The Treasury Inspector General of Tax Administration (TIGTA) recently conducted an audit of the Internal Revenue Service (IRS)'s latest private debt collection program and found much room for improvement. As of May 31, 2018, the private debt collection program had netted $1.3 million, but the private agencies have collected only 1 percent of the $4.1 billion assigned to the program. For reference, the industry average for 2016 was 9.9 percent.
Through the Tax Cuts and Jobs Act of 2017, taxpayers now have up to two years to file an administrative claim and bring suit for a wrongful levy by the Internal Revenue Service (IRS) where the IRS has already sold the property it levied. This time limit is a significant extension on the previous nine-month time limit and applies to levies made after December 22, 2017, and on or before that date if the shorter time limit hadn't yet expired.
The Franchise Tax Board (FTB) recently published its updated list of California's top 500 tax debtors, comprising both individuals and businesses that now collectively owe the state more than $505 million in income tax. Since October 2007, this list is updated twice annually. Taxpayers who receive notice of the FTB's intent to include them on the list and then make arrangements to pay their tax debt are removed from the publication.
The Franchise Tax Board has updated its cost recovery fees, which are assessed against individuals and business entities when they fail to file tax returns upon demand or fail to pay their delinquent taxes. The filing enforcement fee for individuals and most entities will be $84, and the collection fee will be $287. For corporations and LLC's treated as corporations, the filing enforcement fee will be $85 and the collection fee $374.
This month, the Internal Revenue Service (IRS) will begin having private collection agencies work to collect overdue federal taxes for a small group of taxpayers who have had multiple contacts from the IRS in previous years and still have an unpaid tax bill. The IRS will send letters to these taxpayers first, followed by phone calls. The designated firm will also send a letter to the taxpayer confirming the collection account has been transferred to them from the IRS.
The Internal Revenue Service (IRS) will now return without consideration any Offer in Compromise applications submitted by taxpayers who have not filed all required tax returns. The application fee will be returned to the taxpayer, but any initial payment submitted with the returned application will be applied to outstanding tax debt. An updated Offer in Compromise Booklet (Form 656-B) reflecting this policy change will be available March 27, 2017 here.
The Internal Revenue Service (IRS) is piloting an expanded program for streamlined processing of taxpayer requests for installment agreements through the end of September 2017. For the next year, the IRS expects more taxpayers to qualify for faster processing of their requests. The expanded criteria do no apply, however, to requests submitted to W&I Accounts Management, SB/SE Field Collection, or through the Online Payment Agreement application form. For details, click here.
The Internal Revenue Service (IRS) announced that it will begin private collection of overdue federal tax debts starting in Spring 2017. The IRS will contract with four private agencies to attempt to collect on federal debts owed that the IRS is no longer actively pursuing or for which the IRS does not have sufficient resources to pursue.
On September 2, 2016, the U.S. Department of State finalized a rule that will result in the denial or revocation of passports for persons with seriously delinquent tax debts, effective immediately. A "seriously delinquent tax debt" generally means an assessment of $50,000 or more for which a lien or levy has been filed. The Internal Revenue Service (IRS) will certify the status of these individuals for the Secretary of the Treasury.
The United States Tax Court Chief Judge Michael B. Thornton recently announced that the Tax Court has adopted interim amendments and has issued proposed amendments to the Tax Court Rules of Practice and Procedure relating to the Bipartisan Budget Act of 2015, the Fixing America's Surface Transportation Act, and the Protecting Americans from Tax Hikes Act of 2015. Among the proposed amendments to the Tax Court Rules are rules relating to the new ability of the IRS to issue a certification to the Secretary of State for action with respect to denial, revocation, or limitation of a passport in the case of "seriously delinquent tax debts." I.R.C. sec. 7345(a).