Cover image for The unofficial guide to dealing with the IRS
The unofficial guide to dealing with the IRS
Nath, Robert G.
Personal Author:
First edition.
Publication Information:
New York, N.Y. : Macmillian, [1999]

Physical Description:
xxxi, 492 pages ; 21 cm.
Format :


Call Number
Material Type
Home Location
Item Holds
KF6300.Z9 N386 1999 Adult Non-Fiction Non-Fiction Area

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Around tax time, the scariest three letters in the English language are I-R-S. What happens if you get an audit letter or are charged with a penalty? You need to know how to assess your situation, prepare your paperwork, and defend yourself before the IRS. You also need to know the inner workings of the IRS--how tax returns are selected for audits, and what the audit process is like. You want the inside scoop.

Table of Contents

The Unofficial Guide Reader's Bill of Rightsp. xix
The Unofficial Guide Panel of Expertsp. xxiii
Introductionp. xxv
I Meet the IRSp. 1
1 How the IRS Operatesp. 3
The IRS's draconian powersp. 4
Where it all came fromp. 5
The IRS pyramidp. 7
IRS functionsp. 7
A shake-up in 1999?p. 8
You can't hide from the IRSp. 9
Youp. 9
Public recordsp. 9
Third-party records and sourcesp. 10
The tax collection officersp. 11
The notice levelp. 11
ACSp. 12
The "field"p. 12
The tax auditorsp. 14
The criminal investigatorsp. 14
The Office of the Taxpayer Advocatep. 15
How the IRS assesses a taxp. 15
The plain vanilla billp. 15
The audit billp. 18
Applying your tax payments--the "voluntary payment" rulep. 19
Nonfiler Assessmentsp. 20
The unknown "assessment from hell"p. 21
How long can they chase you?p. 22
Just the factsp. 24
2 Why You Have Problems with the IRSp. 25
Menu choices big and smallp. 27
Your audit "menu"p. 28
The collection "menu"p. 29
Pay in full within thirty daysp. 29
Pay in full, over timep. 30
Pay part now, pay part over timep. 30
Pay in part, write off the restp. 30
Pay nothingp. 31
Reduce the amount you owep. 31
Call the bossp. 32
The IRS's "menu"p. 33
Pay all--now!p. 33
Pay in full now, involuntarilyp. 33
Pay in full--soonp. 34
Pay part now and the rest laterp. 34
Pay all laterp. 34
Pay part now, write off the restp. 34
Pay nothing now or laterp. 35
Sue the taxpayerp. 35
Dueling menus and rules of the restaurantp. 35
Helping you get through it allp. 36
You might need a tax professional ifp. 37
Other civil mattersp. 39
Who are the tax professionals?p. 41
Finding a tax professionalp. 44
Choosing an ethical professionalp. 45
Choosing a tax professionalp. 46
The Costp. 48
Relating to the professionalp. 49
Just the factsp. 50
II IRS Weapons to Collect Overdue Accountsp. 51
3 The Federal Tax Lienp. 53
How the lien arisesp. 54
What the lien encumbersp. 55
Example A businessp. 57
Example Marriagep. 57
Example Lawsuitp. 58
The IRS lien does not always prevailp. 58
Superprioritiesp. 59
Overcoming the federal tax lienp. 60
Credit ratingp. 60
A Drag on selling propertyp. 61
Releasing the lien in fullp. 62
Discharging specific property from the lienp. 64
The IRS is Paid in Fullp. 64
The IRS receives the taxpayer's interest in the propertyp. 65
The tax lien is worthlessp. 66
Another discharge alternativep. 66
Subordinating the lienp. 67
Withdrawing a notice of lienp. 68
Be a true American--sue!p. 68
"Persuading" a stubborn agent to release a lienp. 69
Just the factsp. 70
4 IRS Leviesp. 71
Choose your poison: varieties of the levyp. 72
Lose your bail, back to jailp. 73
In no particular hurryp. 73
Not team playersp. 74
No saving for a rainy dayp. 74
Before the IRS leviesp. 75
You won't necessarily knowp. 75
IRS levy policy and practicep. 76
All is not lost when the IRS leviesp. 77
Avoiding or releasing the levyp. 78
