Taxpayer's Bill of Rights

[Snaggletooth]

I don't pay much attention to these, because for the most part they don't do anything to help, and don't make the IRS responsible for anything at all. Most of the news happens when smiling politicians trumpet their earthshaking accomplishment of giving ordinary citizens a "bill of rights" and delude their constituency with false hope that they actually have "rights" to protect them against the IRS.

However, if anyone is familiar with the current "taxpayer bill of rights" (there have been several versions over the years), there may be some relief for a few clients that I have.

Is there a "right" to an answer? Is there a "right" to an assessment prior to collection activity?

On earlier posts I brought to the forum that IRS collection activity is now being launched because the audit division is so far behind in making assessments. There was discussion about this and solutions given, but please understand the traditional solutions are being circumvented. These situations with my clients are still ongoing with no conclusions - and they continue to get threats of levies on open issues.

If there is relief to be found in the "taxpayer's bill of rights", there may be something which can be done.

[New York Enrolled Agent]

Is there a "right" to an assessment prior to collection activity?

On earlier posts I brought to the forum that IRS collection activity is now being launched because the audit division is so far behind in making assessments. There was discussion about this and solutions given, but please understand the traditional solutions are being circumvented. These situations with my clients are still ongoing with no conclusions - and they continue to get threats of levies on open issues.

Snags

I always respect your posts but I'm having trouble with the notion that collection activity is taking place prior to an assessment.

§6502, in fact, is titled Collection After Assessment.

I can't speak to any of your clients but a taxpayer may have self assessed on their return and collection can follow that assessment. Another possibility is that a summary assessment took place under the Math Error Authority (as an aside NAEA is doing a session on MEA at the 2015 IRS Forums). If that's the case, the taxpayer only received a notice of assessment and failed to respond. Taxpayers who have MEA assessments are not issued a 90-day letter. Many clients fail to provide us with all the correspondence they get from the IRS.

I fully understand the IRS makes plenty of mistakes but I'm finding hard to believe you have a client receiving levy notices without an assessment of tax. I would get a copy of the taxpayer's transcript for the year in question - that will show if an assessment has been made.

[Snaggletooth]

'Tis true, 'tis true

...and my client is far from innocent, having failed to file a tax return for 2011. He engaged me with POA to file his 2011 return, and I did so with the result being him owing some $15K. The IRS was forcing him to file, as other circumstances led them to audit a business successor's bank account for 2012. My client was thus under audit for 2011, and were threatening to assess him for $1.5MM in receipts if he didn't file.

So I filed 2011 for him showing an amount due of $15K. The auditor-in-charge in Nashville proposed two further adjustments which resulted in another $10K and $17K respectively for a grand total of $42K plus penalties/interest. After looking at auditor's calculations, I acquiesced on the first $10K and protested the additional $17K.

The collection division immediately began collection of the $15K on his original 2011 return. When I talked to the auditor, she told me they were collecting the $15K without waiting on the audit division to conclude. This was last November. In January, the still undetermined audit was moved from Nashville to the auditing office in Charlotte, NC. I had to reiterate the situation to a new auditor, who as of today STILL hasn't decided on the protest.

In the meantime the collection division is sending him threats of levies (he is self-employed) and he is keeping his bank balance low.

NYEA if you can interpret the above in any way that may shed light on what's going on, please do so. On a related note, I have seen so many levy threats in the last year or two I don't know how the IRS could act on all of them.

Sorry to burden readers with details that are time-consuming to read, but this is what I'm dealing with.

[kathyc2]

Are you saying that you think the IRS should not be trying to collect the amount client admits to owing after being caught simply because the total owed may be more?

[Snaggletooth]

They're not following protocol.

Are you saying that you think the IRS should not be trying to collect the amount client admits to owing after being caught simply because the total owed may be more?

Kathy, if that's the way it is interpreted, then "yes." Fact is they are trying to collect an amount when they don't know what the amount is. This may sound like my client is a deadbeat and thus indefensible, but the fact is we are getting a tax lawyer to settle with the collection division and none of know how much he has been assessed for, yet the collection division keeps trying to collect the money, giving 30-day reprieves from levies. To put this in perspective, the tax return being audited was filed last August, and the protest lodged in November.

I have a couple more clients where the collection division is trying to collect in advance of an assessment, but the above is the most blatant.

[New York Enrolled Agent]

Kathy, if that's the way it is interpreted, then "yes." Fact is they are trying to collect an amount when they don't know what the amount is. This may sound like my client is a deadbeat and thus indefensible, but the fact is we are getting a tax lawyer to settle with the collection division and none of know how much he has been assessed for, yet the collection division keeps trying to collect the money, giving 30-day reprieves from levies. To put this in perspective, the tax return being audited was filed last August, and the protest lodged in November.

