Posted by: Cory Stigile | December 18, 2017

IRS Complex Collection – Holiday Considerations and Collection Moratorium by CORY STIGILE

As the holidays approach, it is a great time to think about your clients who have had difficulty paying their taxes. Below is a Top 5 list of enforced collection issues to think about this December.

  1. Collection Moratorium / Current Compliance – Although it is not an official policy position, during most of December the IRS limits its enforced collection of outstanding taxes.   This generally means decreased levies, wage garnishments and other seizures. While only temporary, this short break provides an opportunity for your clients to get back on their feet and start the next year (hopefully) by being currently compliant with their estimated taxes and withholdings.
  2. Practitioner Hotline Hold Times – As with the IRS employees that have use-it-or-lose-it time off, your tax preparer colleagues also take time off during December. As of the time of writing this article, the hold time for the practitioner hotline was only 10 minutes! Consider blocking off an hour each of the next few weeks to call the IRS to resolve outstanding collection issues or request account transcripts.
  3. Collection Information Statements – As the filing season approaches after the year end, we will all become much busier with the 2017 tax return filing season. Consider preparing the financial information (Form 433-A for individuals and Form 433-B for businesses) to send to your assigned Revenue officer during December. Gathering the end of year bank statements will also help you get a jump start on fourth quarter information that you will need anyway when preparing the 2017 returns in the coming months.
  4. Payment of Prior Year State Taxes / 2017 Tax Legislation – With the potential limitation of 2018 state tax deductions to $10,000, clients with large outstanding state tax liabilities should consider payment of their prior year taxes before the year end.   While the tax benefit may still be phased out because of alternative minimum provisions that are still applicable for 2017, you should walk through potential payment advantages with your clients. You will potentially be saving them money and you will also be showing them that you are current on legislative issues that may impact them.  Also, please note that this blog post addresses payment of past tax liabilities, but the proposed legislation specifically excludes prepayment of 2018 state income tax liabilities in 2017 to get the state tax deduction before the benefit is substantially limited in 2018.
  5. First Time Abatement of Late Payment Penalties – If you client has otherwise been compliant with taxes, consider whether your client is eligible for late payment penalty abatement. To qualify, the taxpayer must have filed all required returns currently due and paid (or arranged to pay) any tax currently due. Additionally, the taxpayer may not be eligible if they were subject to penalties in one of the three years preceding the tax year that is being collected. See IRM 20.1.1.3.3.2.1 (11-21-2017).

CORY STIGILE – For more information please contact Cory Stigile – stigile@taxlitigator.com  Mr. Stigile is a principal at Hochman, Salkin, Rettig, Toscher & Perez, P.C., a CPA licensed in California, the past-President of the Los Angeles Chapter of CalCPA and a Certified Specialist in Taxation Law by The State Bar of California, Board of Legal Specialization. Mr. Stigile specializes in tax controversies as well as tax, business, and international tax. His representation includes Federal and state controversy matters and tax litigation, including sensitive tax-related examinations and investigations for individuals, business enterprises, partnerships, limited liability companies, and corporations. His practice also includes complex civil tax examinations. Additional information is available at www.taxlitigator.com


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