2. IRS Hot Topics of the Day Dan Breece Lori Cacioppo April 14, 2010

3. Topics Reminders for Last Minute Tax Filers Reminders for Last Minute Tax Filers Get Recovery Tax Breaks Get Recovery Tax Breaks Return Preparer Initiative Return Preparer Initiative Collection Issues Collection Issues

4. Reminders for Last Minute Tax Filers Deadlines Deadlines Recovery Tax Breaks Recovery Tax Breaks File Electronically File Electronically Direct Deposit for Refunds Direct Deposit for Refunds Pay Electronically Pay Electronically Extension of Time to File Extension of Time to File Installment Agreements Installment Agreements

5. Dont Miss the Deadline

6. Recovery Tax Breaks The Homebuyer Credit The Homebuyer Credit Making Work Pay Credit Making Work Pay Credit American Opportunity Credit American Opportunity Credit Home Energy Credit Home Energy Credit New Car Tax and Fee Deduction New Car Tax and Fee Deduction

7. Worker, Homeownership, and Business Assistance Act of 2009 (WHBAA) First time homebuyers have qualified for refundable tax credits as part of the economic stimulus package First time homebuyers have qualified for refundable tax credits as part of the economic stimulus package With that program set to expire at the end of November, Congress voted to extend and expand the program With that program set to expire at the end of November, Congress voted to extend and expand the program President Obama signed WHBAA into law, November 6, 2009 President Obama signed WHBAA into law, November 6, 2009

8. First Time Homebuyer Credit for 2008 Purchases Maximum credit $7,500 Maximum credit $7,500 Repayment over 15 years - starting on tax year 2010 return Repayment over 15 years - starting on tax year 2010 return Purchases must have been completed between 4/9/2008 and 12/31/2008 Purchases must have been completed between 4/9/2008 and 12/31/2008

9. First Time Homebuyer Credit for 2009 and 2010 Purchases First Time Homebuyers First Time Homebuyers Maximum credit $8,000 ($4,000 for married filing separately), Maximum credit $8,000 ($4,000 for married filing separately), Purchase must be completed between 01/01/2009 and 4/30/2010 Purchase must be completed between 01/01/2009 and 4/30/2010 Long Time Homeowners Long Time Homeowners Maximum credit $6,500 ($3,250 for married filing separately) Maximum credit $6,500 ($3,250 for married filing separately) Purchase must be completed between 11/7/2009 and 4/30/2010 Purchase must be completed between 11/7/2009 and 4/30/2010 Credit allowed to homebuyers who sign a binding contract by Credit allowed to homebuyers who sign a binding contract by 4/30/2010 and close by 6/30/2010 4/30/2010 and close by 6/30/2010 No Repayment, unless home ceases to be main home within 3 years of purchase date No Repayment, unless home ceases to be main home within 3 years of purchase date Taxpayers can elect to claim credit on their prior year return. 2009 purchases can be claimed on a 2008 return, either original or amended. 2010 purchases can be claimed on a 2009 return, either original or amended. Taxpayers can elect to claim credit on their prior year return. 2009 purchases can be claimed on a 2008 return, either original or amended. 2010 purchases can be claimed on a 2009 return, either original or amended.

10. Must be primary residence Must be primary residence Must close on the purchase prior to claiming credit Must close on the purchase prior to claiming credit Must be a first-time homebuyer to claim the $7,500 credit for 2008 purchases or $8,000 credit for 2009/2010 purchases Must be a first-time homebuyer to claim the $7,500 credit for 2008 purchases or $8,000 credit for 2009/2010 purchases Must not have not owned a home in the three years prior to the purchase Must not have not owned a home in the three years prior to the purchase Must be long-time resident of same principal residence to claim $6,500 credit for purchases after 11/6/2009 Must be long-time resident of same principal residence to claim $6,500 credit for purchases after 11/6/2009 Must have owned and used the same principal residence for five consecutive years out of eight-year period ending on date of new purchase Must have owned and used the same principal residence for five consecutive years out of eight-year period ending on date of new purchase Must file Form 5405 with relevant return Must file Form 5405 with relevant return Eligibility Requirements

11. Repayments of Credit For 2008 purchases, normally repaid in 15 equal annual installments beginning in 2010 For 2008 purchases, normally repaid in 15 equal annual installments beginning in 2010 For 2009/2010 purchases no repayment required unless a repayment trigger within 3 years For 2009/2010 purchases no repayment required unless a repayment trigger within 3 years

