2016 IRS Collections Representation Boot Camp

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2016 IRS Collections Representation Boot Camp Presented by: Dan Henn, CPA & Jassen Bowman, EA Sponsors: IRS Program Number: SDQJW-T-00040-16-I Sponsor ID #137128.

1 2016 IRS Collections Representation Boot Camp Presented by: Dan Henn, CPA & Jassen Bowman, EA Sponsors: IRS Program Number: SDQJW-T I Sponsor ID # Before We Get Started For proper CPE tracking, please sign in and out each day. No need to sign in/out for breaks and lunch. Please sign out if you are going to miss a particular session, also. Twitter hashtag: #TaxResolutionTraining Acronyms: Don t hesitate to ask what they mean. Questions: Feel free to ask questions during the presentations. This makes for better learning for everybody. 1

2 Collections Due Process Appeals Presented by Jassen Bowman, EA Course Objectives Purpose of CDP Appeals Eligibility for CDP Forms Appeals outcomes 2

3 Why file a CDP? Stay of enforcement but for tax periods covered only Time CDPs are Appeal s lowest priority despite being ¾ of their case inventory Appeals is your friend Their job is to prevent litigation Why file a CDP? continued Approximately half of all my IA s have been granted in Appeals as a result of a CDP. Do be aware that CDP tolls CSED. Look for CDP rights in transcript review. 3

4 Statutory Authority IRC 6320: Right to appeal NFTL (668-Y) IRC 6330: Right to appeal proposed levies and actual levies, including: Jeopardy levies State tax refund levies Bank levies A/R levies Wage levies Appeals Limits By statute (26 USC 6320(b)(2)) Taxpayers are only entitled to ONE appeals hearing per tax type and tax period! but applies to liens and levies separately. 4

5 Appeals Limits By statute (26 USC 6330) They re only required to tell you once that they re going to levy. Letter 3174 is merely a courtesy under the IRM, not required by law. Appeals Limits Per 26 USC 6330(f) IRS must offer you the right to a hearing, but can still proceed with levy action in cases of: Disqualified Employment Tax Levy 2-year lookback rule Federal contractor levies State tax refund levies Jeopardy levies 5

6 Forms Form 12153, Request For Collection Due Process or Equivalent Hearing. 6

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8 Forms Form 12256, Withdrawal of Request for Collection Due Process or Equivalent Hearing Why would you ever want to withdraw a CDP? 8

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10 Appeals Process Hurry up and wait Use this time wisely! Expect a request for information 433 with full documentation (even if under $50k) Make note of who is calling who. Don t miss it! If the scheduled date/time doesn t work, request rescheduling well in advance. Appeals Personnel Settlement Officers Primarily deal with collection alternatives Appeals Officers Primarily deal with liability issues Appeals Team Managers Review & approve collection alternatives Account Resolution Specialists Support staff 10

11 Appeals Hearings Hearings are purposefully informal Verify administrative procedures have been met Frivolous appeals Appeals Hearings Duty to ensure that collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary. This helps prevent lawsuits May not raise issues considered in previous appeals or litigation Important to know your client case history 11

12 Equivalent Hearings If you missed the 30-day window, can still request EH within one year No suspension of collections action No CSED toll No retained jurisdiction No judicial review rights Appeals Outcomes If agreement is reached Appeals sends Form 12257, Waiver of Appeals Notice of Determination in a Collection Due Process Hearing Waives judicial review rights Not required to sign If no agreement is reached Notice of Determination issued Comes with additional rights (Tax Court) 12

13 Appeals Judicial Approach & Culture (AJAC) Appeals improvement project started in 2012 Goal is to increase the independence and distance between Appeals and other IRS functions Appeals owns the process of dispute resolution they do NOT assess tax, investigate, examine, etc. Appeals Policy Changes FY 13: Clarify that Appeals Officers cannot take an investigatory approach to OIC appeals Takes collections and taxpayers word on most matters Will not seek to change asset valuations in OIC, but can consider taxpayer or collections provided documentation for changes 13

14 Appeals Policy Changes FY 14: Appeals will no longer raise NEW issues in hearings Will retain and resolve underdeveloped cases New OICs submitted within Appeals are reviewed by OIC centers, but case remains in Appeals jurisdiction 433-A(OIC) sent for review to avoid Appeals taking an investigatory stance Outside of CDP, OIC rejections in Appeals will no longer incur collection alternatives IA/CNC cases: NFTL determinations will not be made by Appeals Appeals Policy Changes Big Picture: Appeals does not want to be first finder of fact. Bigger Picture: Message to CFF to deliver only fully developed cases. E.g., do your job. 14

15 Quick Bonus Info OIC filed while CDP pending is retained by Appeals, but processed by OIC center. TIGTA : 2012 internal audit of CDP effectiveness Found no improvement in Appeals deficiencies CSED computation errors Appeals failed to properly document impartiality Improper classification of requests Honorable Mention Collection Appeals Program Streamlined, fast track Appeals process GM conference required within 2 business days Typically filed on levy action 15

16 Collection Appeals Program 941 levy releases 1. Third-party harm. 2. Jeopardize collection due to disruption of business operations. IRM Fun Times IRM 5.1.9, Collection Appeal Rights IRM , Pre-Levy Actions, Restrictions on Levy, Post-Levy Actions IRM , Collection Due Process Appeals Program For Tax Court related matters, also see CC , Tax Court jurisdiction in CDP cases to consider NON-CDP matters CC , Guidance for certain employment tax cases (including in CDP cases) 16

