A Bold Plan - Unethical??

[DaveinTexas]

Solvency not an issue with a DATL

These last few suggestions may really be helpful. For example, I didn't even know there was such a
thing as a "stakeholder liaison." Filing a DATL may get their attention as well, although if the taxpayer
is solvent it would probably serve as a device only.

Good suggestions.

You don't worry about solvency when submitting a DATL offer. You are challenging the existence (accuracy) of the assessment, not offering less than what has been assessed due to the taxpayer's inability to pay. You could even mention in the Offer that the taxpayer is willing to Full Pay the "correct tax assessment" within 120 days or less. What will most likely happen is the Offer will be turned over to the Audit Recon but it will stop collection activity.

From the IRM:
"8.23.3.10 (10-15-2014)
Consideration of Doubt as to Liability (DATL) Offers

You will make an independent determination regarding any offers. A DATL offer will generally be evaluated by you in the same manner as an audit reconsideration case. You should consider the facts and law as well as the hazards of litigation in determining the degree of doubt as to the liability."

Also from the IRM:
"4.18.1.3 (01-07-2011)
Classification and Screening Procedures
DATL offers submitted without any consideration (zero dollar amount offered) should not be considered processable as an offer in compromise. The taxpayer should be advised to amend the offer to reflect what the taxpayer believes to be the correct liability. If the taxpayer does not amend or withdraw the offer, the request may be considered as an audit reconsideration or informal claim, but may not be considered as an offer in compromise.

Note: The taxpayer should generally pay the tax and file a claim (or request an audit reconsideration) rather than submit an OIC if the liability in question originated from an examination assessment. However, this should not be used as the basis for returning or rejecting an offer."

So, in summary, the DATL will stop collection (aggressive move) and so might the Audit Recon (less aggressive) but there is no guarantee. You could submit the DATL with an Offer to full pay the correct amount of tax (send along the proper Schedules/Worksheets to determine the correct amount of tax). The safest approach may be to submit an Installment Agreement for the lowest allowable payment while the Offer or Recon is in process. This isn't an admission of guilt but merely a method to stave off aggressive collection activity from the IRS.

Good luck Mr. Frog.

[Bees Knees]

Getting back to the original post, there is a simple reason why the idea won't work, and it has nothing to do with ethics. Claiming an erroneous amount as an estimated tax payment will get immediately rejected under their computer matching program. As a result, tax will be increased by the erroneous amount, and now you have two tax bills to deal with. The original CP2000 and the erroneous estimated tax payment that was claimed on the return.

The bottom line is IRS does not have to process an Amended Return, period. They can, and do ignore Amended Returns at will. Your only recourse, if all IRS calls, letters, appeals, etc. fail is going to Court. Pay the tax and file a lawsuit against IRS. At least by paying the IRS the amount they claim is owed, you get them off your back and stop more interest, penalties, and any levy action they might take. Let the Court make IRS pay all that back, plus attorney fees you incur to defend yourself against incompetent IRS employees. Make sure you file in District Court, as they are much nicer to taxpayers than Tax Court.

[DaveinTexas]

Tax Court......$$$$$

Getting back to the original post, there is a simple reason why the idea won't work, and it has nothing to do with ethics. Claiming an erroneous amount as an estimated tax payment will get immediately rejected under their computer matching program. As a result, tax will be increased by the erroneous amount, and now you have two tax bills to deal with. The original CP2000 and the erroneous estimated tax payment that was claimed on the return.

The bottom line is IRS does not have to process an Amended Return, period. They can, and do ignore Amended Returns at will. Your only recourse, if all IRS calls, letters, appeals, etc. fail is going to Court. Pay the tax and file a lawsuit against IRS. At least by paying the IRS the amount they claim is owed, you get them off your back and stop more interest, penalties, and any levy action they might take. Let the Court make IRS pay all that back, plus attorney fees you incur to defend yourself against incompetent IRS employees. Make sure you file in District Court, as they are much nicer to taxpayers than Tax Court.

Bees, I think the original balance due is $1,800 or so. To go to Tax Court, the last time I checked with an Tax Attorney, would cost the client a $5,000 to $10,000 retainer. That is unless you can find someone who is licensed to practice before the Tax Court (USTC Practitioner) who is willing to do it pro-bono to gain some experience. Surely there must be a less costly approach, and I am not calling you Shirley.

[Corduroy Frog]

Distinction

Getting back to the original post, there is a simple reason why the idea won't work, and it has nothing to do with ethics. Claiming an erroneous amount as an estimated tax payment will get immediately rejected under their computer matching program. As a result, tax will be increased by the erroneous amount, and now you have two tax bills to deal with. The original CP2000 and the erroneous estimated tax payment that was claimed on the return.

The bottom line is IRS does not have to process an Amended Return, period. They can, and do ignore Amended Returns at will. Your only recourse, if all IRS calls, letters, appeals, etc. fail is going to Court. Pay the tax and file a lawsuit against IRS. At least by paying the IRS the amount they claim is owed, you get them off your back and stop more interest, penalties, and any levy action they might take. Let the Court make IRS pay all that back, plus attorney fees you incur to defend yourself against incompetent IRS employees. Make sure you file in District Court, as they are much nicer to taxpayers than Tax Court.