12. Making Work Pay Credit Maximum credit is 6.2% of earned income Maximum credit is 6.2% of earned income Refundable Refundable Phased out over modified AGI range of $75,000- $95,000 ($150,000-$190,000 if MFJ) Phased out over modified AGI range of $75,000- $95,000 ($150,000-$190,000 if MFJ) Available for tax years 2009 and 2010 Available for tax years 2009 and 2010 Figured on Schedule M or on 1040EZ worksheet Figured on Schedule M or on 1040EZ worksheet Reduced by economic recovery payment and government retiree credit Reduced by economic recovery payment and government retiree credit

13. Hope Education Credit Hope credit modified for 2009 and 2010 Hope credit modified for 2009 and 2010 Maximum credit $2,500 Maximum credit $2,500 100% of the first $2,000 of expenses 100% of the first $2,000 of expenses 25% of the next $2,000) 25% of the next $2,000) Available first four years of post-secondary education Available first four years of post-secondary education Qualified expenses include course materials, tuition, and fees Qualified expenses include course materials, tuition, and fees 40% credit is refundable 40% credit is refundable

14. Nonbusiness Energy Property Credit Increased to 30% Increased to 30% Limited to $1,500 for the total of all 2009 and 2010 purchases Limited to $1,500 for the total of all 2009 and 2010 purchases Qualifying property definition revised including update to energy efficiency requirements Qualifying property definition revised including update to energy efficiency requirements

15. Qualified Motor Vehicle Taxes New deduction for qualified motor vehicle taxes on purchase of certain new cars, trucks, motorcycles or motor homes New deduction for qualified motor vehicle taxes on purchase of certain new cars, trucks, motorcycles or motor homes Elect to add to standard deduction or take itemized deduction (if not electing sales tax deduction) Elect to add to standard deduction or take itemized deduction (if not electing sales tax deduction) Limited to tax on first $49,500 Limited to tax on first $49,500 Applies to purchases made after February 16, 2009, and before January 1, 2010 Applies to purchases made after February 16, 2009, and before January 1, 2010

16. Other Reminders File Electronically File Electronically Choose Direct Deposit for Refunds Choose Direct Deposit for Refunds Buy Savings Bonds Buy Savings Bonds Check for Errors Check for Errors Pay Electronically Pay Electronically Extension of Time to File Extension of Time to File Installment Agreement Installment Agreement

17. IRS Recommends Increased Oversight of Federal Tax Return Preparers (Presenter name) (Presenter title)

18. Background IRS Return Preparer Review IRS Return Preparer Review IRS Strategic Plan Objectives IRS Strategic Plan Objectives Oversight agency interest Oversight agency interest Consumer protection group concerns Consumer protection group concerns Taxpayer Advocate concerns Taxpayer Advocate concerns Almost 9 out of 10 use a paid preparer/software Almost 9 out of 10 use a paid preparer/software

19. Definition of Preparer for These Recommendations Any person who prepares for compensation any return of tax or any claim for refund of tax under the Internal Revenue Code

20. Summary of Significant Recommendations 1. Registration, user fee, and Preparer Tax Identification Number (PTIN) usage requirements for all signing paid preparers 2. Competency testing for signing paid preparers who are not attorneys, certified public accountants, or enrolled agents 3. Continuing education requirements of 15 hours per year for signing paid preparers who are not attorneys, certified public accountants, enrolled agents, enrolled actuaries, or enrolled retirement plan agents 4. Tax compliance verification of all paid preparers

21. 1. Registration, User Fee, PTIN Recommendations: Recommendations: Implement mandatory registration and user fee for all signing paid federal tax return preparers Implement mandatory registration and user fee for all signing paid federal tax return preparers Issue a PTIN to all registered preparers Issue a PTIN to all registered preparers Require renewal registration and user fee every three years Require renewal registration and user fee every three years

22. 2. Competency Testing Recommendations: Recommendations: Require all unenrolled signing paid return preparers to pass a competency test within three years from the initial implementation date. No grandfathering for experience Require all unenrolled signing paid return preparers to pass a competency test within three years from the initial implementation date. No grandfathering for experience Attorneys, CPAs, and enrolled agents would be exempt from testing Attorneys, CPAs, and enrolled agents would be exempt from testing Develop two levels of competency tests Develop two levels of competency tests 1) Wage and non-business 1040 returns and 2) Wage and small business 1040 returns (would expand to include other business returns in later years) (more)

