25 South Charles Street, 21 st Floor Baltimore, Maryland (410)

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1 25 South Charles Street, 21 st Floor Baltimore, Maryland (410)

2 Julian T. Lee joined Rosenberg Martin Greenberg s tax department as an associate in Julian s practice focus is representation of individuals and businesses throughout all stages of federal and state tax controversies. He is a graduate of Emory University and earned his J.D. from the Benjamin N. Cardozo School of Law, where he served as an editorial board member of the Moot Court Honor Society. Julian received his LL.M. in Taxation with distinction from Georgetown University Law Center. He is admitted to practice in the State of Maryland and the State of New York.

3 Jeffery D. Trevillion Jr., MBA, CPA is an attorney and has been admitted to practice law in Oklahoma and the U.S. District Court, Western District of Oklahoma and the United States Tax Court. Mr. Trevillion s experience and his law practice focuses on tax controversies, white collar criminal litigation, and civil justice litigation. He has been recently admitted to the Criminal Justice Act Panel for the Western District of Oklahoma. Mr. Trevillion is regarded as a highly trusted advisor by the Oklahoma legal community, for example, he serves on the Board of Directors or as a trustee for the following organizations: the Oklahoma Bar Foundation, Oklahoma County Bar Foundation, the Oklahoma City Association of Black Lawyers, and the OBA Young Lawyers Division. Mr. Trevillion is a member of the American Bar Association, the National Bar Association, the Oklahoma Bar Association, the Oklahoma County Bar Association, the American Institute of Certified Public Accountants and Oklahoma Society of Certified Public Accountants, the American Association for Justice (AAJ), and the Oklahoma Association for Justice (OAJ).

4 Circular Formally titled Regulations Governing Practice Before the Internal Revenue Service. Treas. Dept. has authority to promulgate rules for those representing clients before the Service. Includes the ability to discipline representatives, including: imposing monetary fines; public censure; and suspension or disbarment from the right to practice before the Service.

5 Form 2848 Power of Attorney & Declaration of Representative Required to represent taxpayers before the IRS. Form 2848 allows IRS to communicate with the representative alone Complete the form, fax to the appropriate campus. Authorization should register in the IRS system in about 10 days Retain a copy to fax directly to IRS rep., if the form is not accessible to the IRS rep.

6 Practitioners must enroll and be approved for access After August 11, 2013 E-Services will only provide transcript data

7 Collection Information Statement (Form 433) Installment Agreement Offer In Compromise (OIC) Currently not collectible (CNC) status Notice of Federal Tax Lien (NFTL) Lien Releases

8 Form 433-A (Individuals); 433-B (Businesses); 433-F (simplified version) Necessary to assess taxpayer s ability to pay from income and equity in assets Identifies levy sources that may be brought into the collection process Signed under penalty of perjury Pre-requisite for OIC, CNC, and some installment agreements

9 Pre-requisites: Taxpayer must be in compliance, i.e. all delinquent returns filed to determine total tax liability.(see IRM ) Form 433 collection information statement. OIC Requested with Form 656 including: Form 433 Basis for the offer. (See IRM (2)). 20% of total offer* $150 filing fee* *Waived in certain circumstances. (See Reg (b); Rev. Proc , )

10 If accepted, strict adherence to these conditions: Compliance with all filing and payment requirements for the next 5 years Taxpayer forfeits all refunds during repayment period Taxpayer cannot contest tax liability NFTL may be filed until offer terms are satisfied. SOL on assessments are suspended until 1 year after terms of offer are satisfied See IRS Legal Memo (July 20, 2000)

11 If OIC is rejected: Request appeal using Form Appeal review hearing or reconsideration is de novo. See Reg (b)(3)(i) If Appeal was rejected as part of a Collection Due Process Hearing, the rejection must be appealed to the US Tax Court (See IRC 6330(d))

12 6321. Lien for taxes If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.

13 6322. Period of lien Lien imposed by IRC 6321 arises at the time the assessment is made and continues until the liability for the amount so assessed (or a judgment against the taxpayer arising out of such liability) is satisfied or becomes unenforceable by reason of lapse of time.

14 6323. Validity and priority against certain Persons (a) Purchasers, holders of security interests, mechanic's lienors, and judgment lien creditors.- Lien imposed IRC 6321 shall not be valid as against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor until notice thereof which meets the requirements of subsection (f) has been filed by the Secretary.