What can the levy capture?p. 81
Bank accountsp. 81
Wages and salariesp. 83
Retirement accountsp. 85
Insurance policiesp. 86
Your homep. 86
Community propertyp. 87
Exemptions from levyp. 88
The Automated collection systemp. 90
Selling seized propertyp. 93
Redemption of propertyp. 96
Just the factsp. 96
5 Penaltiesp. 97
How the IRS looks at penaltiesp. 97
Asserting or assessing the penaltiesp. 99
These penalties are designed to hurt!p. 100
Late-filing penaltyp. 100
Late-payment penaltyp. 100
Estimated-tax penaltyp. 101
Accuracy-related penaltyp. 101
Fighting these penalties on the front linesp. 104
Appealing denial of penalty abatementp. 107
Proving your casep. 107
Death, serious illness, or unavoidable absencep. 108
Fire, casualty, natural disaster, or other disturbancep. 110
Unable to obtain necessary recordsp. 110
Lack of fundsp. 111
Ignorance of the lawp. 111
Making a mistake or being forgetfulp. 112
Relying on the advice of a competent tax adviserp. 112
Erroneous oral advice from the IRSp. 113
Erroneous written advice from the IRSp. 114
Failure to deposit due to lack of couponsp. 114
Embezzlementp. 114
Bad-check penaltyp. 115
Negligence penaltyp. 115
"Substantial understatement" penaltyp. 116
Estimated-tax penaltyp. 117
Mechanics of making your abatement requestp. 118
Just the factsp. 118
6 The Trust Fund Recovery Penaltyp. 119
Setting the scenep. 119
What is this "penalty"?p. 122
There ought to be a law!p. 123
How the IRS handles these casesp. 125
The agent goes for your walletp. 128
Who is a "responsible" person?p. 128
Responsibilityp. 129
Willfulnessp. 131
Make your appeal more appealingp. 133
Defenses you may usep. 135
The "Nuremberg" defensep. 135
The "pointing finger" defensep. 136
The "it's been paid" defensep. 136
The "your numbers are wrong" defensep. 136
The "contribution" defensep. 136
Filing your protestp. 137
The appealp. 139
Who are the appeals officers?p. 139
Preparing for your conferencep. 140
The conferencep. 141
Is there life after appeals?p. 143
Filing your claims for refundp. 144
Just the factsp. 146
7 Other Big IRS Headachesp. 147
Getting inukedi by a jeopardy assessmentp. 148
What it isp. 148
Fighting a jeopardy or termination assessmentp. 149
Why the IRS wants you (the nonfiler)p. 151
Why people don't filep. 152
The IRS's surprise for the non-filerp. 152
Reasons that workp. 154
Getting back into the systemp. 155
The downside of not filingp. 157
Steps you can takep. 158
What's "reasonable" cause for not filing?p. 161
The itax policei--Criminal Investigation Divisionp. 163
CID starts a casep. 164
Investigating the casep. 166
How CID proves a casep. 168
Defending against the investigationp. 168
Just the factsp. 171
III All about Auditsp. 173
8 "Your Tax Return has been Selected for Examination"p. 175
"Hey, what's your DIF?"p. 176
Not all audits are created equalp. 178
The correspondence auditp. 178
The office auditp. 179
The field auditp. 181
"Getting to know you"--IRS-stylep. 182
How the revenue agent worksp. 182
Can the agent really get all those records?p. 184
What--more audits?p. 185
Requesting audit reconsiderationp. 186
What's on the horizon?p. 189
What can the agent do to you?p. 190
Your state tax is not far behindp. 192
Time is (not) on your side--statutes of limitationp. 195
A special case: the "innocent spouse"p. 197
When you may claim to be innocentp. 198
five tests for proving you are innocentp. 199
Filing a joint returnp. 199
Understatement of taxp. 200
Ignorance of the understatementp. 200
Fairnessp. 201
The two-year deadlinep. 203
Filing the claim of innocencep. 203
Prepare the affidavitp. 203
Assemble third-party testimony and objective evidencep. 204
Get help and be persistentp. 205