23. 2. Competency Testing Recommendations (continued): Recommendations (continued): Allow individuals to take the tests an unlimited number of times during the initial three-year implementation phase Allow individuals to take the tests an unlimited number of times during the initial three-year implementation phase Individuals who pass the test will be permitted to sign returns as paid tax return preparers Individuals who pass the test will be permitted to sign returns as paid tax return preparers After completion of the initial registration phase and testing has begun, new unenrolled preparers would be required to pass the competency test prior to receiving a PTIN After completion of the initial registration phase and testing has begun, new unenrolled preparers would be required to pass the competency test prior to receiving a PTIN

24. 3. Continuing Education Recommendations: Recommendations: Require all unenrolled signing paid preparers to complete 15 Continuing Professional Education (CPE) hours per year, including 3 hours of federal tax law updates, 2 hours of ethics, and 10 hours of federal tax law Require all unenrolled signing paid preparers to complete 15 Continuing Professional Education (CPE) hours per year, including 3 hours of federal tax law updates, 2 hours of ethics, and 10 hours of federal tax law During three-year renewal registration, require self-certification of 45 hours of CPE completion (IRS will perform random verification) During three-year renewal registration, require self-certification of 45 hours of CPE completion (IRS will perform random verification)

25. 4. Tax Compliance Recommendations: Recommendations: During the three-year phase-in period, tax compliance checks would be performed on all preparers after registration During the three-year phase-in period, tax compliance checks would be performed on all preparers after registration After the three-year phase-in period, the IRS would begin conducting tax compliance checks prior to issuance or renewal of a PTIN. Similar to the testing requirement, tax compliance would become a condition of registration for new applicants. (more) After the three-year phase-in period, the IRS would begin conducting tax compliance checks prior to issuance or renewal of a PTIN. Similar to the testing requirement, tax compliance would become a condition of registration for new applicants. (more)

26. 4. Tax Compliance Recommendations (continued): Recommendations (continued): Existing preparers with potential tax compliance violations would be referred to the IRS Office of Professional Responsibility for investigation Existing preparers with potential tax compliance violations would be referred to the IRS Office of Professional Responsibility for investigation

27. Additional Recommendations Apply Circular 230 ethical standards to all signing and nonsigning paid preparers Apply Circular 230 ethical standards to all signing and nonsigning paid preparers Develop a comprehensive return preparer enforcement strategy Develop a comprehensive return preparer enforcement strategy Develop a public awareness campaign to educate taxpayers, preparers, and employees on the new requirements and standards Develop a public awareness campaign to educate taxpayers, preparers, and employees on the new requirements and standards Create a public database Create a public database(more)

28. Additional Recommendations Establish an IRS task force that will seek the input of the software industry to address identified risks on software dependence and the possibility of establishing industry standards Establish an IRS task force that will seek the input of the software industry to address identified risks on software dependence and the possibility of establishing industry standards Convene a working group to review the refund settlement product industry and explore opportunities to improve efficiency of refund delivery Convene a working group to review the refund settlement product industry and explore opportunities to improve efficiency of refund delivery

29. Efforts This Filing Season Helping taxpayers choose a reputable preparer Helping taxpayers choose a reputable preparer Sending 10,000 letters to preparers with large volumes of returns with error-prone issues Sending 10,000 letters to preparers with large volumes of returns with error-prone issues Visiting thousands of preparers who receive the letters to discuss preparer obligations and responsibilities Visiting thousands of preparers who receive the letters to discuss preparer obligations and responsibilities Posing as taxpayers for the purpose of determining non-compliance Posing as taxpayers for the purpose of determining non-compliance Working closely with the Department of Justice to pursue civil or criminal action as appropriate Working closely with the Department of Justice to pursue civil or criminal action as appropriate

30. Also Coming Soon… Preparer E-File Mandate Legislation was signed in late 2009 mandating preparers that file more than 10 individual or trust returns to e-file beginning 1/1/2011 Legislation was signed in late 2009 mandating preparers that file more than 10 individual or trust returns to e-file beginning 1/1/2011 IRS has not yet issued rules or regulations IRS has not yet issued rules or regulations Analysis is underway on whether the mandate will be phased in and whether there will be exceptions, waivers, or taxpayer opt-outs Analysis is underway on whether the mandate will be phased in and whether there will be exceptions, waivers, or taxpayer opt-outs