15 6325. Release of lien or discharge of property (a) Release of lien.--irs shall issue certificate of release of any lien imposed with respect to any IRC tax not later than 30 days after the day on which (1) Liability satisfied or unenforceable.--irs finds that liability (together with applicable interest ) has been fully satisfied or has become legally unenforceable

16 6325. Release of lien or discharge of Property (b) Discharge of property- (1) Property double the amount of the liability; (2) Part payment; interest of United States valueless; (3) Substitution of proceeds of sale; or (4) Right of substitution of value

17 6325. Release of lien or discharge of Property (b) Discharge of property (2) Part payment; interest of United States valueless. IRS may issue a certificate of discharge of any part of the property subject to the lien if (A) there is paid over to the Treasury in partial satisfaction of the liability secured by the lien an amount equal to full value of the government s interest in the part to be discharged, or (B) the IRS determines at any time that the government s interest in the part to be so discharged has no value. In determining the value of the government s interest in the part to be discharged, the IRS shall give consideration to the value of that part and to existing liens with priority ahead of the government.

18 6325. Release of lien or discharge of Property (d) Subordination of lien. IRS may issue certificate of subordination of any lien imposed by this chapter upon any part of the property subject to such lien if (1) there is paid over to the IRS an amount equal to the amount of the lien or interest to which the certificate subordinates the lien of the United States, (2) the IRS believes that the amount realizable by the United States from the property to which the certificate relates, or from any other property subject to the lien, will ultimately be increased through subordination and that collection will be facilitated by the subordination

19 IRM (2) ( ) Discharge and Subordination Requests If the taxpayer requests a discharge/subordination while an offer is pending and the request is approved, the advisor will: Advise the taxpayer that proceeds from the discharge or subordination will be applied to the OIC, if accepted; and Advise the taxpayer if the OIC is not accepted, the proceeds will be applied to the tax liability.

20 Resources: Letter 3172 and Appeal Rights Grounds for Release or Withdrawal Pub Application for Discharge Pub. 783 Application for Subordination Pub. 784 Centralized Lien Unit Taxpayer Advocate Report

21 6015. Relief from joint and several liability on joint return (b) Procedures for relief from liability applicable to all joint filers.-- (1) In general.--under procedures prescribed by the Secretary, if-- (A) Joint return; (B) Understatement attributable to erroneous items of one individual filing the joint return; (C) Requesting Spouse did not know, and had no reason to know, that there was such understatement; (D) Inequitable to hold Requesting Spouse liable for deficiency attributable to the understatement; and (E) Requesting Spouse requests relief within 2 years after IRS begins collection activity, then Requesting Spouse shall be relieved of liability (including interest, penalties, and other amounts)

22 6015. Relief from joint and several liability on joint return (c) Procedures to limit liability for taxpayers no longer married or taxpayers legally separated or not living together.- - (1) In general. Requesting Spouse s liability for any deficiency shall not exceed the portion of the deficiency allocable under subsection (d). (2) Burden of proof. Barring exceptions, Requesting Spouse shall have the burden of proof with respect to establishing the portion of any deficiency allocable to such individual. (3) Election.-- (A) Individuals eligible to make election. (i) In general. Requesting Spouse is eligible to elect the application of this subsection if-- (I) at the time of election, Requesting Spouse is no longer married to, or is legally separated from, spouse or (II) Requesting Spouse was not a member of the same household as spouse at any time during the preceding year. (ii) Certain taxpayers ineligible to elect. Election is invalid if IRS can demonstrate fraudulent transfer of assets between spouses. (B) Time for election. Election must be made within 2 years of IRS initiation of collection action against Requesting Spouse. (C) Election not valid with respect to certain deficiencies. Unless evidence of duress, Requesting Spouse not entitled to relief from items causing deficiency he/she had actual knowledge of.

23 6015. Relief from joint and several liability on joint return (f) Equitable relief.--if- (1) taking into account all the facts and circumstances, it is inequitable to hold Requesting Spouse liable for any unpaid tax or deficiency; and (2) relief under IRC 6015(b) and (c) is unavailable, IRS may relieve Requesting Spouse of such liability.

