Ask The California Employment Tax And Payroll Tax Attorney – National Taxpayer Advocate Wants The IRS To Resume Sending Out Collection Notices. What To Do?
By Robert S. Schriebman
The IRS has put a hold on issuing collection notices. This has been in effect for almost one and half years. When the notice process will resume has not been made known to the tax professional community. The National Taxpayer Advocate, Erin Collins, is concerned that the public is saying in her words, “Hey, the IRS probably forgot about me because it’s been 18 months. And I am concerned people do not realize that interest and the failure to pay penalty is kicking in.” In case you don’t know, interest on IRS debt is compounded, not monthly, but is compounded daily. Collins is afraid of apathy from the public and is also concerned about big bills and 25% late payment penalties being added to your tax bill. She is urging the IRS to resume sending out collection notices. She does not want the hiatus to last two years or longer. She is also concerned about a deluge of collection notices being heaped upon an apathetic public and tax professionals. Therefore, she has urged Commission Werfel to resume the notice process.
In order to avoid being taken by an unpleasant surprise the next time you check your mailbox, there are things that you can do to be proactive. You can go on the IRS website and get a printout of your transcript to see what your current IRS liability is. Many people are now caught in a potentially difficult spot. Yes, it’s nice not to be reminded of how much you owe the IRS. It’s another thing to be a victim of huge accruing interest and late payment penalties of 25% of your underlying tax debt. People are also strapped for cash. COVID money has run out. What to do?
The Dean of my law school, the late Robert K. Castetter, of blessed memory, had us students memorize a handful of his famous mottos. Allow me to pass down to you the motto appropriate for these times,
“If you can’t do the best, do the best you can.”
Send the IRS something towards your account and try to do so every month. Something is better than nothing, and any payment lowers your exposure. How does the IRS apply a partial payment under today’s circumstances? Payments are first applied to accruing interest and penalty portions of your deficiency. Once those two elements are satisfied, the payments will apply to the tax portion of what you owe
The suspension of collection notices by the IRS has a plus side and minus side. On the minus side your tax debt is growing with daily compounding interest and penalties. Since these liabilities are dictated by statutes in the Internal Revenue Code, I do not believe the IRS Commissioner has the legal ability to abate these accruals. It’s going to require an act of Congress. Don’t count on Congress to be sympathetic. On the plus side, the ten-year statute of limitations for collection is also ticking away and many outstanding taxpayers’ deficiencies may be legally uncollectable when the IRS resumes its collection efforts.
Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD, and he is not employed by the EDD or any other agency of the State of California.
Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
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