Disputing IRS Tax Collections: It Can Be Done & You Do Have Options

Can you fight the Internal Revenue Service (IRS) if you believe that you don’t owe what the IRS claims? Absolutely, encourages Justin Hein, Managing Attorney for Roni Deutch, a Professional Tax Corporation – a law firm that has been resolving IRS tax debts for American taxpayers for nearly 20 years. Hein says that you not only have the ability to dispute the collection action being proposed by the IRS, but that you also have several options for resolving your IRS tax debt.

IRS dispute

As part of the tax collection process, the IRS is required to send taxpayers a series of letters. The final letter states that if the IRS tax debt isn’t paid in the next 30 days, the IRS has the right to take collection actions such as a bank levy or wage garnishment.

If you don’t agree with the amount the IRS says you owe, you can dispute tax liability with the IRS department of appeals. This is known as a public collection due process hearing. Hein cautions that most of the time, the individual actually does owe the money that the IRS claims they owe and the IRS has met all of its procedural requirements. If this is the case, the individual must resolve their IRS tax debt through one of the options available.

Resolving IRS back taxes

Hein describes several options available to taxpayers seeking to resolve IRS tax debts:

• Installment Agreement. This is a way for a taxpayer to pay their IRS tax debt over a period of time through monthly payments or installments. Most Installment Agreements are monthly payments based on an individual’s ability to pay.
• Currently Not Collectible Status. If you can prove to the IRS that you have no ability to pay your IRS tax debt, you may be eligible for placement into Currently Not Collectible status, which means that the IRS cannot attempt to collect on your IRS tax debt unless your financial situation significantly changes. You will continue to accrue penalties and interest while your IRS tax debt is in Currently Not Collectible status. However, you will end up owing nothing to the IRS if you remain in Currently Not Collectible status until the time for it to collect on your IRS tax debt expires.
• Offer in Compromise. In this settlement program, the IRS will settle IRS tax debt for an amount less than what the taxpayer owes. The IRS requires an in-depth, complicated analysis for this program, in which the taxpayer must prove that there is no way he or she will be able to pay their IRS debt before the time for the IRS to collect expires.

Case Studies: Disputing IRS Tax Collections

Case Study 1: Successfully Disputing Tax Liability

John Smith, a small business owner, received a notice from the IRS claiming that he owed a substantial amount in back taxes.

Unconvinced of the accuracy of the IRS’s calculations, John decided to dispute the tax liability. With the assistance of an experienced tax attorney, he gathered relevant financial records and supporting documentation to present his case.

Through a public collection due process hearing, John’s attorney argued against the IRS’s claims, highlighting errors in the calculations and providing evidence to support a lower tax liability.

The IRS acknowledged the discrepancies and agreed to reassess John’s tax debt. As a result of the successful dispute, John’s tax liability was significantly reduced, providing him with much-needed financial relief.

Case Study 2: Negotiating an Alternative Payment Plan

Sarah Johnson, a single mother with limited income, faced an overwhelming tax debt owed to the IRS. Unable to pay the full amount, Sarah sought legal assistance to explore her options.

Her attorney advised her to negotiate an alternative payment plan with the IRS to make the debt more manageable.

Through careful negotiations, Sarah’s attorney presented her financial situation and proposed a monthly payment plan that aligned with her income and expenses.

Recognizing Sarah’s willingness to resolve the debt, the IRS agreed to the alternative payment plan, allowing Sarah to fulfill her tax obligations without facing excessive financial strain.

Case Study 3: Proving Innocence in Tax Liability

Michael Thompson, a self-employed consultant, received a notice from the IRS stating that he owed a significant amount in unpaid taxes.

Shocked and bewildered, Michael was certain that he had filed his taxes correctly and had no outstanding liabilities.Determined to clear his name, Michael engaged the services of a tax attorney specializing in IRS disputes.

Together, they meticulously reviewed Michael’s financial records, receipts, and tax returns. They discovered that an accounting error had occurred, leading to the incorrect tax assessment by the IRS.