24 IRS Notice Section 4. General Conditions for Relief.01 Eligibility for equitable relief (1) The requesting spouse filed a joint return for the taxable year for which he or she seeks relief. (2) Relief is not available to the requesting spouse under section 6015(b) or (c). (3) Time for filing claim for relief: (a) If the requesting spouse is applying for relief from a liability or a portion of a liability that remains unpaid, the request for relief must be made before the expiration of the period of limitation on collection of the income tax liability, as provided in section Generally, that period expires 10 years after the assessment of tax. Section (b) Claims for credit or refund of amounts paid must be made before the expiration of the period of limitation on credit or refund, as provided in section Generally, that period expires three years from the time the return was filed or two years from the time the tax was paid, whichever is later. (4) No assets were transferred between the spouses as part of a fraudulent scheme by the spouses. (5) The nonrequesting spouse did not transfer disqualified assets to the requesting spouse. (6) The requesting spouse did not knowingly participate in the filing of a fraudulent joint return.

25 IRS Notice Section 4. General Conditions for Relief.01 Eligibility for equitable relief (cont.) (7) The income tax liability from which the requesting spouse seeks relief is attributable (either in full or in part) to an item of the nonrequesting spouse or an underpayment resulting from the nonrequesting spouse's income. Exceptions: (a) Attribution solely due to the operation of community property law. (b) Nominal ownership. (c) Misappropriation of funds. (d) Abuse not amounting to duress. (e) Fraud committed by nonrequesting spouse.

26 IRS Notice Section 4. General Conditions for Relief.02 Streamlined Equitable Relief Requesting Spouse must establish he/she: (1) Is no longer married to the non-requesting spouse; (2) Would suffer economic hardship if relief were not granted; and (3) Did not know or have reason to know that there was an understatement or deficiency on the joint return, or did not know or have reason to know that the nonrequesting spouse would not or could not pay the underpayment of tax reported on the joint income tax return.

27 IRS Notice Section 4. General Conditions for Relief.03 Equitable Relief Factors--.03 Equitable Relief Factors-- (a) Marital status (b) Economic hardship (c) Knowledge or reason to know (d) Legal obligation (e) Significant benefit (f) Compliance with income tax laws (g) Mental or physical health

28 Hold on Collection Action IRC 6015(e)(1)(B)(i): no collection action until 90 days after final determination or final Tax Court decision Collection Statute of Limitations Tolled IRC 6015(e)(2)(A): CSED toll extends for 60 days after expiration of collections hold

29 Additional Claims After Final Determination: o IRM ( ) ( A final determination will be reconsidered any time a Requesting Spouse (RS) submits information not previously considered (new information or information that the IRS failed to previously consider) as long as the collection statute expiration date (CSED) or refund statute expiration date (RSED) is still open. ) o Treas. Reg (h)(5): a second 6015(c) claim is permissible if RS did not meet qualifications on 1 st claim but now does o See Gray v. Commissioner, 138 T.C. No. 13, (2012), quoting Barnes v. Commissioner, 130 T.C. 248, 254, n. 6 (2008) (reserving ruling on whether a second request for relief that is based on grounds or facts sufficiently dissimilar from those underlying the first request for relief might revive the right to petition for review by this Court. )

30 Resources: Form 8857 (Request for Innocent Spouse Relief) Instructions for Form 8857

31 Dollar threshold for filing NFTL - $10,000 Withdrawal (not release) of NFTL when paid For individuals -- Withdrawal of NFTL with Direct Debit Installment Agreements (DDIA) For businesses If $25,000 or less of unpaid tax, withdrawal of NFTL and 24 months to pay with Direct Debit Installment Agreements Streamlined IA with no financials and 72 months if less than $50,000 Streamlined OICs individuals (self-employed with gross receipts less than $500,000 & no employees or annual income up to $100,000 & up to $50,000 owed) Waiver of failure-to-pay penalty for Form 1127A

32 Revisions to the OIC Program Focus on financial analysis used to determine which taxpayers qualify for an OIC Revising the calculation of taxpayer s future income Revising the calculation of taxpayer s future income RCP considers only 1 year of future income for Offers paid in 5 or fewer months, down from 4 years RCP considers 2 years of future income for Offers paid in 6 to 24 months, down from 5 years All Offers must be fully paid within 24 months of the date the offer is accepted

33 New definition of dissipated assets to calculate RCP Equity in income producing assets generally will not be included in RCP for on-going businesses Allowable Living Expense standards Allowable Living Expense standards National Standard miscellaneous allowance expanded to include additional items such as credit card payments and bank fees and charges Allow payments for loans guaranteed by the federal government for taxpayer's post-high school education. Allow payments for delinquent state & local tax based on percentage basis of tax owed to the state and IRS

