home foreclosure? put on the brakes.
by 卡塔尔世界杯常规比赛时间 research
tax assessment and collection – this is the juncture where taxpayers really get to know their favorite federal agency … or, if not favorite, the only one that touches virtually every working american.
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it can be a heavy touch to a tender area, the one in the vicinity of the wallet. so it’s a touch that can always use improvement.
fortunately for taxpayers, the tax advocacy service suggests 16 ways congress could make the assessment and collection touch a touch softer.
1. ease up on the requirement that the office of chief counsel review certain offers in compromise.
irc § 7122 authorizes the secretary of the treasury (through the irs) to settle tax liabilities for less than the full amount owed, as long as the case has not gone to court. the irs can offer such a partial abatement in cases where there is doubt as to the liability or its collectibility, or to promote effective tax administration. the settlement is called an “offer in compromise” (oic).
but crooks and big taxpayers beware! your cases are a little more complicated. for criminal cases and cases where the unpaid taxes (and penalties, interest, etc.) exceed $50,000, the treasury department’s general counsel must review the case through the irs office of chief counsel.
and that’s where things get gummed up. criminal cases, of course, merit the legal attention, but in tens of thousands of civil cases, the chief counsel review may be an unnecessary complication and delay.
in that these cases are legal issues, the office of the chief counsel can’t just rubber-stamp oic approvals. legal staff has to look into the facts behind the cases and write supporting opinions. the process consumes irs time and resources. meanwhile, the poor taxpayer is in financial limbo. she may be impeded from making financial decisions, and the delay could even jeopardize her ability to pay the amount offered.
the tas believes that treasury could ease up on the chief counsel review requirement in at least some cases.
tas recommendation: amend irc § 7122(b) to repeal the requirement for all oics in civil cases and replace it with language authorizing the treasury to require counsel review only in cases determined to present significant legal issues.
2. require irs to mail notices at least quarterly to taxpayers with delinquent tax liabilities.
irc § 7524 requires the irs to send out delinquency notices “not less often than annually.” the notices must state the amount of the tax delinquency and the date of the notice.
just once a year? really?
maybe the irs should take a lesson from credit card companies, retailers, banks and other private sector debt collectors. almost all of them send out monthly notices. apparently the stamps and processing are a cost-effective expenditure. bottom line, reminders generate revenues.
a good number of taxpayers would be glad to avoid penalties and interest. all they need is a few reminders. and the longer the penalties and interest pile up, the less likely the liability will be paid.
tas recommendation: amend irc § 7524 to mail out delinquent tax notices at least once per quarter.
3. strengthen taxpayer protections in the filing of federal tax liens.
under irc § 6323, the irs is authorized to slap a notice of federal tax lien (nftl) on taxpayers who owe past-due taxes.
it’s actually a slap on the assets. an nftl protects the government’s interest in property that might otherwise be claimed by judgment lien creditors. it can be a crippling slap if the taxpayer wants to sell those assets or use them to borrow money to stay solvent or even to pay off the tax debt.
in other words, the nftl may be preventing that which it is trying to accomplish.
unlike creditors, the irs does not need a court judgment to file an nftl. under irc § 6320, the taxpayer has a right to a collection due process (cdp), but get this – the due process can begin only after the nftl has been filed.
it’s an ironic catch-22: just as the taxpayer needs an asset, the irs renders it unusable.
the irs restructuring and reform act of 1998 tried to avoid this problem by requiring an irs employee to get approval from a supervisor, “where appropriate,” before filing an nftl.
where appropriate? what’s that supposed to mean? apparently the irs doesn’t think it means much. the service takes a rather narrow interpretation of the term. in a majority of cases, employees seek no supervisor approval. worse still, employees don’t even have to personally contact the taxpayer beforehand to discuss financial conditions or collection alternatives.
several tas studies have found that nftls can undermine government interests. by complicating a taxpayer’s financial condition, a lien makes it harder for the taxpayer to remain or become compliant. furthermore, an nftl can increase the taxpayer’s living expenses, perhaps even render him or her unemployed. the government may end up unfurling the safety net of unemployment benefits, food stamps and so on, increasing the tax burden on others.
the tas says there’s a better way.
tas recommendations:
- amend irc § 6323 to a) provide clear guidance for making nftl decisions, b) require “live contact” (or good-faith effort) to obtain taxpayer financial information and discuss collection alternatives, and c) allow for pre-filing administrative review by the irs office of appeals.
- amend irc § 7433 to allow civil actions for damages resulting from nftl filings in violation of required procedures.
- codify and expand rra 98 to
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- require irs employees to obtain managerial approval when it is likely the nftl will cause a hardship, will be unlikely to protect government interest in the taxpayer’s rights or will impair the taxpayer’s ability to pay the tax,
- require the supervisor to consider whether the benefits of the nftl outweigh the harm to the taxpayer, and whether the filing will jeopardize the taxpayer’s ability to comply with tax laws in the future, and
- require the irs to discipline employees who fail to secure managerial approval for an nftl.
4. provide protections before filing a lien foreclosure on a principal residence.
nothing makes the irs look more monstrous than the seizure of a taxpayer’s home to satisfy a delinquent tax liability. indeed it is something that the irs wants to avoid. it is a last resort.
but that doesn’t mean it doesn’t happen.
there are two ways the irs can seize a principal residence.
administrative seizure: irc § 6334(a)(13) exempts a principal residence from levy except as provided by subsection (e). (e) provides that the residence is not exempt if a u.s. district court judge approves the levy. the irs must release the levy if it “is creating an economic hardship due to the financial condition of the taxpayer.”
lien foreclosure suit: irc § 7403 authorizes the department of justice to file a civil action to enforce a lien and foreclose on a principal residence. this action has less protection than the administrative seizure. the court has no discretion to refuse a sale simply to protect the interest of the taxpayer.
when enacting rra 199, the senate finance committee report stated that a home “should only be seized to satisfy a tax liability as a last resort.”
one reason for that non-statutory restriction is that the seizure affects not only the taxpayer but possibly a spouse and children.
the irs has an internal revenue manual (irm) that prescribes certain steps an irs employee must take before filing a lien foreclosure suit. but this is internal guidance, not a basis for challenging a court action.
because of the devastating impact of seizing a family’s home, the tas recommends that the guidance should be codified.
tas recommendation: amend irc § 7403 to codify irm protections, including a requirement of an executive-level approval to proceed with a lien foreclosure suit. also amend to preclude foreclosure on a residence unless a) the taxpayer’s other property, if sold, could be insufficient to pay the amount due, and b) the foreclosure would not create an economic hardship on the taxpayer.