I have a couple more clients where the collection division is trying to collect in advance of an assessment, but the above is the most blatant.

The collection division immediately began collection of the $15K on his original 2011 return. When I talked to the auditor, she told me they were collecting the $15K without waiting on the audit division to conclude. In the meantime the collection division is sending him threats of levies (he is self-employed) and he is keeping his bank balance low.

NYEA if you can interpret the above in any way that may shed light on what's going on, please do so.



Snags

Your taxpayer self-assessed the $15K when he filed his 2011 return. After the return was filed the liability was entered into the "books" via an assessment based on what you and the taxpayer filed. Contrary to what you posted, you do KNOW the amount of the assessment.

The audit that is going may result in an additional assessment for 2011. A taxpayer can have multiple assessments for one tax year. The 10-year collection statute is running on the original 2011 assessment. ACS doesn't care about what may happen. They have a valid $15K assessment they are trying to collect. If additional tax is assessed then there will be a second 10-year collection statute on the new IRS assessment.

[kathyc2]

Kathy, if that's the way it is interpreted, then "yes." Fact is they are trying to collect an amount when they don't know what the amount is. This may sound like my client is a deadbeat and thus indefensible, but the fact is we are getting a tax lawyer to settle with the collection division and none of know how much he has been assessed for, yet the collection division keeps trying to collect the money, giving 30-day reprieves from levies. To put this in perspective, the tax return being audited was filed last August, and the protest lodged in November.

I have a couple more clients where the collection division is trying to collect in advance of an assessment, but the above is the most blatant.

Well, "deadbeat" may be a better descriptive label than "taxpayer" as it appears he has not made any effort to pay the 15K shown on return in the year since it's been filed.

[kathyc2]

I apologize. That comment probably crossed the line. I just get so mad at what I consider tax cheats that emotion takes over reason. Again, I apologize and the comment was not aimed at you taking on the case.

[Snaggletooth]

More for Kathy

Kathy, I don't like tax cheats either. Although my guy was not pro-active, he is questionably the cause of the tardy return. He had a Sub S corp in 2011 and was forced to sell to creditors who became partners. His wife was involved with one of the new partners and divorced him. He was told he was going to receive a K-1 from the new parties from 2011 and 2012. He never did. Instead he received a 1099-MISC as if he was never an owner. His 2012 return was filed by an IRS assistant.

Hardly innocent, but hardly guilty either. No apology necessary - please don't jump to conclusions about the kind of people I choose to represent.

NYEA explained that a filed return can be held as a self-assessment. I didn't know this could be part of the protocol.

Thanks for your interest - Snag.

[Snaggletooth]

Your taxpayer self-assessed the $15K when he filed his 2011 return. After the return was filed the liability was entered into the "books" via an assessment based on what you and the taxpayer filed. Contrary to what you posted, you do KNOW the amount of the assessment.

The audit that is going may result in an additional assessment for 2011. A taxpayer can have multiple assessments for one tax year. The 10-year collection statute is running on the original 2011 assessment. ACS doesn't care about what may happen. They have a valid $15K assessment they are trying to collect. If additional tax is assessed then there will be a second 10-year collection statute on the new IRS assessment.

Thank you for this explanation. I didn't know a "self-assessment" counted if they had pulled his situation for audit.

Regards NYEA, Snag

[New York Enrolled Agent]

Thank you for this explanation. I didn't know a "self-assessment" counted if they had pulled his situation for audit.

Regards NYEA, Snag

Snags - just a follow up. I want to give you a cite that might be helpful with your client or for the future. §6201 is the code section that gives the IRS assessment authority. §6203 is the method of assessment. I've pasted Reg. §301.6203-1 (underlines added)

The district director and the director of the regional service center shall appoint one or more assessment officers. The district director shall also appoint assessment officers in a Service Center servicing his district. The assessment shall be made by an assessment officer signing the summary record of assessment. The summary record, through supporting records, shall provide identification of the taxpayer, the character of the liability assessed, the taxable period, if applicable, and the amount of the assessment. The amount of the assessment shall, in the case of tax shown on a return by the taxpayer, be the amount so shown, and in all other cases the amount of the assessment shall be the amount shown on the supporting list or record. The date of the assessment is the date the summary record is signed by an assessment officer. If the taxpayer requests a copy of the record of assessment, he shall be furnished a copy of the pertinent parts of the assessment which set forth the name of the taxpayer, the date of assessment, the character of the liability assessed, the taxable period, if applicable, and the amounts assessed.