If someone sets up a trust for a third party and the third party owes the IRS back taxes, can the IRS reach the trust assets to satisfy the back taxes? This is a common question that we get from those with trusts or those seeking to set up trusts. This is also a question…
Category: IRS Debts
IRS Debts
Tax debts owed to the IRS, including unpaid taxes, penalties, and interest. Give us a call to see how we can help, (713) 909-4906.
IRS Collections When Taxpayer’s Income Varies
In Charnas v. Commissioner, T.C. Memo. 2015-153, the U.S. Tax Court addressed whether a lawyer who had variable income from year to year was able to pay his outstanding tax debt. The court concluded that the IRS erred in not considering the variable nature of the taxpayer’s income in determining whether he could pay his…
Court Says Tax Lien Does Not Have to Be Filed Prior to Entering Into an Installment Agreement
In Budish v. Commissioner, T.C. Memo. 2014-239, the U.S. Tax Court held that the IRS erred in insisting on a tax lien being filed before it would accept an installment agreement. This case serves as a reminder that a tax lien does not have to be filed if it creates a hardship that would make…
Designating Voluntary Tax Payments for Business Owners
If you owe a third party for several different items and you voluntarily pay a debt, you should get to designate which item the payment is to be applied to. This is the general rule for voluntary payments made to the IRS. But according to IRS Action on Decision 2014-01, the IRS will not follow…
Informal Offer in Compromise? Is There Such a Thing?
What if you reach an oral agreement with the IRS to settle the tax debt, but then the IRS back tracks on the agreement? If you didn’t submit the offer on a Form 656, do you have any rights? The court addresses this in Bergdale v. Commissioner, T.C. Memo. 2014-152. Facts & Procedural History Mr.…
IRS Notice of Intent to Levy Sustained Despite IRS Not Following Its Procedures
In Eichler v. Commissioner, 143 T.C. 2, the U.S. Tax Court said that the IRS Notice of Intent to Levy was proper even though the IRS failed to follow its policy to check an installment request into its system which would have stopped IRS collection actions. Facts & Procedural History The IRS assessed Section 6672…
How the IRS Evaluates Offer in Compromise
In Zumo v. Commissioner, T.C. Summary Opinion 2013-66, the U.S. Tax Court examined a case involving the Internal Revenue Service’s (“IRS”) rejection of an offer in compromise based on doubt as to collectibility. An offer in compromise is a request by a taxpayer to settle their tax debt for an amount that is less than…
IRS Liable for Stock Loss After Levy
When the IRS levies or takes property from the taxpayer, the taxpayer has the right to request that the property be sold within 60 days. This rule applies to more than just stocks. It also applies to cryptocurrency, for example. In Zapara v. Commissioner, 126 T.C. 215 (2005), aff’d, 652 F.3d 1042 (9th Cir. 2011),…
Household Expense Rules for IRS Offers in Compromise
The IRS has broad discretion to settle unpaid taxes. It can compromise taxes for any amount and for any reason–even for no reason. Absent the IRS dropping the ball, the IRS set up a very specific process and rules that it applies in deciding to compromise tax debts. This is the IRS’s offer in compromise…
IRS Appeals Does Not Have to Hold Open CDP Hearing
Our system of income taxes is based on arbitrary deadlines. Income and expense are counted and tax computed on a set interval, whether calendar year, fiscal year, or a 52-53 week tax year. Tax returns are filed three, four, nine or ten months later. Audits have to be done within three years usually unless extended…