it's not TP's account, I wouldn't worry. As previously stated, a SIA will resolve this problem. Did I mention no CIS is required?

If 1058 you only have until December 15th to file a CDP (12153), and you really need to do this.

[geekgirldany]

Thanks for all the information.

The notice received was a Form 8519. Transcripts show a Code 150 but ACS said they were original returns.

[smithtax]

Choices

Form 8519 is the same as Form 668-A. Although both can be issued by ACS, normally it's the 8519 that ACS uses.

You didn't ask, so you may already be aware there are basically two ways to resolve the issues. It's too late for a CDP. So....

1) Ask for an administrative hearing (oftentimes referred to as an Equivalent Hearing) using Form 12153. Make sure you check the appropriate box for the EH.
Additionally, the EH can only be requested if submitted within 1 year of a either a NTFL or NITL. The transcript(s) will provide the issue date of a NTFL or NITL.
The EH will suspend any future adverse collection activity and offer you a meeting with Appeals. There are two reasons I prefer Appeals. One, an AO has much more technical experience and knowlege than ACS, AND he/she has the authority to resolve on the spot. Two, it delays the process. The case will sit in "queue" for at least 4-6 months before assignment to an AO. This would be helpful if replacement returns need to be prepared, then processed and posted before TP is fully compliant, which is a requirement for an IA. More importantly, it also helps if TP needs more time to arrange his financial affairs for eventual payment (IA or full pay).

2) Propose an IA with ACS. Any pending installment agreement will also suspend collection activity (Reg. 301.6331-4). This is also the only way to prevent any
subsequent levies if 1 year has passed since either the NTFL or NITL. ACS will work with you for any replacement returns.

Good luck! This kind of stuff is fun!

[geekgirldany]

I suppose it could be fun

Thank you for the detailed information. I have not received any payment yet for the representation work and have not heard from the client since my last phone call.
ACS rep said that if they could get all the back tax returns then they would more than likely cancel the levy. I wanted to have it all finished this week but client never called me back.

So, I guess I'll see where it goes.

Thanks again
Dany