Tax Collections
Offer in Compromise
The IRS, FTB & EDD Offer in Compromise programs attempt to settle large tax debts when the taxpayer is financially unable to pay the entire amount of tax, penalties and interest. An Offer in Compromise settles all income taxes, payroll taxes, trust fund recovery penalties, and certain other taxes. Negotiations are based upon fitting your business and personal finances into several financial formulas. Failure to fit within the guidelines will preclude acceptance, or require such a large offer amount as to be prohibitive. Strict compliance with the formula is required, regardless of the reasonable or business purpose of failure to comply with the formula. General business reasons or common sense are irrelevant. Many nuances make these formulas complex. The most common problem areas that must be dealt with in the tax planning stage include high credit card debt, excessive personal living expenses, personnel loans, high rent or mortgage payments, equity in certain assets, retirement accounts, children's college education expense, and others. This tax law firm provides tax planning services to change your personal situation to fit within the formula so that your Offer in Compromise will be accepted with the lowest offer amount possible.
The Offer in Compromise process is comprised of two stages. The first stage in a successful Offer in Compromise is to strategically plan your personal and business financial affairs to fit within the strict formula. Filling out the forms is the easy part. Planning your strategy is the complex part. After we fully plan for all contingencies and structure your business and personal financial affairs to comply with the strict formulas, we will then prepare necessary documents and the Offer in Compromise, the tax agency will deem it processable.
The second stage involves negotiating with the IRS, FTB, or EDD tax official. After you collect and organize your bank statements, canceled checks, credit card statements and cash receipts, this tax law firm will prepare new financial statements so that they comply with the IRS, FTB and EDD guidelines. We will conduct in depth analysis of your financial statements and supporting documentation with the government at this stage. Aggressive negotiations and tactics are imperative for a successful Offer in Compromise. We will conduct several meetings with the government officials to explain your financial status and negotiate the lowest possible settlement amount.
The Offer in Compromise process takes between nine months to one year. This tax law firm has been extremely successful in having offers accepted.
Creative OIC's may include not only cash, but also certain non-money items, such as future income collateral agreements, an agreement to reduce the basis of other assets, waive net operating losses or capital losses, or waive certain future tax deductions. The government tax agencies consider them the same as money. In the event that it is not successful before the IRS Revenue Officer , an administrative review may be pursued, or a new offer may be submitted. Egregious collection activity generally is ceased during the pendancy of a valid Offer and Compromise. The trick in a successful Offer in Compromise is change your personal and business situation to fit into the formula, and using aggressive negotiating tactics with the IRS, FTB and EDD, not just filling out the forms and submitting them to the tax authorities. We have been very successful in representing not only first time taxpayers, but also taxpayers who attempted to prepare Offers in Compromise themselves or those who used less experienced or less highly educated tax professionals.
Installment Agreements
Negotiating an installment agreement will temporarily prevent levies and seizures and most other collection activity. This temporary relief from the IRS, FTB and EDD collection activities may be all that is necessary to build up your business or give you time to pay. In order to enter into an installment agreement that you can reasonably pay and that is not too expensive, aggressive negotiations are necessary. After you organize your bank statements, canceled checks, credit card statements, cash receipts, and other supporting documentation, this tax law firm will assist in preparing your financial statements. It is imperative that your financial statements accurately reflect income and allowable expenses. The government is notorious in overstating income and not allowing your personal expenses, thus resulting in an exorbitant installment payment that you will soon be in default on. 
The areas that the governmental tax collectors will create the biggest problems include alleging that all gross bank deposits are income, without reducing amounts for inner-bank transfers, re-deposits of insufficient fund checks, credit card advances or loans. Care should be taken to assure that only true income is taken into account. The second problem area is where the government tax collectors disallow necessary business expenses, or reasonable personal expenses that exceed the necessary living expense guidelines. Certain strategies such as appealing to the revenue officer's manager, submitting a Taxpayer Assistance Order, or transferring the case to the Problems Resolution Office generally are successful in dealing with an overly aggressive revenue officer. A third major area of concern is to assure that no extensions of the statute of limitations are inadvertently granted. The IRS uses both form 872 and form 900, to extend the ten year statute of limitations to collect. Care should be taken in negotiations to assure that no extensions are granted which may affect later dischargeability of taxes in bankruptcy, or significantly extend the period of time that the tax agency can collect the debt.
