Tax Problems with the IRS in the Connecticut Area

Living in Connecticut is Expensive. Tax Problems can make it impossible.

 

Connecticut is an expensive place to live. Sometimes, in order to get by, Connecticut taxpayers might put off paying their tax bill. It will take some time, but eventually the notices will start coming.  You will get several notices telling you that you owe the IRS some money. Then, you get a cp504 – Notice of Intent to Levy, and the tone of the letters change. All of a sudden the IRS isn’t asking you to pay your tax bill.  Now, the IRS is telling you that it is going to seize your state refund and “other property.” Finally, the IRS is going to come at you with a “Final Notice of Intent to Levy” – cp1058 and/or a Notice of Federal Tax Lien Filing.  (NOTE: The IRS has started using a much more benign-looking letter called the “LT11.” Make sure you read every letter you get from the IRS to make sure that it does not mention a Collection Due Process hearing.) At that point, you have 30 days to act – or your bank account, wages, and other property and income is at risk of being seized by the Internal Revenue Service. But Connecticut is an expensive place to live, and even though you owe them money – the IRS cannot collect more money from you than you can afford to pay. The bottom line is that most people at the IRS do not get what it is like to live in Connecticut. You need Tax Help in Connecticut. And I can provide that help.

There are things that can be done to keep the IRS in check while you sort out your finances and figure out exactly what you can pay. Too many taxpayers rush into Installment Agreements that they truly cannot afford. The important thing to keep in mind is that agreeing to an Installment Agreement with the IRS will not protect you from future collection action if the Installment Agreement ends up in default. A Tax Attorney can help you arrange your finances so that your reasonable living expenses are documented and acceptable to the IRS. But if you are not proactive, if you – or someone you hire – doesn’t call the IRS, then the Tax Machine will go into motion, levy notices will be sent to banks and employers – and you might end up struggling trying to figure out how to put food on the table and keep a roof over your family’s head.

That’s why you want to get into an arrangement that will actually work for you. The first time.

IRS Help in Connecticut

If you live in Connecticut, and have problems with the IRS, you might be wondering whether or not you should speak with a Tax Attorney, a CPA, an Enrolled Agent, or go another route. Any of these professionals can deal with your case at the administrative level. I know several CPAs and Enrolled Agents who I would trust to resolve most tax issues. But, sometimes, even when a client’s position is reasonable, the IRS will refuse to budge. The IRS will “abuse” it’s discretion. When that happens, only a Tax Attorney (or a United States Tax Court Practitioner) can take your case all the way to Tax Court.

Whether your plan is to go it alone, or seek advice from a Tax Professional, I would be happy to discuss your options with you, free of charge. Click the “Talk2Tom” button below to send me a message, or schedule a phone call with me. Even with prospective clients, communications are always confidential and protected by attorney-client privilege.

 

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Getting Rid of a Tax Lien

Looking to get rid of a Tax lien through a lien release or lien withdrawal?  Call 860-4THE-LAW to be connected directly to a real, live, Tax Attorney. Click “Call Now” below to call, send me a message, or schedule a phone consultation.

 

If you owe money to the federal government, the IRS will often place a tax lien on your personal and real property. That lien is piece of paper filed by the Internal Revenue Service with your local  and/or state government. The purpose of an IRS lien is to give the government priority in your stuff.  A tax lien should not be confused with a tax levy. A lien protects the government’s interest in your property, but a levy (garnishment) involves the government taking your property. If the IRS issues a levy, they will either empty your bank accounts, garnish your wages, or sell your house or other property to collect from you.

How an IRS Tax Lien Hurts

An IRS tax lien can hurt you by making it difficult for you to obtain credit, this will make it tougher to buy a home, a car, take out a personal loan, or get a job. Tax liens make it harder to live. Get some Tax Help in Connecticut! Give me a call today.

There are only a few ways to get rid of a tax lien

You may be able to get a lien released or withdrawn by:

  • Paying your tax bill in full,
  • Getting the IRS to accept an Offer in Compromise
  • Entering into an Installment Agreement (in some cases)
  • Filing for bankruptcy (in some cases)
  • Paying a portion of the tax due and suing for a refund in district court (some cases)
  • Waiting for the collection statute (CSED) to expire (10 years)
  • or, Filing an appeal with the IRS if the lien was filed by mistake or is impacting your ability to earn a living (in some cases)

If you are trying to deal with a tax lien – or if you are worried that one will be filed against you, I urge you to contact me today to discuss. I am a Connecticut Tax Lawyer, but I take on the IRS for clients throughout the United States.