17 The CDP is one of the most powerful tools in your tax debt resolution arsenal USE IT! 17

18 2016 IRS Collections Representation Boot Camp Presented by: Dan Henn, CPA & Jassen Bowman, EA Sponsors: IRS Program Number: SDQJW-T I Sponsor ID # Trust Fund Recovery Penalty Assessment: Who s On The Hook? Presented by Jassen Bowman, EA 18

19 Course Objectives Provide an overview of personal assessment criteria for the Trust Fund Recovery Penalty. Understand the conditions necessary for an individual to be declared a responsible party. Understand the conditions necessary for an individual to be declared a willful party. Review the completion of IRS Form Discuss defenses against personal assessment. Personal Assessment Overview 19

20 What is the Trust Fund Recovery Penalty? IRC 3505, Third Party Responsibility IRC 6672, Personal Assessment Only assessable against responsible person. Responsible person must willfully fail to pay over trust fund taxes. Penalty is the full amount of trust fund portion of payroll tax liability Withheld income taxes Withheld Social Security taxes Withheld Medicare taxes Establishing Responsibility 20

21 Who s responsible? IRM : Responsibility is a matter of status, duty, and authority. A determination of responsibility is dependent on the facts and circumstances of each case. Examples: Officers Bookkeeper PEO Shareholder What responsible does Hires Fires Makes FTD Signs payroll checks Has certain officer duties Directs the actions of employees in these same matters 21

22 Delegation Generally, authority can be delegated, but not responsibility. Was the delegator removed from authority by the delegation? Establishing Willfullness 22

23 Was it on purpose? Was the failure to pay deliberate? Was the responsible person aware of the failure to pay? Failure to correct the failure proves willfulness Question: Were other bills paid instead? IRS Form 4180 Interview 23

TFRP Interview Personal interview required by IRM Over the phone, with representative present, is preferred. For 4180 NOT available online, RO not permitted to provide blank copy.

24 TFRP Interview Personal interview required by IRM Over the phone, with representative present, is preferred. For 4180 NOT available online, RO not permitted to provide blank copy. Schedule the interview, with pre-completed Form 4180 in hand. Know your willful and/or responsible defense going in. Advise clients not to answer ANY questions about roles and responsibilities without you present if RO calls or shows up. Summons authority Never sign Form 2751 accepting assessment without a good reason. 24

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27 Form 4180 Page 3: PSP/PEO interview Page 4: Additional info, RO comments, signatures Defenses Against Personal Assessment 27

28 Core Defense Clearly separate responsible from willful. Silo everything. Fighting Responsibility Don t play CFO Don t prepare 941 s Don t prepare payroll Don t be on the bank account as authorized check signer Don t be the name on EFTPS Don t have access to online banking 28

29 Fighting Willfullness Don t be the person paying the bills. Don t be the person deciding which bills to pay. Don t be in the loop on financial matters. Don t interact with the IRS. Conclusion Best course of action is to set up business structure in the most advantageous way from the get go. For most single member LLC s or single shareholder S corps, there is no defense. For other situations, dig to find somebody else to throw under the bus for the other component. Use the 1153/2751 as leverage. 60 day rule Form 2750, ASED Extension 29

30 2016 IRS Collections Representation Boot Camp Presented by: Dan Henn, CPA & Jassen Bowman, EA Sponsors: IRS Program Number: SDQJW-T I Sponsor ID # Putting It All Together Presented by Jassen Bowman, EA 30

31 The IRS Notice Cycle Assessment Letter 1058 Bill 1 CP-504 Bill 2 NTFL 31

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33 Six Steps To Six Figures (and beyond!) Tax Pro Sales Cycle: 1) Lead Generation 2) Lead Nurturing 3) Consultation 4) Prospect follow up and client conversion 5) Case work 6) Cross sell to other services for years to come Key concept: The goal of each step is to get them to the next step! Lifetime Customer Value 33

Lifetime Customer Value Tax resolution is either a vehicle to other work, or IS the additional service

Easy way to add 10 to 50 new 1040 s per year for a solo practitioner (plus collect 10k- 200k doing it).

practice. 941 cases: Perfect lead generator for monthly bookkeeping & payroll servicing.

Four tax resolution cases per month brings you 1) $132,000+ in annual representation fees 2) $25,000 to

34 Lifetime Customer Value Tax resolution is either a vehicle to other work, or IS the additional service you offer. Build your recurring tax prep practice. Easy way to add 10 to 50 new 1040 s per year for a solo practitioner (plus collect 10k- 200k doing it). One attorney client uses tax resolution as a lead generator for their international tax litigation practice. 941 cases: Perfect lead generator for monthly bookkeeping & payroll servicing.. What does this look like in practice? Four tax resolution cases per month brings you 1) $132,000+ in annual representation fees 2) $25,000 to $50,000 in unfiled return prep 3) $12,000 to $20,000 in new annual tax prep fees 4) In four years, that s nearly 200 recurring tax returns from just representation clients 5) plus their referrals 6) plus insurance, wealth management, bookkeeping, etc. 34

com 4) E-services + TDS Access 5) Transcript Analysis Software Audit Detective from

35 Tools 1) Sales/Marketing CRM Platform Contactually Nutshell/Insightly Tax-specific ATOM 2) Marketing Assistant 3) Case Work Management Platform CanopyTax.com 4) E-services + TDS Access 5) Transcript Analysis Software Audit Detective from Tax Help Software Canopy now includes this feature 6) Processes/Systems It s been a whirlwind three days 35

36 Discussion What s YOUR next step? 36

2016 IRS Collections Representation Boot Camp

2016 IRS Collections Representation Boot Camp Presented by: Dan Henn, CPA & Jassen Bowman, EA Sponsors: IRS Program Number: SDQJW-T-00040-16-I Sponsor ID #137128. Before We Get Started For proper CPE tracking,