For many Greater Memphis small business owners, and families, it can seem that the government has simply been throwing money around and not paying attention to what is done with it, or collecting what is due.
But if you believe that the IRS won’t come hunting for ways to recapture lost revenue … you’d be wrong. Owing the IRS money is not something the IRS easily forgets (even in Greater Memphis).
But there are limits to the IRS’ power, and we can help you stand up for yourself if you find yourself owing the IRS…
1) They must “consider” settling your debt.
(Internal Revenue Code 7502):
We’re talking here about the Offer in Compromise (OIC), and they are indeed authorized to settle for less than the full amount that you owe. In fact, they always have to listen to an offer.
But be careful — not everyone qualifies for an offer in compromise. The IRS has very rigid guidelines for examining an offer in compromise. They will look at your household income, living expenses and asset values, and determine if they can collect the FULL amount you end up owing the IRS. In most cases, to accept a compromise, the IRS has to be convinced that they will never collect the full amount owed from you. If so, then they can agree to settle for a lower amount, representing what can be paid and recovered.
Usually, you need help for this process.
2) The IRS MUST give you notice before a levy, and give you the right to an appeal.
(Internal Revenue Code 6330 and 6331(d)):
The IRS must send you a letter before they can take your property, and give you 30 day notice beforehand. This letter is called a “Final Notice of Intent to Levy”. After you receive a Final Notice, tax laws give you 30 days to file an appeal to dispute the IRS levy, stop it from happening, have a hearing with an IRS appeals officer to reach an alternative solution to levying, and, ultimately if all else fails, petition the US Tax Court for additional review. This is called a “collection due process appeal” — and all IRS enforcement is on hold while you exercise your rights to appeal.
3) The IRS can only levy or seize your property when it results in financial recovery
(Internal Revenue Code 6331(f) and 6331(j)(2)(c)):
This is known as the “no equity rule”. In other words, the IRS can only seize your property if it results in payment to them. For example, if you have a Camaro that is worth $10,000 and has a $10,000 loan on it, an IRS seizure will only get your bank paid on the loan. There will be nothing left for the IRS as there is no equity in it for them. Because of that, they legally cannot seize it. Same is true for your [BEGINBLOG]~Profile.MarketArea~ [ENDBLOG]house. The no equity law eliminates the vast majority of IRS seizures.
4) The IRS only has 10 years to collect your unpaid tax debt
(Internal Revenue Code 6502):
After 10 years expires, the IRS must, by law, put a credit on your account for the amount that cannot be collected, and move your account balance to zero. The time to collect begins when the IRS first puts a balance due on its books, and ends 10 years later. The end is known as the “IRS collection statute expiration date”. By law, owing the IRS is not forever.
And, of course, with our help, it’s much, much less for Greater Memphis taxpayers.
We’re in your corner.
Jonathan D. Nyaku
Memphis Consulting Group, LLC