All of the above is true, but describes a situation where the IRS does absolutely nothing, choosing to change absolutely nothing. The situations I must deal with are where the IRS has not so chosen, but claims over the phone that they are simply months and months behind and things "should" be dealt with in time and my clients "should" be OK once they get around to processing.

[Corduroy Frog]

Here I go again

Today I ran into a client at a gas station - Responded to CP2000 notices for a number of situations, and worked on this about a year-and-a-half ago. When all the dust settles, "Tony" will have some $3500 coming back to him.

But as it is, he still is receiving "intent to levy" letters. I have called them and postponed levy action 4 or 5 times, and received grace from the collection people "pending action from the audit division." His employer has been back and forth on the levy so many times, and is now ignoring levies.

Nothing is happening, nobody is "making it happen", and "no one is responsible." John H has stated that it is the IRS who is really the churlish and lackadaisical party in this scenario, although he may not agree with my foolhardy plan. If this mess isn't straightened out by filing season for 2015, and claiming this $3500 as a prepayment will get their attention, I am considering doing it.

Go ahead and throw rocks at the idea, if you have any left to throw. I would make a very poor lawyer, and may even be a very poor tax preparer, but I learned a few things about right and wrong behind the barn when I was young.

p.s. I have employed the tactic twice on Alabama returns where action was stagnant, and was successful breaking the logjam.

[Corduroy Frog]

Reconsider - Bump Up

I'm bumping this up as it may appeal to a more current thread by kathyc2

[Black Bart]

These last few suggestions may really be helpful. For example, I didn't even know there was such a
thing as a "stakeholder liaison." Filing a DATL may get their attention as well, although if the taxpayer
is solvent it would probably serve as a device only.

Yup, there is such a creature and I encountered a real live specimen at a CPE seminar back in 2010 (haven't seen one since). When the speaker announced "We have an IRS Stakeholder Liaison representative with us today", all attendees were baffled since nobody'd ever heard of such. Personally, I imagined someone with a handful of tent pegs and couldn't quite grasp the relation to taxes.

IRS had sent him to the meeting to "make friends" with tax practitioners and to take suggestions regarding problems between us and IRS. I didn't give it another thought since I'm generally pessimistic when any government official says "We take your concerns very seriously and will look into this issue as soon as possible".

The link is below; looks like all states have one. The odds they will do anything probably aren't good, but I figure the hold time has be shorter than everywhere else 'cause nobody's ever heard of them.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Stakeholder-Liaison-Local-Contacts-1

Best of luck, my amphibian comrade.

P.S. Just thought, I did speak to the guy after the meeting to ask about something and he replied "I will elevate your inquiry." Since I never heard anything back, I assume my inquiry is still rising (should be about near Mars by now).

[Corduroy Frog]

I've met the creature

Yup, there is such a creature and I encountered a real live specimen at a CPE seminar back in 2010 (haven't seen one since).

Since the intense conversation a few weeks ago, I have taken the time to meet this person in Nashville. She can't really get involved in specific cases, which deflates any hope I had when I first heard of her. She generally serves as a communication person to the "community" which includes not only us but also the public.

I am favorably impressed with the lady, but as far as real help is concerned, no real solution to be had.

[taxea]

As bad as this may make me look, I've been his hypothetical preparer all along if that makes any difference for a hypothetical situation. The only thing done wrong was failure to report the sale in 2012. He neglected to give me the paperwork, but we summarily filed the amended return and even have a return mail receipt. The situation is fictitious, but let's pretend it's real for purposes of illustrating the problem.

Dany, the taxpayer advocate doesn't work anymore. They are even more backed up than the IRS. In defense of Nina Olsen, she has disclosed the plight of the taxpayer advocate office to congress every year, but congress responds by cutting the IRS staff even more.

Most of the responses (as I expected) think this is extremely unethical. But in the name of all that is fair, the IRS has no accountability and needs something to happen to get this fixed. What I propose is against the rules that are unfair to begin with, and I believe is not immoral any more than untying a fighter who has his hands tied behind his back.

Hypothetical, yes, but I have several real-life situations where the IRS is literally YEARS behind in their processing, and no one outside their walls can make them do a thing.

I haven't seen anything in the Tax Code that requires the IRS to be fair

[JohnH]

Wonder if there's anything in the Moral Code that requires the IRS to be fair? Absent a sense of fairness, taxpayers lose their confidence in their institutions and become more inclined to justify disobedience to laws enacted by a government they perceive as being unfair.

[kathyc2]

Wonder if there's anything in the Moral Code that requires the IRS to be fair? Absent a sense of fairness, taxpayers lose their confidence in their institutions and become more inclined to justify disobedience to laws enacted by a government they perceive as being unfair.

The IRS Mission Statement:
“Provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.”

[JohnH]

Nice.
But now we can wait for someone to point out that's just a publication, it isn't the regs.

[TAXNJ]

Changed?

The IRS Mission Statement:
“Provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.”

Rumor has it has been changed. Can you call the IRS tomorrow to find out and let us know?