What is the best way to request reduction of payment to IRS?

[JAinNC]

Client age 64 single (old friend - no charge client) in Alabama has been making payment of 125.00 per month to IRS since 2005 for 2004 tax year.

He recieves disability social security (since 2004) approx 1500 per month and less than 2000 per YEAR in other retirement. He has no assets except an old car. He is a severe diabetic with heart issues and pays the VA for his medical supplies and RX and takes 12+ medications. I have asked him to gather his utility bills, medical expenses, and other expenses. He drives about 20 miles a day to go to the senior citizen center in his town because they have a reduced cost nutrition program for lunch.

Back in 2005 when he did not pay his notice of tax assessment, IRS took 1/2 of his disability for 1 month and got his attention. He called them and says IRS told him if he did not pay at least 250 per month they would take 1/3 of his disability/SS. He finally got it down to 125. per month and has paid on time every month since then.

With the cost of gas, living, food, RX increasing he can't afford a new tire for his car.
Not that the reason matters, but an ex wife took him for everything he had.
He now uses the library computer because he can't affford the cost of internet or land line phone.

When I get facts together, I want to request lower payment or uncollectable status.

What do you think the chances are?

Thanks,
JA in NC

[Corduroy Frog]

Slim and None

The extreme difficult situation in which your client finds himself did obviously not exist the year he owed taxes and didn't pay them. If they had, he would not have owed this kind of tax liability.

If you want to lock in gear with IRS thinking, they will not open this door to reconsider the plight of someone who could have filed in a productive year, and chose not to. They are focusing their collections on a 2004 tax year, not 2008.

It sounds like your client is an honorable man, and does not deserve the heavy hand of government on top of other problems which have seemingly "ganged up" on him. But I believe the IRS will take the position as described above.

If anyone has any remedies which are workable, I hope they will post.

[JohnH]

I'd say what does he have to lose by trying?

[Zee]

You didn't provide how much IRS debt your client has. But, if it's unlikely they IRS will ever recover the entire amount, you might consider an Offer in Compromise. But, It isn't quick or easy.

[ED SMITH]

I couldn't disagree more with Corduroy Frog's post. The fact that he has limited income, is disabled and is 64 make his chances excellent for a CNC.

First, get a POA from him and don't let him talk to the IRS. They should only be talking to his representative - you.

Next, download form 433F and help him fill it out. Also check the Irs collection standards. You will see that a single person is allowed $507 in food, clothing, etc. Use the full amounts for Section G, Part 1.

Since he doesn't work. the gas- car insurance might not be allowed, but he may not need it because his food -clothing allowance may be greater than what he actually spends.

Rent and utilities shouldn't be a problem.

Only $54 is allowed for prescription drugs, so this and his medical expenses will have to be substantiated. (part 4). Also any thing ins Part 5. if after subtracting his expenses from his income he has anything left over, that would be the basis of n Installment Agreement.

You will also need three months of bank statements which should also show his SS deposits as proof of income.

Then call ACS 1-800-829-7650. You can give them all the data over the phone and may not have to fax them anything. Then it goes to a supervisor for review and if you don't hear back in 5 days you know that the CNC is approved. I would check back about 2 weeks just to be sure. You can call PPL for this.

[DaveO]

I agree with ED

I can't see why the payment couldn't be reduced or even have him moved to currently not collectible status.

[JAinNC]

Thanks Guys

I do not have the amount owed - He will locate the last yearly statement.
It seems I will not be able to avoid completing the 433F. That was my 1st thought but I hoped I might get by without that. Guess not.

He would go without his insulin before he would not pay what IRS required. This is a real hardship case. I wish I could have gotten to this 2004 MFJ return before the 3 year times was up to amend or question the 2004 1040.


Ed, thank you so much for all the advise and help.
Thanks John, I agree. We NC people have to look after our Alabama clients.

Thanks,
JA in NC

[JAinNC]

Thanks

Dave,
I hope so.

[Zee]

He would go without his insulin before he would not pay what IRS required.

JA in NC

Show him some of the ads from Offer in Compromise companies touting their success. It may change his mind if he compares himself to others.

[JAinNC]

Did that

That is why I am now going to get a POA and his info.
Pride is powerful.

[myerstaxes]

I Agree

go for currently not collectible...I did many in the early years of my IRS career...He sounds like a good candidate for it...

[joanmcq]

Show him some of the ads from Offer in Compromise companies touting their success. It may change his mind if he compares himself to others.

The only problem is most of those ads are lies.

[Zee]

The only problem is most of those ads are lies.

It doesn't matter if they're exaggerations, or not. His pride needs to be set aside.

[Corduroy Frog]

Just my take

I couldn't disagree more with Corduroy Frog's post.

I am fast losing credibility on the board. But I am responding based on my experience with Form 433, some 3 of them in last few years. Admittedly a couple of them were borderline, but the position taken by IRS was consistent with what I have related. Even though the form appeared to be quantitative as to what could be settled upon.

For my North Carolina neighbor, I am nonetheless quite delighted that many others have had good experience in securing relief - including some with IRS experience. Ed Smith laid out a very good road map, especially if your client can supply documentation.

Ed, I'm currently out of a job and was planning on applying for one of those "pennies on the dollar" firms, like Roni Deutsch or J K Harris, and listing YOU as a job reference. Guess I can forget about that...right?

[taxea]

Request reduction of payment to IRS

My experience is you can fill out a financial budget of expenses and income. The IRS has strict rules on what can be included in expenses. Include it with your request to lower his installment payments.
Once the IRS has reviewed the financial information they will tell he what they believe he can afford. This would mean he would have to cut all unnecessities from his expenses.If he is unable to pay anything by their standards they will put him on "unable to pay" status but interest will continue to accrue.
this process takes time and he will have to continue to make the installment payments while it is in progress.
Call the number on his latest letter and explain what you are in the process of doing. They will make a note on his account. taxea