31. In Preparation If you file more than 10 individual or trust returns, are you enrolled and accepted to e-file? Do you have an Electronic Filing Identification Number (EFIN)? If you file more than 10 individual or trust returns, are you enrolled and accepted to e-file? Do you have an Electronic Filing Identification Number (EFIN)? If yes, all you need to do is file your customers returns electronically If yes, all you need to do is file your customers returns electronically If no, the first step is to enroll to participate in IRS e-file, also known as becoming an Electronic Return Originator (ERO). You may do this anytime. Visit IRS.gov and click on the e-file logo. If no, the first step is to enroll to participate in IRS e-file, also known as becoming an Electronic Return Originator (ERO). You may do this anytime. Visit IRS.gov and click on the e-file logo.

32. Collection Issues Notices Notices Federal Tax Liens Federal Tax Liens Installment Agreements Installment Agreements Offer in Compromise Offer in Compromise Appealing Collection Issues Appealing Collection Issues

33. Issuance of Notices

34. Who Works What After the last notice is issued: After the last notice is issued: Status 26: Worked by a Revenue Officer Status 26: Worked by a Revenue Officer Status 24: Queue – may be worked by Campus, ACS, TAC or Field Collection Status 24: Queue – may be worked by Campus, ACS, TAC or Field Collection Status 22: Referred to the Automated Collection System (ACS) Status 22: Referred to the Automated Collection System (ACS) May also be worked at Taxpayer Assistance Centers (TAC) – walk-in sitesMay also be worked at Taxpayer Assistance Centers (TAC) – walk-in sites

35. Federal Tax Lien Legal claim against property as security for tax debt Legal claim against property as security for tax debt Arises after assessment, notice and demand, and neglect or refusal to pay Arises after assessment, notice and demand, and neglect or refusal to pay NFTL is filed to establish priority against competing creditors NFTL is filed to establish priority against competing creditors Appeal rights after filing Appeal rights after filing

36. Levy/Seizure Authority Final Notice issued at least 30 days prior to levy Final Notice issued at least 30 days prior to levy Seizure: Property that is held by the taxpayer Seizure: Property that is held by the taxpayer Car, Boat, House, etc. Car, Boat, House, etc. Levy: Property that belongs to the taxpayer that is held by someone else Levy: Property that belongs to the taxpayer that is held by someone else Wages, bank accounts, retirement accounts, etc. Wages, bank accounts, retirement accounts, etc. Levy on assets easily converted to cash first Levy on assets easily converted to cash first Appeal Rights prior to levy within 30 days of notice Appeal Rights prior to levy within 30 days of notice Collection Due Process hearing with Appeals Division Collection Due Process hearing with Appeals Division

37. Installment Agreements TP can not full pay immediately TP can not full pay immediately TP can make payments TP can make payments TP can Full Pay prior to expiration of the Collection Statute TP can Full Pay prior to expiration of the Collection Statute TP can make payments up to the expiration of the Collection Statute TP can make payments up to the expiration of the Collection Statute Penalty and Interest continue to accrue Penalty and Interest continue to accrue Payroll Deductions Payroll Deductions Direct Debits Direct Debits Monthly Remittances Monthly Remittances

38. Streamlined Installment Agreements Income Tax Income Tax Business or Individual Business or Individual Out-of-Business Payroll Taxes Out-of-Business Payroll Taxes Balance due less than $25K Balance due less than $25K Can full pay in five years Can full pay in five years All Federal tax returns must be filed All Federal tax returns must be filed Financial statement may be required Financial statement may be required Generally, Federal Tax Lien is considered Generally, Federal Tax Lien is considered

39. Traditional Installment Agreements Collection Information Statement is required Collection Financial Standards are used to help determine a taxpayer's ability to pay a delinquent tax liability Collection Financial Standards are used to help determine a taxpayer's ability to pay a delinquent tax liability Allowances for food, clothing and other items, known as the National Standards. Taxpayers are allowed the total National Standards amount for their family size and income level, without questioning amounts actually spent Allowances for food, clothing and other items, known as the National Standards. Taxpayers are allowed the total National Standards amount for their family size and income level, without questioning amounts actually spent Maximum allowances for housing and utilities (based on family size) and transportation, known as the Local Standards, both vary by County. Unlike the National Standards, the taxpayer is allowed the amount actually spent or the standard, whichever is less Maximum allowances for housing and utilities (based on family size) and transportation, known as the Local Standards, both vary by County. Unlike the National Standards, the taxpayer is allowed the amount actually spent or the standard, whichever is less