The best time to fight a lien is before it is filed. But when that is no longer an option, the best thing to do is to seek professional advice to resolve the problem. When a lien is filed – that’s usually a sign that levies are on their way. A lien filing provides you with the opportunity to request a hearing with IRS Appeals to protest the lien.  Contact me today to make sure that your due process rights are protected. Need Tax Help, and live in Connecticut? Just give me a call. You will speak directly to me, and the first consultation is free.

It’s time to put your IRS problems behind you. I am here to help make that happen.

A Young Tax Attorney in the Danbury Area? Finally!

BY: THOMAS S. GROTH, ESQ

September 10, 2014

I am excited to announce that I am moving the location of my firm’s main office to Bethel, Connecticut. My thoughts on that? there is finally a young tax attorney in the Danbury area! That guy (me) that calls himself “Tom Tax Lawyer.”

While I do practice in other areas aside from tax relief, that is where I focus my attention. There is a good reason for that – I’m on a mission to put a stop to harmful IRS collection tactics, but it looks like the best way for me to do that is to take it one case at a time (there’s no more efficient and impactive way to take on the IRS.)

Let me be candid. I’m a young attorney. I graduated (cum laude with honors in Tax Law) from QUSL in 2012. If you need tax help, you should give me a call. I’ve been working in the field of tax resolution since the start of 2011, and I have been studying it even longer. One thing I have learned? The IRS never stops changing the rules of the game. So, I work hard to stay on the cutting edge. I work every angle of that edge, too.

When I started my practice, I began by renting an office in my current hometown, Naugatuck.

Recently, I decided to move my main office to Bethel, Connecticut. I am keeping a spot in Naugatuck to meet with clients, but most days I’ll be taking the drive down I-84.

I do more than just tax law, though..

I started my own practice for more than one reason. I’m going to briefly discuss two of those reasons below.

The first reason was that I wanted to work for a firm with a particular philosophy about how a lawyer should interact with his clients. I wanted to provide my clients with greater access, convenience, and transparency. I realized that being upfront with my clients, and treating my clients as more than a “customer” basically mandated that I run my cases my way – by getting my clients more involved and informed throughout the process.

So I did.

I also wanted to expand my practice areas. Since hanging my shingle a year ago:

  • I have drafted and negotiated investment contracts for my clients,
  • I have assisted clients who were ripped off by unscrupulous businesses (think used car dealers)
  • I have worked with clients to develop Estate Plans and to put their wishes in legally enforceable writings,
  • I have handled probate matters on complex Estates and simple Estates,
  • I have provided Real Estate closing and title services,
  • I have gone to court for clients charged with relatively serious crimes,
  • I have consulted with clients on bankruptcy options,
  • I have filed a civil rights lawsuit in federal court, and
  • I have even handled a few landlord-tenant disputes (on the tenant’s side).

Here’s the thing, though.

I will always be “Tom Tax Lawyer,” because tax law is my calling. I plan to continue to take cases in various practice areas, but I will always stay focused on being the best tax attorney I can be.

Branching out into these practice areas has not stopped me from focusing on my core area of practice. Every story is different. No tax problem is exactly the same. But  I continue to protect my clients from the harmful, automated, and devastating  collection tactics employed by the IRS and state taxing authorities. My job is to make things less devastating, to take the weight off my clients’ shoulders, to ensure that my clients maximize the impact of their procedural rights and put forth the best possible case for tax relief and/or reduction of the amount of tax due.

To do that, I always stay current with changes in tax laws, rules, and regulations. That will not change – even when I’m an old tax attorney. But right now, I know that my youth provides me with tangible advantages. I have the energy, ability, and up-to-date know-how to get the job done.  I also know how to read, write, and fight. Are you ready for that Danbury? 