Recent developmentsp. 205
Just the factsp. 207
9 Avoiding an Auditp. 209
Ways to avoid an auditp. 210
Keep deductions within the averagesp. 210
Report all third-party payer incomep. 211
Use the right formsp. 211
Operate a noncash businessp. 212
Use only employees, not independent contractorsp. 212
Don't use a proprietorshipp. 213
Watch cosmetics and arithmeticp. 213
Avoid unusual deductions or exclusions from incomep. 214
Check your lifestylep. 214
Hire a prop. 215
Keep your evidencep. 215
"They don't eat much"p. 216
The importance of keeping good recordsp. 217
What records, and for how long?p. 219
In generalp. 219
Your homep. 221
Stocks, bonds, and other investmentsp. 221
Business recordsp. 222
Tax returnsp. 222
Giftsp. 223
Organizing your records during the yearp. 223
Rule 1 Save paperp. 223
Rule 2 Separate business from personalp. 224
Rule 3 The Computer is your friendp. 225
In the new year--preparing for tax seasonp. 226
Just the factsp. 228
10 Appealing a Bad Audit Resultp. 229
Where the cases come fromp. 230
The income tax auditp. 230
Employment tax investigationsp. 230
Penalty appealsp. 231
Offers in compromise and refund claimsp. 231
Collection casesp. 232
Preparing your protest and your casep. 232
"Face-to-face" time--the appeals conferencep. 235
The Injured spousep. 237
Just the Factsp. 237
IV Your Options--and You Do Have Themp. 241
11 "Let's Make a Deal"--Offers in Compromisep. 243
How the IRS thinks about offersp. 244
Current assetsp. 246
Future income potentialp. 246
Putting it all togetherp. 247
How bankruptcy affects offersp. 247
Look before you leapp. 248
The Good news about offersp. 252
Making an acceptable offerp. 252
Filling out the collection statement: Form 433-Ap. 255
National Standard Expensesp. 264
Housing and utilitiesp. 265
Transportationp. 269
Principal other expensesp. 269
Health care expensesp. 270
Taxesp. 270
Court-ordered paymentsp. 270
Child and dependent care expensesp. 270
Life insurancep. 271
Debts and other expensesp. 271
Other allowancesp. 272
Proving your financesp. 272
If you own a businessp. 274
Offers for businessesp. 275
Proving your business expensesp. 277
Appealing a rejected offerp. 278
Is there life after appeals?p. 279
The bankruptcy optionp. 279
Just the factsp. 280
12 The Installment Agreementp. 281
The installment agreement menup. 283
Where to get an installment agreementp. 284
Tips on negotiating the agreementp. 287
Know your financesp. 288
Meet all deadlinesp. 288
Appealp. 289
Get creditp. 289
Stay currentp. 289
Ask for lien withdrawalp. 290
Request nonfiling of Notice of Federal Tax Lienp. 290
Filling out the Collection Information Statementp. 290
Form 433-A, sections i-iiip. 291
Line 13p. 291
Line 14p. 291
Lines 15 and 16p. 292
Lines 17 and 18p. 293
Line 19p. 294
Form 433A, section IVp. 294
Form 433-A, section Vp. 296
National Standard Expensesp. 297
Housing and utilitiesp. 298
Transportationp. 298
Other expensesp. 298
Make your financial statement the "quick and easy" onep. 301
Revising the installment agreementp. 302
If only one spouse owes taxesp. 303
Installment agreements for businessesp. 203
Rules of the roadp. 306
Just the factsp. 307
13 The Bankruptcy Alternativep. 309
Bankruptcy fiction and fablep. 309
How bankruptcies workp. 311
Discharging taxes in bankruptcyp. 312
Getting the discharge from taxesp. 315
How Chapter 11 and Chapter 13 workp. 316
Putting these concepts into practicep. 319
Just the factsp. 319
14 The Problem Resolution Program and the Taxpayer Bills of Rightsp. 321
"Help!"--the Problem Resolution Programp. 322
In collection trouble? File "911"p. 323
How to file 911p. 326
Other red-tape issuesp. 328
The Taxpayer Bills of Rightsp. 329
When you are auditedp. 330