40. What is an Offer in Compromise? An agreement between the taxpayer and the IRS that settles the taxpayers tax debt for less than the full amount owed An agreement between the taxpayer and the IRS that settles the taxpayers tax debt for less than the full amount owed

41. Objectives of the OIC Program Resolution in best interest of both the taxpayer and the government Resolution in best interest of both the taxpayer and the government Provide taxpayer a fresh start toward future compliance Provide taxpayer a fresh start toward future compliance Obtain what can be reasonably collected as early as possible and at least cost Obtain what can be reasonably collected as early as possible and at least cost Revenue that may not be collectable through other means Revenue that may not be collectable through other means

42. Basis of OICs Doubt as to Collectibility - doubt that the tax liability could be fully paid during the life of the statute Doubt as to Collectibility - doubt that the tax liability could be fully paid during the life of the statute Effective Tax Administration - exceptional circumstance exists: public policy/equity/economic hardship Effective Tax Administration - exceptional circumstance exists: public policy/equity/economic hardship Doubt as to Liability - doubt exists that the assessed tax is correct Doubt as to Liability - doubt exists that the assessed tax is correct

43. OIC Payment Terms Lump Sum Cash Offer Lump Sum Cash Offer Short Term Periodic Payment Offer Short Term Periodic Payment Offer Deferred Periodic Payment Offer Deferred Periodic Payment Offer

44. Lump Sum Cash Offer Payable in five or fewer installments upon written notice of acceptance Payable in five or fewer installments upon written notice of acceptance Offer must be accompanied by 20% of the amount being offered and the $150 application fee or a completed Form 656-A Offer must be accompanied by 20% of the amount being offered and the $150 application fee or a completed Form 656-A 20% payment is not refundable, regardless of the outcome of the OIC 20% payment is not refundable, regardless of the outcome of the OIC

45. Determining the Lump Sum Offer Amount 5 or fewer installments in 5 months or less: 5 or fewer installments in 5 months or less: -Realizable value of assets + amount that could be collected over 48 months (or time remaining on statute, whichever is less) 5 or fewer installments in more than 5 months but within 24 months : 5 or fewer installments in more than 5 months but within 24 months : -Realizable value of assets + amount that could be collected over 60 months of payments (or time remaining on statute, whichever is less)

46. Determining the Lump Sum Offer Amount (continued) 5 or fewer installments in more than 24 months: 5 or fewer installments in more than 24 months: -Realizable value of assets + amount that could be collected over the time remaining on the statute

47. Short Term Periodic Payment Offer The offer amount must be paid within 24 months of the date the IRS received the offer The offer amount must be paid within 24 months of the date the IRS received the offer The first installment and the $150 application fee or a completed Form 656-A are due upon filing The first installment and the $150 application fee or a completed Form 656-A are due upon filing

48. Determining the Short Term Periodic Payment Offer Amount The offer amount must equal or exceed: The offer amount must equal or exceed: The realizable value of assets + what could be collected over 60 months of payments, or the time remaining on the statute, whichever is less

49. Deferred Periodic Payment Offer Payable in installments in 25 or more months but within the life of the remaining statutory period for collection Payable in installments in 25 or more months but within the life of the remaining statutory period for collection Offer must be accompanied with the first proposed installment payment and the $150 application fee, or a completed Form 656-A Offer must be accompanied with the first proposed installment payment and the $150 application fee, or a completed Form 656-A

50. Determining the Deferred Periodic Payment Offer Amount The offer amount must equal or exceed: The offer amount must equal or exceed: The realizable value of assets + the amount that could be collected through monthly payments during the remaining life of the collection statute.

51. Processability Criteria The Taxpayer Must: 1. Not be a debtor in open bankruptcy 2. Submit $150 application fee or Form 656-A 3. Submit 20% payment if filing a Lump Sum Cash offer, or the first installment payment if filing a Short Term or Deferred Periodic Payment offer, or submit Form 656-A

52. OIC Processing OIC Processing Offer must be filed with COIC site: Memphis or Holtsville. Offer must be filed with COIC site: Memphis or Holtsville. COIC site is determined by the taxpayers state of residence COIC site is determined by the taxpayers state of residence Exception: DATL offers must be filed with Exception: DATL offers must be filed with Holtsville Holtsville COIC makes all processability determinations COIC makes all processability determinations