Tax Levy
The IRS, FTB and EDD have the right to levy upon wages, salaries, independent contractor payments, severance payments, bank deposits, escrow accounts, retirement plan accounts subject to certain limitations, thrift savings plan accounts, vacation accounts, cash value of life insurance, and any other inocme or asset that the taxpayer has as a right in lawsuit proceeds. Virtually any asset, which is owned by the taxpayer, may be levied upon to collect the tax debt. The governmental tax collectors use administrative levy procedures, rather than filing suit and enforcing a judgment like other creditors are required to do. The defenses on releasing a levy include negotiating with the IRS, FTB and EDD to enter into an installment agreement or Offer in Compromise, appeal under the collection due process program, submit a Taxpayer Assistance Order to the Problems Resolution Office, or file a bankruptcy petition. Each of these items, properly instituted may provide for a return of levied property and a temporary agreement not to levy in the future.
The IRS, FTB and EDD may levy on any of the taxpayer's asset after they have properly assessed the tax, issued a Notice and Demand, mailed a notice of intent to levy, and given the taxpayer notice and opportunity for a hearing. This tax law firm has been successful in preventing levies during the pendancy of refund procedures, an Offer in Compromise, and an installment agreement. This tax law firm has had many levies released, and property returned and provided tax planning to assure that levies are not issued during the resolution of the tax debt.
Seizure of Real or Personal Property. The IRS, FTB and EDD have the right to seize and sell the taxpayers real and personal property. This generally includes homes, rental properties, automobiles, and entire businesses. Preventing a seizure of real and personal property can be accomplished by proving that the assessment was erroneous, all notice of sale procedures were not properly complied with, entering into an installment agreement or Offer in Compromise, or filing bankruptcy. Care should be taken to assure that all prior encumbrances are accurately accounted for prior to the IRS, FTB, or EDD receiving the sale proceeds. This tax law firm has prevented many seizures of real and personal property through effective negotiations with the IRS, FTB and EDD. The IRS, FTB and EDD hold seizure sales on a regular basis. If property has been seized, the taxpayer has certain rights to negotiate and redeem the property after the sale has occurred.
Suits Against the IRS, FTB and EDD For Tax Collection Misconduct
Although the government generally has sovereign immunity against suit, a civil complaint may be filed against IRS, FTB and EDD, their collection officers, and the Department of Justice, for their violation of any constitutional provisions. This includes their violation of procedural or substantive due process for depriving you of your right to your own property. There are also statutory damages for unauthorized collection actions as well. This includes civil damages for failure to release a tax lien. Litigation may be instituted for their unlawful disclosure of confidential tax return information. There are several statutorily required notices for an IRS tax assessment to be valid. First, a notice of a proposed assessment must be sent, second, a notice and demand must be mailed to the taxpayers last known address, and third, a notice of intent to levy must be issued. Failure of the IRS to follow these guidelines will provide a basis to prevent subsequent collection actions. A third party may also initiate a wrongful levy suit for IRS, FTB and EDD collection misconduct. Other types of suits include, suits to quiet title, declaratory judgement, foreclosure actions, partition suits, condemnation suits, inner pleader suits, wrongful levy suits, suits for surplus proceeds, suits for substituted sales proceeds, suits to enjoin collection of the trust fund recovery penalty, suits to enjoin collection of erroneously assessed deficiencies and suits for damages against the IRS for their unauthorized collection activity.
Defensive Measures. There are several different legal methods that the taxpayer can use to combat collections. This includes abating the tax, penalties and interest when improper assessment procedures occurred, preventing collection if the government has breached the statute of limitations on assessment or collection, requesting an audit reconsideration, or injunctive relief with the district court. There are several causes of action that may be filed against the IRS, FTB and EDD. These include a quiet title action to remove a paid or discharged tax lien, declaratory judgment to remove an erroneous tax assessment, partition suit to limit the government's authority to collect from only the taxpayer and not from a related party or business associate, interpleader suit where the government tax authorities are holding funds owned by another party, wrongful levy suit to release a levy, suit for surplus proceeds on the disposition of real or personal property subject to a tax lien, suit for substituted sale proceeds, suit to enjoin collection of penalties or erroneously assessed deficiencies, suit for damages against the IRS, FTB, EDD, suit for a jeopardy levy review, suit for unauthorized enticement of information wrongfully disclosed, and suits by third parties against the government. These are several examples of suits that may be instituted against the IRS, FTB, and EDD. This law firm can assist you in any suit against the government for any wrongful collection activity.
Collection Summons. An IRS summons may only be issued for a civil or criminal permissible purpose. A summons may not be issued in bad faith, or an abuse of process objection may be raised. A summons may not be issued for unnecessary examinations or sometimes for second inspections. A summons may not be issued when the information is in the government's possession.