34 Refund Fraud Detection and Prevention During 2012, the IRS protected $20 billion of fraudulent refunds, including those related to ID theft, compared with $14 billion in Refund fraud detection and prevention for the 2013 tax season: For 2013, significant increase in number and quality of ID theft screening filters to spot fraudulent tax returns before refunds are issued. Dozens of filters now in place IRS CID tripled number of ID theft investigations in fiscal year 2012, starting 900 investigations. Nearly 500 indictments across the country. For October 2012 through March 2013, over 670 criminal ID theft investigations opened. Sentences average four years in custody and as long as 20 years. IRS expanded pilot program nationwide allowing local law enforcement agencies to obtain tax return data facilitating investigation and pursuit of ID thieves. During pilot s first year covering nine participating states, IRS received over 1,560 waiver requests from over 100 state and local law enforcement agencies. IRS is collaborating with more than 130 financial institutions to identify ID theft fraud schemes and block refunds from reaching the hands of identity thieves. Hundreds of millions of dollars protected so far.

35 Increasing Efforts to Help Victims 1Q 2013, IRS worked with victims to resolve and close over 200,000 cases. This is in addition to the expanded Identity Protection PIN (IP PIN) pilot, an initiative to protect victims with previously confirmed cases of identity theft by creating an additional layer of security on these accounts. Additional IRS efforts to help victims: IP PIN expansion - IP PIN is unique identifier demonstrating a particular taxpayer is rightful filer of the return. IRS issued IP PINs to over 770,000 taxpayer victims of ID theft in More than 100% increase over previous year. IP PIN allows victims to avoid delays in filing returns and receiving refunds. Victim case resolution - More IRS employees assigned for resolution of ID theft cases. Often complex issues over multiple tax years. Cases of resolving identity can be complicated by the thieves themselves calling in. IRS is working hard to streamline internal process to reduce typical resolution time period down from 180 days. Service options - IRS provides information in several ways ranging from a special section on IRS.gov devoted to ID theft (Taxpayer Guide to Identity Theft) to a special phone number available for victims to resolve tax issues. The IRS Identity Protection Specialized Unit is available at

36 IRS Criminal Investigation FY 2012: IRS tripled number of criminal investigations compared to 2011 by initiating nearly 900 investigations regarding ID theft resulting in almost 500 indictments. January 2012: IRS enforcement personnel in January 2012 simultaneously conducted sweep of approx. 150 money services businesses to ensure businesses not knowingly or unknowingly facilitating ID theft or refund fraud. Visits in nine high-risk locations across the country. April 2012: IRS established pilot program in Florida, allowing ID theft victims to authorize IRS to share information with local law enforcement, removing hurdle previously exploited by ID thieves. IRS expanded pilot to eight more states: Alabama, California, Georgia, New Jersey, New York, Oklahoma, Pennsylvania and Texas - representing large percentage of overall ID theft refund fraud threat seen at the IRS. Over 100 law enforcement agencies participated in this effort, and over 1,560 waiver forms were received from taxpayers during the program s first year. The IRS expanded the program nationwide in March January 2013: IRS conducted coordinated ID theft enforcement sweep leading to 734 enforcement actions, including 298 indictments, informations, complaints and arrests. IRS CID also working closely with DOJ Tax on new guidelines to expedite investigations and criminal prosecutions of these fraudsters to deter identity theft refund fraud. We continue working collaboratively on this effort.

37 April 26, 2013: Alabama Residents Indicted for Stolen Identity Refund Fraud Conspiracy Several residents of Montgomery, Ala., indicted by federal grand jury for involvement in conspiracy to receive fraudulent tax refunds into their bank accounts. Indicted on various charges, including conspiracy, theft of government funds and aggravated ID theft. Defendants obtained the means to identify individuals - names, dates of birth, and Social Security numbers to prepare and file false returns and set up bank accounts to receive the false federal income tax refunds. Defendants withdrew funds after the false refunds were deposited. The bank accounts received at least $500,000 in false tax refunds. If convicted, each of the defendants face maximum potential sentence of five years in prison for the conspiracy charge, up to ten years in prison on each theft of government funds charges. One also faces a mandatory two-year sentence for the aggravated identity theft counts. The defendants will also be subject to fines and mandatory restitution if convicted.

38 Form (Identity Theft Affidavit) Reason for Filing Form Taxpayer Information Telephone Contact Information Required Documentation Proof of ID Passport; License; Soc. Sec. Card; Other valid fedeal or State issued ID Identity Protection Specialized Unit (IPSU) Taxpayer Advocate Service

39 Resources: Form (Identity Theft Affidavit) Taxpayer Guide to Identity Theft