Discussion:No liens, levies or garnishments
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FloridaTaxes (talk|edits) said: | 31 October 2009 |
| I recently prepared an amended return for a new client for 2007 because there were some mistakes and the IRS actually caught them this time. From what he said, I think it has been done incorrectly, to his favor, for years. What I am shocked about is that when he finally met me in my office to pick it up, he told me he owes $40,000 from a long time ago. Actually, the statute is about to expire on some if it. The IRS has never garnished his wages, levied his assets, filed a lien, etc.
Have you guys seen something like this before? He said he has never had an installment agreement. They just keep his "refund", which IMO he was only getting because the return was being prepared incorrectly, and apply it to the balance. He's considering an OIC, because he read on some tax resolution company's website that they reduced a client's tax owed from $100,000 to under $1,000. I explained to him that this would be an exception not the norm, but I don't think he believed me. | |
Death&Taxes (talk|edits) said: | 31 October 2009 |
| "What I am shocked about is that when he finally met me in my office to pick it up, he told me he owes $40,000 from a long time ago."
How long ago? Do you have his most recent seizure of refund notice? Use our yellow box to search for items about the Statute of Limitations on collection. Hint: it is not three years, but it is not infinite. If the statute has almost expired, submtting an offer in compromise is almost criminal, an act of malpractice, for it keeps the statute open. Long time ago, his account was probably marked 'Code 53' and never subsequently reviewed. I've a relative who is paying $150 a month for the past five years, but now makes treble what he did before. IRS has never called him in to review the matter/the amount he pays barely covers the interest on the account. | |
FloridaTaxes (talk|edits) said: | 31 October 2009 |
| I know what the statute is. A small portion is from 2000, with the remainder from 2003. I am not going to submit an OIC for him since I am still an unenrolled preparer. He was talking about submitting one for 2003. He wants to offer $500 for the $30,000+ owed for that year. I am just surprised. He was making good money for quite some time. | |
| 31 October 2009 | |
| There is much for everyone to learn about OICs.
1) They have to include ALL of the taxes, not just some of the periods/years. 2) D&T is correct - it would be malpractice to help someone prepare an offer when the statute of collections for a significant portion of the debt is about to run out. I would only do so if the client signed a statement that I had advised him against it but he chose to go forward anyways. Wait, if my client won't take my advice, maybe I don't want that client. I think I'd let him go elsewhere. 3) PLEASE send this client to someone who is NOT an OIC mill. We have several people on this site who do these routinely and would give the taxpayer great advice for a more reasonable fee. 4) It is OK to refer people to someone with more experience. | |
FloridaTaxes (talk|edits) said: | 31 October 2009 |
| As I stated before, I have no intention of doing this for him- so I do not need to be lectured on refusing work I cannot handle. I have never done an OIC, never helped with one at the CPA firm I worked at, and I know some good people around here that can handle this. I never take on work I do not have the experience/education to deal with. The reason why he was going to do it only for 2003 is because he was hoping to wait until the SOL for the 2000 taxes was over. I usually send people like him to the CPA I used to work for, who specializes in tax preparation and tax problem resolution. | |
FloridaTaxes (talk|edits) said: | 31 October 2009 |
| The problem is that when these people hear the advertisements from the OIC mills and you try to tell them they should not expect similar results, they don't believe you. I know many of these places actually amend the returns first to lower the tax due and then file an OIC. If his returns were correctly amended, the tax due would probably be greater. Oh well. I did what he asked me to do correctly- amend the 2007 return. If he wants to continue believing they will never catch up with him so be it. | |
| 1 November 2009 | |
| And remember, a F/S is required when you file for an OIC or installment agreement, so if he is earning as you said "good money" he can pay the tax bill and even if filed, he would certainly not qualify.
And amending a return to lower tax only is certainly unethical. If you are pushing the envelope be careful. Your client then may be audited on the amended return(s). | |
| 1 November 2009 | |
| if you can't take the heat, FloridaTaxes, you might consider adjourning to the dining room.
I hardly consider the above to constitute a 'lecture'. Belive me, I have lectured a few people on this site, and THAT was NOT a lecture. | |
| 1 November 2009 | |
| So maybe I should apologize and move on. There was no question in your original post. You wanted no help, you just wanted to chat. Happy chatting. | |
FloridaTaxes (talk|edits) said: | 2 November 2009 |
| Sandysea- Thanks for the information. I only amended the 2007 return because he omitted a 1099 and got a notice. The problem is the company that issued the 1099 sent the IRS 2 copies for the same dollar amount and never sent one to the client. They went out of business and we could not get them to correct the error. So I amended to include both 1099s and deducted one of them on the Schedule C. If they audit the 1040x I prepared it will be perfectly clean.
Kevin- understood. I was mainly just wondering how this guy could really go so long without truly being bothered on such a large amount. Never saw something like that before and I am assuming it isn't common. Sorry about my comment, I just thought I made it clear that I have no intention of helping him with an OIC, especially since right now I can't. I do appreciate the insight on OICs though, since there's a lot I do not know about them. | |
| 2 November 2009 | |
| You are welcome FT, if there were (2) copies of the same 1099 I certainly would call the PPS and let them know. I myself would have not amended the return but if you have all the ducks in a row you can explain it. If you amended due to him NEVER picking up the income, then I agree that you should show the first one. | |
| 3 November 2009 | |
| Here's my (humble) analysis. The statute for collections is 10 years from the date of assessment (section 6502). So let's do the math...
Assuming he filed his 2003 return in April, 2004.. the assessment would not have occurred until (probably) end of 2005 / beginning of 2006. (Audits generally begin about 12-18 months after filing, and take at least a month). So he's likely about 4 years into the 10 year statute (6 years to go). If this is true, he may be 7 years into the 10 year statute on his 2000-related debts, unless he was audited at the same time for both (which is possible). If he is still getting collection notices, and his case has been transferred to a revenue officer, then he should do something quick, or else he might start living in a collection nightmare. If he isn't getting anything anymore, then he may want to lay low. Certain actions can extend the 10 years. For example, if you file an Offer in Compromise, are out of the United States, are in litigation with the IRS, file for bankruptcy, request a Taxpayer Assistance Order, sign a waiver form, or request a Collection Due Process hearing, the ten-year period is extended until these circumstances are resolved. So it may be advisable (if he has slipped through the cracks) to simply do nothing and hope to glide to the 10 year mark. At worst, if the notices are ever re-started you are closer to the 10 year mark. If you're interested, the date of assessment should be on his account transcripts (which can be ordered for free). Good luck! | |
