IRS REFORM 2018 - Congress unveils package of bills to reform the IRS

IRS reform: Largest proposed IRS reform / overhaul in decades (copy here)    IRSreform2018discussion_draft_the_taxpayer_first_act

Some of the proposed IRS Reform provisions include:
Sec. 101. Establishment of Internal Revenue Service Independent Office of Ap-
Sec. 201. Comprehensive customer service strategy.
Sec. 202. Return preparation programs for low-income taxpayers.
Sec. 203. IRS Free File Program.
Sec. 204. Low-income exception for payments otherwise required in connection
with a submission of an offer-in-compromise.
Sec. 205. Notice from IRS regarding closure of taxpayer assistance centers.
Sec. 206. Provision of information regarding low-income taxpayer clinics.
Sec. 301. Internal Revenue Service seizure requirements with respect to struc-
turing transactions.
Sec. 302. Exclusion of interest received in action to recover property seized by
the Internal Revenue Service based on structuring transaction.
Sec. 303. Clarification of equitable relief from joint liability.
Sec. 304. Rules for seizure of perishable goods restricted to only perishable
Sec. 305. Modification of procedures for issuance of third-party summons.
Sec. 306. Establishment of income threshold for referral to private debt collec-
Sec. 307. Reform of notice to contact third parties.
Sec. 308. Modification of authority to issue designated summons.
Sec. 309. Limitation on access of non-Internal Revenue Service employees to
returns and return information

IRS Jeopardizing Taxpayer Representation. Practitioner Call to Action!

In my recent blog posting,  I advised how the IRS was now requiring tax practitioners to provide their personal social security number and date of birth when representing a taxpayer. This is being done under the false and fabricated pretext of “security”.  My prior posting is here .  I had written the National Taxpayer Advocates office about this issue.

As of last week (ending February 2, 2018) the Taxpayer Advocate’s Office called me regarding this matter.  The Analyst advised me that a Team had been set up to review this particular issue and that a considerable number of tax practitioners had contacted the Taxpayer Advocate concerning this.  The Analyst also informed me that some practitioners were even being asked to  provide the name of their spouse.

It is urged that tax practitioners immediately contact the Taxpayer Advocate about this invasive and abusive new procedure and request that it be immediately stopped.  Request that a Taxpayer Assistance Order be issued.

Also, contact your representative in Congress.

Contact:  Mr. Shepard , Taxpayer Advocate Analyst

Telephone:  206-946-3007

IRS Levy Relief


Passport denial, limitation or revocation - IRS violates Taxpayer Due Process Rights.

Taxpayers owing the IRS may face passport denial, limitation or revocation. The IRS is violating taxpayer rights.

On Jan. 22, 2018, the IRS began implementation of the passport certification program (passport denial, limitation or revocation). Under this program (IRC § 7345) the IRS is authorized to certify a taxpayer’s seriously delinquent tax debt to the Department of State for the purposes of passport denial, limitation, or revocation. A seriously delinquent tax debt is an assessed, individual tax liability exceeding $51,000 for which either a notice of federal tax lien has been filed and the administrative rights under section 6320 with respect to such filing have been exhausted or have lapsed, or a levy has been made. Exceptions include: current installment agreements (IAs), offers in compromise (OICs), and Collection Due Process (CDP) hearings.

The Taxpayer Advocate has advised that the IRS planned procedures for implementing this program (passport denial, limitation, or revocation) is a Most Serious Problem in its Annual Report to Congress.

The passport denial, limitation or revocation is a Most Serious Problem, due to the lack of prior notice to taxpayers and the potential for this lack of notice to infringe on U.S. Constitutional due process protections. Research estimates that over three-quarters of the individual taxpayers potentially eligible to be certified will not have received any notice at all prior to certification because they received their CDP notices prior to the IRS including passport information in these notices.