When the IRS comes to collect your taxesp. 332
Right to a clear explanationp. 332
Installment agreementp. 332
Right to pre-levy thirty-day cooling-off periodp. 333
Right to post-lien notice hearingp. 334
When you sue the IRSp. 334
Right to attorneys' fees and other costsp. 334
Right to sue for damagesp. 335
Right to representationp. 335
Right to twenty-one-day waitp. 336
Right to quick appeal for some property seizuresp. 336
Right to review of liensp. 337
Additional rights in the 1996 Actp. 338
(Nearly) useless provisions enacted in 1998p. 340
Just the factsp. 341
V Going to Courtp. 343
15 Handling Your Case in Tax Courtp. 345
What is the United States Tax Court?p. 346
What cases can you bring to Tax Court?p. 347
Getting your case to Tax Courtp. 348
Representing yourself in Tax Courtp. 349
Trying your Tax Court casep. 351
Phase 1 get your foot in the doorp. 351
Phase 2 what's up their sleeve: "Discovery"p. 353
Phase 3 prepare, prepare, preparep. 356
Phase 4 pre-trial Order and Memorandump. 356
Phase 5 "call the case for trial!"p. 358
Phase 6 the trial: Time to fightp. 359
Phase 7 decisionp. 360
Other traps and rulesp. 360
Just the factsp. 361
16 Suing or Getting Sued by the IRSp. 363
Cases people bringp. 364
Suit for tax refundp. 364
Civil damages for unauthorized disclosurep. 365
Civil damages for failure to release a tax lienp. 366
Civil damages for unauthorized collection actionsp. 367
Suit to contest a summonsp. 368
The constitutional tortp. 368
Suit for wrongful levyp. 369
Suits for surplus proceedsp. 370
Suit for substituted sale proceedsp. 371
Suits to adjudicate rights to propertyp. 371
Declaratory judgmentp. 372
Suit to contest jeopardy levy or assessmentp. 373
Deadlines when you want money from the IRSp. 374
Claims for credit or refundp. 374
Suits against the governmentp. 375
Tax Courtp. 375
Federal district courtp. 375
Other deadlinesp. 376
Defending suits by the governmentp. 376
Suit to reduce a tax assessment to judgmentp. 377
Suit to enforce a lien or to subject property to the payment of taxp. 378
Suit for erroneous refundp. 379
Suit to enforce an IRS levyp. 380
Suit to enforce estate taxesp. 380
State law suitsp. 381
Suit against third-party lenders of wagesp. 382
Suit to enforce an IRS summonsp. 382
Just the factsp. 383
VI Everyday IRS Issuesp. 385
17 Turning the Tables: Getting Information and Money from the IRSp. 387
Big Brother does watch youp. 387
Method 1 call the agencyp. 388
Method 2 ask the agentp. 390
Method 3 find and analyze the tax rulesp. 391
Method 4 the Freedom of Information Act and the Privacy Actp. 393
The IRS in The electronic agep. 396
electronic filing And payment optionsp. 399
EZ Telefilep. 399
IRS Tax Factsp. 400
Electronic refundsp. 401
Form 1040PCp. 401
Other electronic filingp. 401
Internet filingp. 402
Paying electronicallyp. 402
Telephone helpp. 403
Teletaxp. 403
The Internetp. 403
Faxp. 405
Tax formsp. 405
Turning the tables: make the IRS give you moneyp. 406
Claim for refundp. 406
Rewardsp. 408
Attorneys' feesp. 409
Suits for damagesp. 409
Just the Factsp. 410
18 Common Business and Personal Tax Trapsp. 411
Choosing your business formp. 411
The tax traps for small businessesp. 413
Employment taxesp. 413
Employee-independent contractor disputesp. 415
Keeping business recordsp. 417
The IRS Education Programp. 418
Divorce and separationp. 419
How the problem arisesp. 420
"But he promised to pay"p. 421
Property transfersp. 421
Negotiating with the Collection Division after a divorcep. 422
Protecting yourself and anticipating problemsp. 424
Just the factsp. 424
A Glossaryp. 425
B Resource Guidep. 435
C Recommended Reading Listp. 457
D Important Documentsp. 461
E Personal and Business Penaltiesp. 473
Indexp. 479