8/3/20233 min read

close-up photography of Information signage
close-up photography of Information signage


The IRS is a Federal Agency that is divided up into local Districts across the country, each of which solves standard IRS problems in a slightly different manner.


Filing an Appeal is a request by a taxpayer disagreeing with an IRS decision and seeking to change an IRS decision. Normally this involves an IRS Audit where the taxpayer's tax liability has been increased, including penalties and interest.


In most cases, when an audit is over it's usually over because the IRS rules on audits are very clear. However, it may be possible to reopen a closed audit under certain circumstances. If the taxpayer feels that he did not get a fair deal in the original audit, they may qualify for Audit Reconsideration even in cases where time limits to appeal for file a tax court petition have expired. If the IRS agrees to audit reconsideration, the taxpayer's case is assigned to an auditor to reopen the audit and the taxpayer is then given the opportunity to have the original audit amended.


In order for a taxpayer to use the Bankruptcy laws to avoid paying income taxes, the taxpayer's income tax liabilities MUST QUALIFY. Many taxpayers file bankruptcy without first understanding the rules to qualify their own income tax liabilities. Old individual income taxes are eligible for discharge in bankruptcy but civil penalties for payroll taxes are not.


The IRS permits a taxpayer to file a Collection Appeal if they have been threatened with an IRS Levy or Seizure, either verbally or in writing, before they follow through on their levy or seizure. On the Collection Appeal, the taxpayer is given the opportunity to explain how they think the situation could be solved without the IRS levy or seizure and is then assigned to an Appeals Officer who is required to make a decision on their Appeal in five days.


Normally, the taxpayer does not owe the IRS anything after the 10-year date has passed, since the IRS has 10 years from the date of assessment to collect all taxes, penalties and interest from the taxpayer. However, there are exceptions to this rule, which include when the taxpayer agrees in writing to allow the IRS more time to collect from them or when the taxpayer files bankruptcy during the 10 year period. The taxpayer must send written notification to the IRS indicating that they no longer have the right to collect this tax liability, in which case the IRS must write off the tax liabilities which have expired if the taxpayer is correct.


  • You must disclose all assets owned, including all cash and bank accounts.

The negotiation for repayment of taxes with the IRS will either take place over the phone with ACS (Automated Collection System) or in person with an IRS Revenue Officer. The total dollar amount owed usually dictates with whom the negotiations will be handled. Typically, IRS Revenue Officers are not involved in cases where the amounts owed are less than $20,000. The IRS has determined allowable monthly expenses for individuals, which will be matched against your actual monthly expenses. The difference between your monthly income and your allowable monthly expenses will be the amount that the IRS will require you to pay on a monthly basis. These monthly payments will continue until your outstanding tax liabilities are paid in full. Be aware that the IRS continues to add penalties and interest while you are making monthly payments.


The Offer in Compromise program allows taxpayers provides taxpayers that owe the IRS more than they could ever afford a chance to pay a small amount as a full and final settlement and get a fresh start. All back tax liabilities are settled with the amount of the offer and all federal tax liens are released upon IRS acceptance of an Offer in Compromise and payment of the amount offered. The Offer amount is determined by the taxpayers inability to pay the IRS based on the taxpayer's current financial position and takes into account the equity in assets as well as their ability to pay. The IRS accepts approximately 50% of all Offers filed with the average amount accepted is 14 cents on every dollar owed.


If you have a good reason to request penalty abatement, depending on the circumstances in your particular situation, taxpayers who are faced with IRS penalties can request the penalties to be completely or partially abated (removed).