One of the major issues which the Taxpayer Advocate has focused upon is the REFUSAL OF THE IRS to exclude from the passport certification program taxpayers with already open Taxpayer Advocate cases. Moreover, the IRS has ignored the legislative history, which reflects Congress’s intent that taxpayers not be certified until their administrative rights have been exhausted or lapsed. In addition, the IRS also ignores its own guidelines. Further, the IRS has refused to exclude taxpayers who have come to the Taxpayer Advocate for help in trying to resolve their tax debts, either because they have economic difficulties or because IRS processes have failed the taxpayer.

Because the IRS has denied the repeated requests by the Taxpayer Advocate for the IRS to exclude already open Taxpayer Advocate cases from certification, the Taxpayer Advocate has taken action to protect these taxpayers.

On Jan. 16, 2018, the Taxpayer Advocate issued Taxpayer Assistance Orders (TAOs) for every one of almost 800 taxpayers, ordering the IRS not to certify their seriously delinquent tax debts to the Department of State. By operation of law, the IRS must refrain from certifying any of these taxpayers until these Taxpayer Advocate Orders are rescinded or modified.

The action was necessary due to the imminent, irreparable harm that taxpayers may face by the loss of their passports and the right to travel internationally, such constituting a clearly compelling public policy for assisting any taxpayer subject to passport certification.

For assistance, please contact

Taxpayer Advocate posting at this link – HERE

Right to Tax Representation – a “Right” being gutted

You have a right to representation when dealing with the IRS. But, the IRS is now demanding that tax practitioners provide their social security number and date of birth when contacting the IRS concerning a client. The Internal Revenue Manual (on IRS website) has not yet been updated as of January 11, 2018. This “requirement” is just now being imposed.  This new mandate will have a chilling effect on your right to representation when dealing with the IRS.

This new mandate was required by the IRS even in a situation where counsel had recently spoken to the IRS (without such requirement); faxed financial statement information and supporting documentation, discussed the financial information with two (2) ACS employees, faxed the power of attorney, and provided the routine CAF number together with taxpayer’s address and other information requested. Thus, the practitioner could answer any factual question presented in the volume of financial information just previously provided. However, in the cited case, during the requested “Manager” call back, legal counsel questioned the need to provide the social security number / DOB, as this has never been requested before. The IRS “Manager” hung up! End of discussion. Now call ACS again and wait on hold.

The abusive tactics by the IRS (historical and current) is well documented. It is clear that this new “requirement” will have a National Chilling Effect on a taxpayer’s right to representation when dealing with the IRS, and  your  chosen representatives ability or desire to aggressively represent you. The ruthless and many times illegal actions of IRS Collections personnel are well documented.

Even the Office of the Director of Collections was not aware of this new “requirement”, and was surprised, appeared shocked and responded “what?” when the procedure was explained.

Moreover, the procedure is not needed. This is overkill. Moreover, it will be used for illegal and wrongful purposes by the IRS and whoever else they release the information to (either intentionally or through IRS incompetence).  Unless the IRS is reigned in,  this will become another another IRS abuse scandal. You will  read about the chilling and negative impacts upon your right to representation when dealing with the IRS.

Reflect on some case examples:

* A case wherein multiple IRS collection managers lied during case representation. It was not until the case reached the Head of the IRS National Office that tax counsel was able to cut through the IRS Managers lying and targeting of the taxpayer.

* The IRS previously released e-mail contact information of tax representatives on the internet. Tax professionals had argued against such, but the IRS did it anyway. The result, tax representatives were then targeted by perpetrators of ID theft. The IRS caused the problem.

* The documented illegal targeting done by the IRS (Lois Lerner). “Former IRS tax-exempt chief Lois Lerner has refused to testify about targeting conservative groups / A formal apology and reported $3.5 million settlement by the IRS with tea party and other conservative organizations the federal agency targeted during the 2012 election may not be the end of the story.”(WND). “Lerner / IRS deliberately targeted political opponents … FBI, Justice Dept. Collaborated with IRS to prosecute groups illegally …” (WND)

* Tax Court case involving taxes and penalties in excess of $28,500.00. The case was successfully brought to resolution with zero owing by the taxpayer. Yet, the taxpayer advised that the IRS has audited her every year since.