53. Field The Field OIC groups work the following types of cases: The Field OIC groups work the following types of cases: * Corporations * Partnerships * Estates and Trusts * Trust Fund Recovery Penalty (TFRP) – Doubt as to Liability (DATL) only * Any business with employees * Closely held corporations * LLP and LLC * Sole proprietors with gross receipts over $500,000

54. Field (continued) Field OIC groups are located in three Collection Areas: Field OIC groups are located in three Collection Areas: – California – Gulf States – South Atlantic

55. Doubt as to Liability Processing Most Doubt as to Liability offers are processed and worked by a centralized Doubt as to Liability Unit in the Brookhaven Campus Most Doubt as to Liability offers are processed and worked by a centralized Doubt as to Liability Unit in the Brookhaven Campus

56. Low Income Guidelines Used to determine eligibility for exception to the application fee Used to determine eligibility for exception to the application fee Used to determine eligibility for exception to initial and all subsequent payments due during course of offer investigation Used to determine eligibility for exception to initial and all subsequent payments due during course of offer investigation Only applies to individuals Only applies to individuals Annual income level is based on the IRS OIC Low Income Guidelines. Annual income level is based on the IRS OIC Low Income Guidelines.

57. Payment Designations Taxpayers may designate the application of the 20% initial payment with the offer and periodic payments submitted while the offer is being investigated Taxpayers may designate the application of the 20% initial payment with the offer and periodic payments submitted while the offer is being investigated Designation must be in writing at the time of payment and specify taxable year, period, and type of tax Designation must be in writing at the time of payment and specify taxable year, period, and type of tax $150 application fee cannot be designated $150 application fee cannot be designated

58. Payment Designations (continued) Payments in excess of the required amount will be applied to tax unless designated as a deposit Payments in excess of the required amount will be applied to tax unless designated as a deposit Payments are considered payments on tax and are not refundable Payments are considered payments on tax and are not refundable Deposits are refundable if the offer is later returned, rejected, or withdrawn Deposits are refundable if the offer is later returned, rejected, or withdrawn

59. Form 656 - Most Common Errors Tax periods missing or incorrect Tax periods missing or incorrect OIC amount missing or not consistent with the terms OIC amount missing or not consistent with the terms Taxpayer identification numbers missing or incorrect Taxpayer identification numbers missing or incorrect OIC includes joint liabilities without signatures or both parties OIC includes joint liabilities without signatures or both parties OIC submitted by a husband and wife with joint liability taxes but also includes the single liabilities of one of the taxpayers. OIC submitted by a husband and wife with joint liability taxes but also includes the single liabilities of one of the taxpayers.

60. Most Common Reasons for a Processable Return Failure to provide financial information Failure to provide financial information Failure to stay in compliance with estimated tax payments Failure to stay in compliance with estimated tax payments Waiver of fee not substantiated Waiver of fee not substantiated Returns not filed Returns not filed

61. Tax Liens, Impact on Statutes, & Appeal Rights Tax liens may be filed during the offer investigation Tax liens may be filed during the offer investigation Tax liens not released until offer payment terms are satisfied Tax liens not released until offer payment terms are satisfied Statute of limitations for collection is suspended for pending offers Statute of limitations for collection is suspended for pending offers IRC § 7122 – provides for appeal of rejection of an offer IRC § 7122 – provides for appeal of rejection of an offer

62. FY 2008 Program Results Receipts: 43,989 Receipts: 43,989 Dispositions: Total % of Total Non processable returns: 4,706 10% Non processable returns: 4,706 10% Acceptances: 10,677 23% Acceptances: 10,677 23% Rejections: 11,608 25% Rejections: 11,608 25% Returns: 13,329 29% Returns: 13,329 29%

63. Case Cycle Time COIC COIC *92% of offers processed by COIC are currently closed within 6 months or less Field Field *74% of offers worked in our Field groups are currently closed in 9 months or less

64. Finally…. Before Filing Before Filing * Explore all collection options * Review processability checklist in Form 656 * Ensure taxpayer is current with all filing and paying requirements * Include all required fees and payments * Carefully complete financial statements and Form 656

65. Appealing Collection Actions Traditional Appeals Traditional Appeals Denied OICs, Trust Fund Recovery Penalties, Other Penalties Denied OICs, Trust Fund Recovery Penalties, Other Penalties Collection Appeals Program Collection Appeals Program Pub. 1660 Collection Appeal Rights Pub. 1660 Collection Appeal Rights Collection Due Process Collection Due Process Pub. 1660 Collection Appeal Rights Pub. 1660 Collection Appeal Rights

