Tax Court Upholds IRS’ Collections Action of Tennessee Man’s Debt

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The U.S. Tax Court in Oliveri v. Comm’r, T.C. Memo 2019-57, found that the IRS didn’t abuse its discretion by pursuing collection of a Tennessee man’s tax debt after he failed to pay subsequent tax bills timely.

Issue

Whether or to What Extent Petitioner May Deduct Expenses He Incurred in 2012 Which He Contends Were Related to Evangelization.

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Tax Court Says Spouse Was Not So Innocent

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In Constance H. Briley v. Commissioner of Internal Revenue, docket number 7782-17 (T.C. Memo. 2019-55), the Tax Court denied innocent spouse relief to a Virginia woman, who the court said had reason to know of an error on her joint tax returns.

Findings of Fact

Constance H. Briley married Mr. Briley in 1988. They were married during the years involved; and although they separated in 2013, they remained married as of the date of trial.

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Innocent spouse relief: Are you responsible for your spouse’s tax mistakes?

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When married taxpayers sign a joint return, they are jointly and severally liable for the taxes owed on the return.

Oftentimes a spouse will fail to report income or claim improper deductions or credits, without the other spouse knowing. In such cases, it might be grossly unfair to hold the innocent spouse liable for the other spouse’s mistakes.

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IRS Payment Plan

IRS Penalties, innocent spouse relief, seriously delinquent tax debt

The most common way to resolve tax debt issues by entering into a payment plan with the IRS. There are several types of payment plans. Do you qualify for a payment plan? The IRS will consider an installment agreement only if a taxpayer is current on his tax liabilities, which means that the taxpayer: has … Read more

How to Settle IRS Debt

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An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer’s tax liabilities for less than the full amount owed. Here is an overview of the process. Step 1: Determine if you are Current on your Tax Obligations You must be currently be in full compliance, … Read more

The Five Biggest Mistakes Made When Filing an Offer-in-Compromise!

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The Internal Revenue Service’s (“IRS”) Offer-in-Compromise program continues to be one of the most popular programs with both practitioners and taxpayers when they are considering a way to resolve their back tax issue.  Yet, only 42% of Offers filed by taxpayers are ultimately accepted.  Why are less than half of the Offers filed being accepted? Read more about common offer in compromise mistakes.

Mistake #1: Not Checking the Statute of Limitations

There is a ten-year collection statute.  What this means is the IRS has ten years from the date it assesses the tax liability to collect that tax.  Easy enough.  However, taxpayers often do things that may toll or freeze the statute, preventing it from running.  These actions include anything that prevents the IRS from taking collection action, including:

  • Filing an Offer-in-Compromise
  • Filing bankruptcy
  • Filing a request for an installment agreement (payment plan)

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IRS Tax Liens

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Anyone who has been in trouble with IRS tax debt probably has some experience with a federal tax lien. Learn about what an IRS tax lien is, how it’s filed, and what you can do to get it released. How a Federal Tax Lien is Created After the IRS makes a tax assessment (when you file … Read more

Guide to IRS Penalties

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Guide to IRS Penalties

There are many different types of penalties that the IRS can impose on individual and business taxpayers. Here are some of the more common IRS penalties.

Failure to File and Failure to Pay Penalty

Legal Authority

Legal authority for the IRS to assess penalties for failure to file and/or pay are provided by:

  1. IRC 6651 – provides for additions to tax for failure to file returns required to be filed to report tax, and for failure to pay tax required to be reported on those returns
  2. IRC 6698 provides for a penalty for failure to file a complete partnership return as required under IRC 6031.
  3. IRC 6699 provides for a penalty for failure to file a S-corporation return as required by IRC 6037.
  4. The penalty for failure to make required payments under IRC 7519(f)(4)(A).

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IRS Offer-in-Compromise vs. Chapter 7 Bankruptcy

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A common misconception is that you cannot discharge federal tax debt in Chapter 7 bankruptcy. In fact you can both discharge some of your tax debts under Chapter 7 Bankruptcy, as well as settle your debts with an Offer in Compromise.

Chapter 7 Bankruptcy

Tax debt is dischargeable in Chapter 7 bankruptcy if they meet specific requirements under the Bankruptcy Code. These requirements are often called the 3-year, 2-year, and 240-day rules.

  1. The 3-year rule. The return was due at least three years ago before you file for bankruptcy. For example, Bob’s 2010 return was due on April 15, 2011. The earliest he can file for bankruptcy for his 2010 tax debt is April 15, 2014. Note that a tax return extension will also extend the 3-year rule.
  2. The 2-year rule. The return must be filed at least two years before the bankruptcy filing. For example, Bob’s 2010 return was due on April 15, 2011, but didn’t actually file his tax return until October 31, 2011. The earliest he can file for bankruptcy for his 2010 tax debt is October 31, 2013.
  3. The taxes were assessed at least 240 days ago. For most taxpayers, the taxes are considered assessed as of the date the return was filed. However, if you file an amended return or are audited and owe additional taxes, then the 240 days on the additional tax begins to run when the additional taxes are assessed.

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