 

PS: A good “Tax Attorney” should not just provide assistance to those with IRS or State Tax problems. For example, I also advise clients on how to reduce the taxes they pay in the future by implementing proper income tax planning, and structuring transactions (when appropriate) to achieve the greatest tax savings going forward.

 

What is a 4180 Interview? The Trust Fund Recovery Penalty

Business owners incorporate or form LLCs to limit personal liability. But don’t think that gets them off the hook for unpaid company taxes. If the company fails to pay over “trust” (payroll/excise) taxes, the IRS will try to collect it somewhere else. When 941, 940, or 720 taxes are unpaid by a company, the IRS will eventually look to key employees or owners to collect. A Revenue Officer will assess what is called a Trust Fund Recovery Penalty (TFRP) IRC § 6672(a) against any officers/owners/employees the IRS determines is a “responsible person.”

You might be surprised to find out that it isn’t only the business owner who can be found to be a “responsible person.” Right off the bat, anyone with check-writing authority is at risk of being deemed a “responsible person.” The IRS Revenue Officer (RO) requests an in-person interview with individuals who may fit the bill for a responsible person. This is called a 4180 Interview.

Have you been asked to sit down with a Revenue Officer because of your company’s unpaid payroll or excise taxes? Contact Tom Tax Lawyer

For example: A Real Estate management company has 1) several investors, an 2) office manager who pays major bills for the company, a 3) bookkeeper who arranges for the filing and payment of taxes, and a 4) secretary who opens the mail and pays smaller invoices. The manager, bookkeeper and secretary all have signing authority. The IRS will consider all three of them as potential responsible persons. Depending on the facts of the case, the RO may or may not pursue the investors.

The basic idea is that if you have the authority to decide who to pay first, and you decide to pay other creditors or vendors before paying the IRS, then you should be held responsible for it. If the IRS decides that multiple parties are responsible, then it can try to collect the entire amount of the Trust Fund Penalty in full from each responsible person. Because of this Joint-and-several liability, the IRS has every incentive to find as many “responsible persons” as possible. See what the IRS Manual has to say about Trust Fund Recovery Penalties here.

If the IRS requests a 4180 interview with you, you should retain your own lawyer to guide you through the process and advocate for you during the 4180 interview. Many times when a company gets into hot water with the IRS, the officers and high-level employees will seek joint representation. While this has the advantage of saving them money – it may cause a conflict.

Why “Tom Tax Lawyer” and not “Tom Tax Attorney”?

It really comes down to the industry that I find myself surrounded by. An industry of Tax Resolution firms that do EVERYTHING short of saying they are Attorneys to imply that they are attorneys. They will call themselves “Tax Firms,” but they don’t employ attorneys – they employ Enrolled Agents and – sometimes – CPAs. Occasionally “Tax Firms” like these will even employ an attorney or two.

But they still aren’t law firms. They will say that they are “licensed by the IRS as power of attorney in all 50 states!” This is not misleading on its face, but it can be for those not as familiar with the terms of art commonly thrown around in the tax resolution industry (or in the legal world in general. An “attorney in fact” is not – in fact – an attorney.) See, properly accredited Enrolled Agents can represent taxpayers in all 50 states in front of the IRS by filing a 2848. But if an Enrolled Agent is the founder of a tax resolution firm, it is not a law firm. 

Well look – I don’t want to cause any confusion. I am an attorney, licensed in the State of Connecticut. IRS Circular 230 allows attorneys to represent taxpayers all over the country in front of the IRS. I am also admitted to Federal Tax Court. With the exception of a small handful of Tax Practitioners, only attorneys can take your IRS tax case all the way to Tax Court. And only an Attorney can bring a refund claim in District Court, where I am also admitted.

I like “Tom Tax Lawyer” better than “Tom Tax Attorney” because there is no room for error. There is no room for confusion. My job as a lawyer is to make things less confusing, not  more confusing.

Keep in mind that Enrolled Agents and CPAs can be forced to testify against you in a criminal proceeding. A tax lawyer cannot be forced to testify against you. I still file the same IRS Power of Attorney that an Enrolled Agent or CPA would file. But I am equipped to go the distance if necessary. And believe it or not, the IRS knows that.

IRS Debt collection procedure compared to the procedure followed by a general creditor.