66. The Collection Appeals Program Taxpayers can appeal under CAP when they are told by an IRS employee that a Taxpayers can appeal under CAP when they are told by an IRS employee that a lien, lien, Can also appeal denied requests to withdraw, discharge, or subordinateCan also appeal denied requests to withdraw, discharge, or subordinate levy, or levy, or seizure action seizure action Must 1 st appeal within 10 days to the field Collection manager after Notice of Seizure is providedMust 1 st appeal within 10 days to the field Collection manager after Notice of Seizure is provided will be or has been taken, or that an installment agreement is denied or terminated will be or has been taken, or that an installment agreement is denied or terminated Generally, quicker and available for a broader range of collection actions Generally, quicker and available for a broader range of collection actions Determinations should be made within 5 days of receipt by Appeals Determinations should be made within 5 days of receipt by Appeals

67. The Collection Appeals Program Under CAP: Under CAP: Lien, Levy and Seizure Lien, Levy and Seizure Collection is generally suspended unless in jeopardyCollection is generally suspended unless in jeopardy Installment Agreement Installment Agreement Collection is suspended for first 30 days after denial or termination (unless in jeopardy)Collection is suspended for first 30 days after denial or termination (unless in jeopardy) Collection is generally suspended while under appeal if timely filedCollection is generally suspended while under appeal if timely filed

68. The CAP Process The taxpayer must first discuss the case with the group manager The taxpayer must first discuss the case with the group manager If resolution is not reached, the taxpayer may request an appeals hearing If resolution is not reached, the taxpayer may request an appeals hearing Use Form 9423 Collection Appeals Request for field (non-Campus) cases Use Form 9423 Collection Appeals Request for field (non-Campus) cases Must be submitted to the Collection manager within 2 days of managerial conference Must be submitted to the Collection manager within 2 days of managerial conference

69. The CAP Process The decision made in the CAP hearing is The decision made in the CAP hearing isFINAL No subsequent CDP after lien or levy notice is later issued (if not previously done) No subsequent CDP after lien or levy notice is later issued (if not previously done) There is no judicial review There is no judicial review

70. Collection Due Process CDP available if you receive one of the following notices: Notice of Federal Tax Lien Filing (L1372) Notice of Federal Tax Lien Filing (L1372) IRS must notify TP within 5 days of filing IRS must notify TP within 5 days of filing TP must file hearing request within 30 days (date will be specified on notice) TP must file hearing request within 30 days (date will be specified on notice) Final Notice of Intent to Levy (L1058 or 11) Final Notice of Intent to Levy (L1058 or 11) Collection action suspended for 30 days from notice date Collection action suspended for 30 days from notice date TP must file hearing request within 30 days TP must file hearing request within 30 days Notice of Jeopardy Levy Notice of Jeopardy Levy Notice of Levy on Your State Tax Refund Notice of Levy on Your State Tax Refund

71. Right to Hearing Form 12153 Request for a Collection Due Process Hearing TP may raise issues relating to unpaid tax: Appropriateness of collection actions Appropriateness of collection actions Collection alternatives Collection alternatives Offer-in-Compromise Offer-in-Compromise Installment Agreement Installment Agreement Spousal defenses Spousal defenses Innocent or Injured Spouse Innocent or Injured Spouse Amount of tax Amount of tax No 90-day letter received No 90-day letter received No other opportunity to dispute tax liability No other opportunity to dispute tax liability TP may not raise any of the above issues considered at a prior administrative or judicial hearing TP may not raise any of the above issues considered at a prior administrative or judicial hearing

72. Right to Hearing Collection action is generally suspended during the 30 days after the levy notice and during the appeal process if appeal was filed timely (unless in jeopardy) Collection action is generally suspended during the 30 days after the levy notice and during the appeal process if appeal was filed timely (unless in jeopardy) Late Request (after 30 days) Late Request (after 30 days) Equivalent Hearing Equivalent Hearing Same considerationSame consideration No right to judicial reviewNo right to judicial review Collection actions not statutorily suspendedCollection actions not statutorily suspended Location of CDP or Equivalent Hearing Location of CDP or Equivalent Hearing Local Appeals Office Local Appeals Office Frivolous arguments not considered in officeFrivolous arguments not considered in office Telephone Telephone

