Ten Year Collection Rule

[Bjorn]

Sadly taxpayers have suffered a series of crop failures and health issues. Long story short. They owe the IRS 65,000.00 + The offer in comp was a joke because they IRS valued business assets very high and would not count certain loans when looking at the worth of the client. They cannot come up with the cash to pay them. The IRS intends to levy what they can. The taxpayers are living on cash since every time they put money in the bank the IRS takes it.

1998 ~ 8,000.00
1999~ 19,000.00

We are at 2006 right now. Does it really mean that if they don't collect it by 2008 {What Date} the IRS will no longer attempt to collect the tax?

What are the pitfalls of this?

The hubby is now on social security to try and get some income . Can the IRS take social security benefits?


Mahola,

Bjorn

[S T]

Some Info

I don't know the answer for your taxpayer's situation, but possibly some of this might help you. A lot of info and circumstances to read through http://ezinearticles.com/?IRS-Statut...pire?&id=52707 (EA and former IRS Agent)

this one is particularly lengthy http://www.mckenzielaw.com/IRSCOLLE.html (Seems to be a tax attorney) seems like maybe the 10 year rule can be extended http://www.friedlaw.com/articles/tax...collection.asp

Levy and possible items exempt from http://d2d.ali-aba.org/_files/thumbs...avid_thumb.pdf (Seems to be a tax attorney)

another source http://www.irstax.com/irslevy.htm (Tax Attorney) does not appear that social security benefits are exempt.

Hope some of these links of info assist you.

Sandy

[jainen]

Most likely

1998 was due in 1999. so that's another year. Time was tolled (extended) while the OIC was pending, so that's another year. Everything so far has been applied to 1998, and most of the debt is from 1999 so that's another year. Penalty and interest was assessed later, so that's more time. They were probably tricked into signing a waiver during their collection negotiations, which is more time. Tax liens have already been filed and remain in force for all time. The IRS may just ignore the time limit, and get away with it if the taxpayer can't afford an attorney to go to court.

The IRS knows all this but will probably not push it. They see that the taxpayer has started hiding cash assets, so they'll just take all the farm machines this year. Most likely.

[Unregistered]

Jainen's concept that liens remain in place "for all time" is simply not true.

§6322 gives the period for a lien. The lien continues until either the tax liability is fully satisfied or becomes unenforceable by reason of lapse of time. The Collection Statutue Expiration Date (CSED) is found in §6502. Generally, the CSED is 10 years from the day tax was ASSESSED. The CSED can be extended under certain circumstances such as filing a petition in Tax Court, bankruptcy, filing an OIC and so forth.

Get a copy of the taxpayer's transcript. It will show the date of assessement and other actions which may have extended the CSED.

New York Enrolled Agent

[DaveO]

I assume you have a POA for all years. Call the Practicioners hotline and pin them down on the expiration of the collection statute. You will have to contact the Lein release office for your area to get the leins removed once they have expired. The IRS may not do it otherwise. Did you go to appeals on the OIC? I worked two OIC cases in the last 18 months and both were settled in appeals.

As far as unsecured loans go you are out of luck on those. The IRS will also want them to max their credit cards out to pay their taxes. It may look and feel hopeless but your clients can survive, broke, naked and homeless, but alive at least.

[ED SMITH]

The hubby is now on social security to try and get some income . Can the IRS take social security benefits?
Bjorn

Yes! They can garnish 15% of the SS.

[Black Bart]

j c -- you've gotta be more careful when

Jainen's concept that liens remain in place "for all time" is simply not true.

New York Enrolled Agent

you're shootin' from th' hip like that. You never know when somebody from the other coast is around. Those New York boys have read a book or two themselves.

[jainen]

some dang fact

No kiddin', it's hard to be a cynic these days. Way too much information out there--somebody's always messin' up a perfectly good screed with some dang fact!

[Harvey Lucas]

Considered Bankrupty?

Have your clients considered chapter 7 bankruptcy?

These are 1040 type taxes?

My understanding is that if the "1040" tax returns were "filed", and the "1040" taxes are more than 3 years old, that they are discharged by a chapter 7 bankrupty.

Bankrupty is not a pleasant option, but it is better than sword of IRS hanging over your head for xx years.

HarveyLucas

[Unregistered]

Just one caution about bankruptcy.

While taxes can be discharged in bankruptcy, note that only the PERSONAL liability of the taxpayer is taken away. Given the original post, the IRS may very well have filed a notice of federal tax lien on this taxpayer's property. Tax liens are NOT extinguished by personal discharge in bankruptcy. Tax liens survive and remain in force until the provisions of §6322 are satisfied. The government (if the lien on property was in existence prior to the bankruptcy petition) has another avenue to pursue - the legal name is an action against the debtor in rem.

New York Enrolled Agent

[jainen]

I dare say

I dare say, New York, that you're takin' a somewhat diff'rent position with old Harv than ye did wi' me.

[veritas]

I haven't looked in the Tax Book but is this information there? I did not know that liens were not removed by bankruptcy. If it isn't there maybe the authors could add a section.

[Unregistered]

Well, Jainen there is a difference. You gave a post with incorrect information. Harvey's post was not incorrect but I think needed to have some additional information. Besides, you luv the "abuse".

Veritas - the citation you can use is in the bankruptcy code - §522(c)(2)(B) - pre-existing tax liens survive.
You can go to the tax court website and read a case which shows the IRS doing a levy on a 401K plan even though the taxpayer's personal liability was removed in bankruptcy.
Iannone 122 TC No. 16. The IRS had put a lien on the account before bankruptcy.

New York Enrolled Agent

[Black Bart]

A Wing and a Prayer

(1) You gave a post with incorrect information.

(2) Harvey's post was not incorrect but I think needed to have some additional information.

New York Enrolled Agent

Ezzackly right, Your Enrolled Enlightenment (although I do think the boy was just wantin' to play around a bit, but he's right -- wingin' it with little fact and lotsa hope doesn't fly nowadays). By the way, do you happen to know if one can include a 1040 balance due in bankruptcy? Thanks.

Look here; I was just wonderin', since you'll probably be floggin' my posts ever' now and then; if you'd mind classifyin' 'em right in there with Harvey's (category two: "...needed...some additional information.")? It just seems so much more outta-your-face than number one. I dare ask as you've already demonstrated, via your calm, polite, and measured response to jainen, an admirable absence of the first of four fundamental traits of a Yankee, i.e., (1) rude and ill-mannered (2) don't love the Lord (3) know lotsa stuff (4) live far off. Thanks for any consideration you may extend. Note: I made this request of the Santa Cruz savant (jainen) previously and he promised not to call me a "red state redneck cracker" (or sump'n like that).

P.S. Is "Cohan" of any practical use to speak of now, since the T&E was kicked out?

[veritas]

Are westerners' Yankees? I don't think I want to be referred to as a Yankee. 1.We are generally polite here. (However I was out of line with Jan) 2.You are correct in that most do not love the Lord. 3.I only know some stuff. 4. Far away from what?