 

A general creditor needs to go to court and get a judgment before he can take collection action against a debtor.  In addition, a general creditor is unsecured until he obtains a judgment lien in his favor.  The IRS has broad collection powers.  In order for the IRS to collect a tax debt, the debt must first be assessed.  The assessment of a tax liability creates a collectible liability with the force of a court judgment obtained by a general creditor that allows the IRS to take necessary collection action.  Collection action includes: levying bank accounts, garnishing wages, and seizing (levying) real and personal property.  In order for a taxpayer to obtain judicial review of a tax that has been assessed, he must generally pay the tax and file a petition in district court or the court of federal claims.

Even when the IRS sends a notice of deficiency, a taxpayer is the party who is tasked with bringing the issue in front of a court.  In order for a general creditor to take collection action, it must: bring an action in court, carry the burden of proof that the debt is owed, prove that the creditor is entitled to payment, obtain a judgment, and collect on the judgment against the judgment debtor.  Despite the differences in presumptions and burdens that apply to a debt to a general creditor and an assessed tax liability, the collection process that the IRS follows is, in many ways, functionally similar to the way a general creditor would go about collecting a debt.  However, the differences are important because they illustrate the special powers and rights afforded to the IRS that are not available to the general creditor.

Once a tax has been properly assessed, the IRS will send the taxpayer several “dunning letters” requesting that he pay his tax liability and listing the amount of interest and penalties that have accrued on his tax liability.  General creditors also send dunning letters to debtors and attempt to contact them over the phone to collect a debt before bringing action in court.  However, when the IRS begins sending dunning letters, the tax has already been assessed.  At this point, the IRS already has the right to collect on that debt without going to court.  General creditors, on the other hand, attempt to collect a debt by issuing dunning letters before they have a secured interest in the debtor’s property.

In terms of priority, a general creditor does not have a perfected security interest in the property of the debtor until it obtains a court order that creates a judicial lien.  A tax lien is retroactive to the date of assessment, and it arises when a taxpayer fails to pay the entire tax in response to a notice and demand for payment.  A tax lien does not need to be filed in order to retain its priority against most creditors.  Because of this, it is sometimes called a “secret lien.”  The IRS does not need court approval to file a Notice of Federal Tax Lien.  Such a filing will insure the IRS’s priority over all subsequent creditors of the taxpayer.  On the other hand, a general (unsecured) creditor does not have a definite priority over other creditors until it initiates court proceedings.

Prior to trial, a court may allow a general creditor to attach the property of a debtor prior to final judgment to ensure that any judgment in the creditors favor will be paid.  Prejudgment seizure and wage garnishments available to a general creditor create a specific lien in its favor.  After final judgment, the lien is perfected and relates back to the date of the levy or garnishment.  However, even for provisional attachment before a final judgment, there still must generally be a pre-seizure hearing (sometimes a post-seizure hearing is enough).  The IRS, on the other hand, has a lien in its favor on all of the taxpayer’s property and rights to property by operation of law once a taxpayer is sent a notice and demand and fails to pay the tax liability.  A taxpayer can request a Collection Due Process hearing in response to a Notice of Federal Tax Lien Filing and a Notice of Intent to Levy.  Filing for a Collection Due Process hearing prevents the IRS from taking collection action on the Taxpayer’s property until the CDP proceeding is over.  However, a request for a CDP hearing will not stop the IRS from filing a notice of federal tax lien.  As soon as this notice is filed, the IRS is perfected against (and has priority over) unperfected creditors of the taxpayer.  On the other hand, a general creditor will not be perfected in his specific lien on the property of a debtor seized prior to a final judgment.

The IRS can sell property it has seized from a delinquent taxpayer provided that the taxpayer is provided with notice; it is not required to obtain a court’s permission to do so.  On the other hand, even after a general creditor has obtained a final judgment, the judgment must first be docketed and a writ of execution must be issued by the court clerk.  When selling a debtor’s property subject to its judicial lien at a sheriff’s sale, a creditor is usually required to have the property appraised.  The IRS is only required to determine a minimum price, but this price is not necessarily the value of the property.  After the property is sold, both the debtor and the taxpayer will have a certain period of time (prescribed by law) to redeem/repurchase the property.