73. Frivolous Arguments Taxpayer must raise valid issues Taxpayer must raise valid issues Appeals will NOT consider the following arguments Appeals will NOT consider the following arguments Constitutional, Religious, Moral, Conscientious, Political, etc. Constitutional, Religious, Moral, Conscientious, Political, etc. Tape Recording NOT permitted for CDP or Equivalent hearing espousing above arguments Tape Recording NOT permitted for CDP or Equivalent hearing espousing above arguments Appeals will STILL solicit alternative collection methods or valid challenges to underlying audit issues Appeals will STILL solicit alternative collection methods or valid challenges to underlying audit issues

74. What Happens After the Hearing? Account adjustment if necessary Account adjustment if necessary Waiver requested for agreed CDP cases Waiver requested for agreed CDP cases Decision Letter sent in Equivalent Hearing cases Decision Letter sent in Equivalent Hearing cases

75. In CDP cases where taxpayer will not sign the waiver, Appeals will issue aDetermination Letter that addresses: Whether the IRS has verified that it followed legal and procedural requirements Whether the IRS has verified that it followed legal and procedural requirements The issues raised by the taxpayer The issues raised by the taxpayer Whether the collection action balances the governments need to collect with the taxpayers concerns about intrusiveness Whether the collection action balances the governments need to collect with the taxpayers concerns about intrusiveness Taxpayers right to petition the Court Taxpayers right to petition the Court Tax Court or District Court within 30 days after Appeals determination Tax Court or District Court within 30 days after Appeals determination What Happens After the Hearing?

76. When are Cases Returned for Collection? Request Withdrawn Request Withdrawn Equivalent Hearing – when decision rendered Equivalent Hearing – when decision rendered Agreed CDP – when waiver accepted Agreed CDP – when waiver accepted Unagreed CDP – when no Court petition is filed or when judicial review finalized Unagreed CDP – when no Court petition is filed or when judicial review finalized

77. Taxpayer can return to Appeals if: Taxpayer can return to Appeals if: Appeals determination is not carried out Appeals determination is not carried out Taxpayer has a change in circumstances Taxpayer has a change in circumstances Before returning to Appeals under this provision, taxpayer must exhaust all other administrative remedies Before returning to Appeals under this provision, taxpayer must exhaust all other administrative remedies Retained Jurisdiction

78. Comparing CAP and CDP Important distinction between CDP and CAP: Important distinction between CDP and CAP: Under CDP a lien or levy action MUST have occurred first Under CDP a lien or levy action MUST have occurred first Taxpayers may request CAP before or after lien or levy action Taxpayers may request CAP before or after lien or levy action

79. CDP Expands Taxpayer Rights to Resolve Disputes 1. The taxpayer has judicial rights following CDP determination, but not following CAP decision 2. Appeals officers have broader authority in resolving a CDP case than in resolving a CAP Can propose other solutions Can propose other solutions 3. A taxpayer may have the right to challenge an underlying liability during a CDP Hearing, but not during a CAP

80. Tips for Collection Cases Try to resolve the case as early in the process as possible Try to resolve the case as early in the process as possible Taxpayer must be in full compliance during resolution period Taxpayer must be in full compliance during resolution period

81. Tips for Collection-related Cases Taxpayer should bring the following records to the conference: Taxpayer should bring the following records to the conference: Current, verifiable financial statements Current, verifiable financial statements Recent bank and wage statements Recent bank and wage statements Verification of loan balances Verification of loan balances Reliable valuations of assets Reliable valuations of assets Documentation supporting a qualified challenge to the underlying tax liability, if appropriate Documentation supporting a qualified challenge to the underlying tax liability, if appropriate

82. Resources Form 9465: Installment Agreement Request Form 9465: Installment Agreement Request Publication 594: What You Should Know About the Collection Process Publication 594: What You Should Know About the Collection Process Publication 4165: An Introduction to Collection Due Process Hearings Publication 4165: An Introduction to Collection Due Process Hearings Publication 1660: Collection Appeals Rights Publication 1660: Collection Appeals Rights Publication 1854: How to Prepare A Collection Information Statement Publication 1854: How to Prepare A Collection Information Statement Publication 971: Innocent Spouse Relief Publication 971: Innocent Spouse Relief Publication 4183: Injured Spouse Claims Publication 4183: Injured Spouse Claims

83. Collection Issues Questions?