* In a collection case the IRS Field Revenue Officers seized random books from a professional out of the library (essential for production of income). They laughed about how his books were now worthless to him and he couldn’t work. The seizure didn’t result in any revenue to the government.

* ACS collection case wherein the IRS was refusing to allow legal fees as an allowable cash flow item for representation before the IRS.

* Just within this last week, ACS employee who advised legal counsel he was like a “2 year old child” because legal counsel was disagreeing with the ACS employee and wouldn’t agree to the ACS employee disregarding the taxpayer’s particular facts and circumstances (which is required under the law).

* The TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION issued its July, 2017 report findings: including IRS rehiring of former employees previously terminated from the IRS … while under investigation for a substantiated conduct or performance issue. … separated while under investigation for unauthorized accesses to taxpayer information; … separated while under investigation for absences and leave, workplace disruption, or failure to follow instructions. This includes positions with access to sensitive taxpayer information, such as contact representatives….” A Table of Examples of Significant Prior IRS Conduct Issues for Rehired Former Employees shows multiple categories, including the rehiring of former IRS employees who had Falsified Employment Forms, Official Documents, or Unofficial Documents. Two rehired employees had repetitively falsified employment forms by omitting prior convictions or terminations. One rehired employee had several misdemeanors for theft and a felony for possession of a forgery device, and another rehired employee had threatened his or her co-workers.

This new mandate is NOT needed and should be stricken.

Your right to representation when dealing with the IRS is threatened. The legislative history of the Taxpayer Bill of Rights is full of documented abuses. Human nature hasn’t changed. IRS employees will seek revenge. This will be a means to accomplish such vendetta and revenge more “discreetly” (whatever rationale is provided).

I have advised the National Taxpayer Rights Advocate of this “new” collection procedure and its direct chilling and harmful impact on taxpayer’s rights. It has been requested that the Taxpayer Advocate issue an immediate order prohibiting this provision from being instituted.

Posted: 20180112

Your basic standard of living and determining “ability to pay”. Is the IRS not following the law?

When a taxpayer owes back taxes, a financial analysis is done. Question: what expenses are you “allowed” to claim? Despite the IRS publications about “taxpayer rights”, the reality is that in many cases, such is merely “for publication”. The IRS is not actually respecting your “rights”.

The Internal Revenue Code mandates that the IRS national and local allowances for taxpayer’s living expenses are to provide for an adequate means to provide for basic living expenses. These “allowances” play a major role in collection cases (for example, Offers in Compromise, installment agreements, undue hardship, etc… ).

The problem is that the IRS computational basis for its allowances is what people spend to live, not what goods or services actually cost to live. Moreover, the IRS excludes some essential expenses from its category of “necessary” (thus the IRS prevents you from claiming them).

As stated by the Taxpayer Advocate – “By focusing on what expenses are allowable instead of adequate, the IRS has exercised its discretion in a way that does not meet congressional intent, since “allowable” is not synonymous with “adequate” or “basic”. Instead, the IRS should adopt standards that allow for a sufficient or adequate standard of living”. [See Taxpayer Advocate Service – Fiscal Year 2018 Objectives Report to Congress – Volume One – Area of Focus #8].

The Taxpayer Advocate concluded in its report that the current IRS allowable expense standard “is not based on an amount of money that allows for a basic standard of living. It also does not take into account all expenses that are necessary for a basic standard of living today”. [See Taxpayer Advocate Service – Fiscal Year 2018 Objectives Report to Congress – Volume One – Area of Focus #8].

When you need assistance with an IRS problem, please call me. The consultation is free. My toll free number is 1-866-482-9767. Visit me on the web at: