payment alternatives when you owe the irs
TRANSCRIPT
Payment Alternatives When You Owe the IRS
• Welcome media • SBSE dot webinars at irs.gov
– Questions – Feedback – Contact information
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Payment Alternatives When You Owe the IRS
• IRS dot gov/Forms Pubs • IRS dot gov/IRM • IRS dot gov/Tax Pros • IRS dot gov
– Search “collection”
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Payment Alternatives When You Owe the IRS
• Submit questions – Not case specific
• Q&A at the end • Subject Matter Experts will answer
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Payment Alternatives When You Owe the IRS
Presentation is … • Educational/Informational • Not official guidance
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Agenda
• Online Payment Agreements update • Case resolution prerequisites • Collection Information Statements • Selling or refinancing property when there’s a
tax lien
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Online Payment Agreement Update
Businesses are eligible if they … • Owe $25,000 or less • Can pay in 24 months or less • Are current with filing/paying requirements
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Online Payment Agreement Update
Businesses – • $25,000 or less
– Includes assessed penalty & interest
• Can pay down to qualify – Pay down – Then apply
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Online Payment Agreement Update
Businesses • If $10,001 – $25,000 owed • Direct debit payments required
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Online Payment Agreement Update
Finding Online Payment Agreement • IRS dot gov “Tools” or Keyword OPA Login Process • At “Date Business Established” • Enter month/year EIN assigned
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Installment Agreement Terms
• Short-term full pay agreement – No user fee
• Monthly payments – $52 fee if direct debit – $120 if payments by mail
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OPA Update Summary
• Businesses can use if – – Owe $25,000 or less – Full pay 24 months or less
• All payment terms/options available • Advantages over calling/writing
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Case Resolution Prerequisites
• Compliance today • Compliance tomorrow • Compliance in the future
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Cost of Non-Compliance
• Late filing penalty – Up to 25%
• Late payment penalty – Up to 25%
• Interest – Until full balance paid
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Case Resolution Prerequisites
Collection’s mission – • Compliance today • Compliance tomorrow • Compliance in the future
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Help at IRS dot gov
Keywords • Withholding • Estimated taxes • Small business • Payroll taxes • Filing or paying late
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Collection Information Statements
Roadmap to resolution … • Currently not collectable? • Installment agreement? • Asset liquidation? • Offer in compromise? • Combination of above?
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Collection Information Statements
No simple solution? • Gather financial information • Prepare Collection Information Statement • Provide to IRS
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Collection Information Statements (CIS)
Forms • 433-F – Collection Information Statement • 433-A – CIS for wage earners and self-
employed • 433-B – CIS for businesses
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CIS Form 433-F
• Short & simple • Used by –
– Accounts Management & Automated Collection (ACS)
• Used for – – Individual & self-employed taxpayers
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CIS Form 433-F
Sample uses – • Request for installment agreement
– Other payment options? – Installment agreement approved? – File notice of tax lien?
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CIS Form 433-F
Sample uses – • Request for temporary hold • Other payment options? • Temp hold appropriate? • File notice of lien?
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CIS Form 433-F
Can’t pay today? • Have 433-F ready – including supporting
documents • Consider all payment options • Provide 433-F to accounts management or
ACS
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CIS Form 433-F
If • Early in collection process • Individual taxpayer • No streamlined installment agreement • Can’t pay Then • 433-F required
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CIS Forms 433-A and 433-B
• Comprehensive • Form 433-A for wage earners, self-employed • Form 433-B for businesses • Instructions
– Publication 1854 – How to Prepare Form 433-A – Publication 5059 – How to Prepare Form 433-B
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CIS Form 433-A
• Used by – Revenue Officers
• Used when – Liable party is wage earner or self-employed – Can’t pay in full – Don’t qualify for streamlined payment plan
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CIS Form 433-A
7 sections • Personal • Employment • Other financial • Asset • Income statement • Business • Sole-proprietor
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CIS Forms 433-A & B
Keys • No blank lines • Attachments as needed • Current information • Verification
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Allowable Living Expenses
• IRS dot gov – search terms – Allowable living expenses – Collection financial standards
• Guidelines providing – Consistency – Fairness
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CIS Form 433-B
• Used by – Revenue Officers
• Used when – Liable party is a business – Can’t pay in full – Don’t qualify for streamlined payment plan
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CIS Form 433-B
• Verification – – Balance sheet – Income statement – Cash flow analysis – Bank statements – Cancelled checks – Receivables – Other
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CIS Form 433-B
Other required items • Credit cards accepted • Payment processors used • Info on key personnel Instructions • IRS Publication 5059
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Collection Information Statements
Required when – • Can’t pay • Don’t qualify for streamlined installment
agreement
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Collection Information Statements
Keys – • Complete, nothing blank • Add attachments • Current and verified • Submit early • Work with Collection
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References - Resources
• IRM Part 5, Chapter 15, Financial Analysis Handbook
• IRS dot gov - search – Allowable living expenses and/or – Collection financial standards
• Publications 1854 & 5059 – How to prepare Forms 433-A and B
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General Lien References
• IRC §6321 Lien for taxes • IRC §6322 Period of lien • IRC §6323 Validity and priority • Reg. §301.6321, 22 & 23 • IRS dot gov – search “lien”
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Liens and Selling or Financing
• Notice(s) of lien filed? – Public records – Account transcript – IRS at 800-913-6050
• Get copy of lien(s) • Contact IRS
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Liens and Selling or Financing
• Will sale or finance pay in full? • Notice of lien amount not equal to payoff
amount
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Lien Payoff Amount
• Publication 4235 – Local phone numbers & addresses
• Centralized lien operation – 800-913-6050 – Address, phone & fax in Pub 4235
• Payoff letter
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Payoff Amount Disclosure
• Form 8821 – Information Authorization • Who are you? • Who gets your information? • What information?
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Full Payment Summary
Sale or financing will pay in full • Get copies of lien(s) • Contact Lien Operation 30 – 45 days in
advance • Request lien payoff letter • Provide Form 8821 – Information
Authorization
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Sale or Finance Will Not Full Pay
What’s your plan for the remaining balance? • Payment agreement • Offer in Compromise • Other
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Lien Discharge or Subordination
• IRC section 6325(b) Discharge • IRC section 6325(d) Subordination
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Discharge Example
Lien payoff – $75,000 • Sale price $200,000 • Less first mortgage $125,000 • Less closing costs $15,000 • Equals IRS lien interest $60,000
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Subordination Example
FMV of property $200,000 IRS Lien $75,000 • New loan $160,000 • Less old loan $125,000 • Less closing costs $5,000 • Equals IRS lien interest $30,000
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Resources
• IRS dot gov keyword “lien” • IRS lien videos • Publication 783 – How to Apply for Discharge • Publication 784 – How to Apply for
Subordination
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Discharge or Subordination
Application Denied • Appeal rights • Form 9423 – Collection Appeal Request • Publication 1660 – Collection Appeal Rights
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CIS Resources
• Internal Revenue Manual (IRM) – Part 5, Chapter 15, Financial Analysis
• IRS dot gov – search – – Allowable living expenses – Collection financial standards
• Publications 1854 & 5059
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