This course will go through the IRS collection process, various IRS notices and final notices, offer strategies, filing for bankruptcy, and other details related to IRS collections.

1. The IRS Collection Process:
Know the Rules or Put Your
Clients at Risk!
Presented by
Sidney Goldin, CPA

2. I. Starting the Process
A. Filing a Tax Return
1. Balance Due
2. IRS Notices
a. CP 503
b. CP 504
c. Liens – Exhibit A, Final notices (LT11, 1058, CP 297, CP
90) – Levies, Exhibit B
d. Required by law – major change from 1998 old law

3. I. Starting the Process
B. Collection Due Process (CDP)
1. Taxpayer’s right to hearing
2. 30 days to file request – CDP hearing
a. Form 12153 (Exhibit C)
b. Failure to request hearing – consequences
c. Enforcement action
1) Levy action (continuous vs. one shot)
2) Bank accounts
3) Wages
4) Homesteads
5) Most assets, very few exemptions

4. I. Starting the Process
B. Collection Due Process (CDP)
2. 30 days to file request – CDP hearing (continued)
d. Enforcement action – liens
1) Right to hearing only after lien issued
2) Liens rarely contested unless premature filing or procedures
not followed

5. II. CDP Hearings
A. Purpose – Resolution of Tax Liability
1. Raise collection alternatives – Prepare
433A – Exhibit D
a. Installment agreements, Offer in
Compromise
b. Page 4 – Critical page for payment
plans

6. II. CDP Hearings
A. Purpose – Resolution of Tax Liability (continued)
2. Offer in Compromise
3. OIC Authority – Form 656 – Exhibit E Code
Section 7122
4. Criteria
a. Little or no assets and small, if any, monthly
discretionary income, formula
b. Must be current on withholding tax or
estimated payments
c. Must be in filing compliance

7. II. CDP Hearings
A. Purpose – Resolution of Tax Liability
(continued)
5. Offer not based on amount owed, but
reasonable collection potential (ability to
pay)
6. Fresh start initiative
a. 48 vs 12 months

8. II. CDP Hearings
A. Purpose – Resolution of Tax Liability
(continued)
7. Life of collection statute
8. Traps and pitfalls
a. Guidelines and caps – certain expenses
limited
b. Dissipation of assets – add back

9. II. CDP Hearings
B. Offer Strategy
1. Free standing offer
a. Potential issues
2. CDP Offer (always better)
a. Advantages – “3 bites at the apple”

10. II. CDP Hearings
C. Offer Rejection
1. 30 day right to appeal
2. Usually held by appeals settlement
officer
3. Tax court opportunity if filed with CDP
4. If settled in appeals, taxpayer has 5
months to pay balance of offer
a. Liens are removed
b. Account balances are supposed to be
zeroed out

11. III. Bankruptcy and The IRS
A. Decision on whether to file
1. Tax Debts
a. Dischargeability issues
b. Due diligence
c. Critical IRS transcript review

12. III. Bankruptcy and The IRS
A. Decision on whether to file
2. Criteria for discharge
a. 3 year wait
b. Return filed 2 years ago
c. Assessment is at least 240 days old
d. No fraud on return

13. III. Bankruptcy and The IRS
B. Some debts are not dischargeable
1. Unfiled returns
2. Substitute returns in which taxpayer has
not signed on
3. Late filed returns

14. III. Bankruptcy and The IRS
C. Tax liens filed before bankruptcy filing
1. IRS is entitled to value of lien interest at
time of bankruptcy filing
2. No appreciation in lien value after
bankruptcy filed

15. III. Bankruptcy and The IRS
D. Liens can be negotiated downward after
taxpayer is out of bankruptcy court
1. Case assigned to field revenue officer
2. Revenue officer’s desire is to move case
out of inventory

16. III. Bankruptcy and The IRS
E. Summary – Stay aware of potential
situations

17. If you have any questions
please feel free to contact
Sidney at:
214-635-2509
sgoldin@gppcpa.com