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Posts Tagged ‘IRS Levy’

26 U.S.C. § 6330(e) contains a provision that is little recognized and underutilized by folks facing off with an Internal Revenue Service levy of their bank account or paycheck. That subsection provides in pertinent part:

“(e)  Suspension of collections and statute of limitations
“(1) In general
“… if a hearing is requested under subsection (a)(3)(B), the levy actions which are the subject of the requested hearing…shall be suspended for the period during which such hearing, and appeals therein, are pending…”

The suspension of collection activities by timely asking for a Collection Due Process Hearing (CDPH) is a very effectual technique to end an IRS levy on a bank account or paycheck. I’ve drawn on this provision to end an IRS  levy in as little as two days. A short time ago I put a remark in my shopping cart that even a dancing bear could end an Internal Revenue Service  levy by a well-timed request for a CDPH hearing as provided in 26 U.S.C. § 6330(b)(1).

However, a dancing bear would not be able to keep Internal Revenue Service collection activity postponed and most likely neither would most of us. In spite of all the waits while appeals are pending; and in spite of being able to retrieve whatever funds you had in the bank when the Notice of Levy arrived from the Internal Revenue Service; and despite the fact of receiving full paychecks during those delays; ultimately, the end of the line will occur and the  IRS (Internal Revenue Service) will move forward with collection activities as they were before the hearing was demanded. At the point this happens almost all the people will be right back where they started off; dealing with collection activity by the Internal Revenue Service. It is because of this harsh reality that I put up nine, no obligation videos, 4-10 minutes in length at www.irsterminator.com talking about strategies I have come up with that make keeping IRS collection activities suspended indefinitely a very real likelihood.

There are two aspects to winning a CDPH hearing: 1) Taking affirmative strategic action pointed at prevailing in the hearing as I discuss in the videos referred to above; 2) Avoiding raising issues that would bring about the loss of the hearing. Keeping away from losing matters is a matter of doing a little research and reviewing what issues have been raised in the past that lost.

Rohner v. U.S., 2003.NOH.0000145 (N.D.Ohio 2003) is the case that I will address in part in this article. Rohner lost his Collection Due Process hearing and appealed to the Federal District Court. I was able to find his case by searching the District Court data base at www.versuslaw.com. I made an hour and forty minute video about how to use Versuslaw to do research and that video is available for you to learn to do online legal research too at www.bearscart.com in the “law study” category.

In the section of the Court’s decision entitled “Factual and Procedural Background” the Court recounted:

“Although Plaintiff submitted Forms 1040 to the Internal Revenue Service (IRS) along with copies of Forms W-2 indicating his wage income for the years 1996 and 1998, he reported no income on the returns and attached statements containing frivolous arguments as to why he was not liable for an income tax for those two years…With regards to the 1998 tax return, the IRS then sent Plaintiff a letter dated May 24, 1999, advising him that a frivolous return penalty of $500 under 26 U.S.C. § 6702 would be assessed against him unless he corrected his position within 30 days…Plaintiff failed to correct the Form 1040 and the IRS assessed § 6702 penalty against him on September 13, 1999, with respect to the 1998 Form 1040…The IRS also accessed Plaintiff a § 6702 penalty on November 13, 2000, with respect to the 1996 Form 1040, because he submitted a Form 1040 for tax year 1996 showing no income with an attached statement containing frivolous arguments on July 21, 2000.”

So, part of what Rohner was trying to do was use the hearing to get out of paying frivolous return penalties. The IRS sent Rohner a Notice of Intent to Levy that informed him of his right to a CDPH hearing and he requested the hearing. After losing in the CDPH hearing, Rohner lost on appeal to the Federal District Court:

1) Rohner’s claim  that he did not obtain  a notice of deficiency respecting the § 6702 frivolous return penalty was declined as being without merit as there is no necessity that a notice of deficiency issue with respect to these penalties. The Court held that deficiency procedures do not apply to the assessment or collection of frivolous tax return penalties.

2) Rohner’s contention that he did not get a just hearing because the Internal Revenue Service neglected to comply with his demands for documents was rejected by the Court as groundless. The Court held that Section 6330 did not afford authorization for production of documents or other investigative demands in association with a CDPH (Colletions Due Process Hearing).

Rohner raised additional unfruitful issues on appeal which will serve as the basis of a different article. The Court ended up holding that the Internal Revenue Service’s administrative holding was to be upheld. Results such as this one have continually served me as an inspiration and not as a dissuasion. At least a court case like this serves up a warning with regard to future strategies. To furnish yourself the best likelihood of enjoying success study the 9 video recordings at www.irsterminator.com.

Follow me on Twitter.com/legalbear See you there.

CDPH Hearing Issues Gone Bad #2
26 U.S.C. § 6330(e) provides that as soon as a Collection Due Process Hearing (CDPH) is timely requested “the levy actions which are the subject of the requested hearing…shall be suspended for the period during which such hearing, and appeals therein, are pending…” This provision renders the request for a Collection Due Process Hearing (CDPH) a highly effective way to stop an IRS levy on a bank account or paycheck. I have seen the IRS fax a release of levy to an employer in as little as two days subsequent to CDPH hearing request being sent allowing the employee to never miss a full paycheck. It is my contention that almost anyone could stop an IRS levy by timely requesting a CDPH hearing as provided in 26 U.S.C. § 6330(b)(1).

However, most us would not be able to keep IRS collection activity suspended without some help. There are a lot of delays before the hearing is held and while appeals are pending. During these delays you will be able to retrieve whatever money you had in the bank when the Notice of Levy showed up from the IRS. You will also be receiving full paychecks during those delays; eventually, the end of the line will come and the IRS will move forward with collection activities as they were before the hearing was requested. When that happens you will be right back where you started; facing collection activity by the IRS. It is because of this harsh reality that I posted nine free videos, 4-10 minutes in length at www.irsterminator.com discussing strategies I have come up with that make forcing the IRS to suspend collection activities permanently a very real possibility.

As I see it, winning a CDPH hearing will involve two things: 1) Taking positive, strategic action designed to prevail in the hearing as I discuss in the videos mentioned above; 2) Avoiding raising issues that would cause you to lose the hearing. Avoiding losing issues is a matter of seeing what other people have tried in the past and building off their experience.

Rohner v. U.S., 2003.NOH.0000145 (N.D.Ohio 2003) is the case that I will address in part in this article. Rohner lost his Collection Due Process hearing and appealed to the Federal District Court. I was able to find his case by searching the District Court data base at www.versuslaw.com. I made an hour and forty minute video about how to use Versuslaw to do research and that video is available here.
In the section of the Court’s decision entitled “Factual and Procedural Background” the Court recounted:

“Although Plaintiff submitted Forms 1040 to the Internal Revenue Service (IRS) along with copies of Forms W-2 indicating his wage income for the years 1996 and 1998, he reported no income on the returns and attached statements containing frivolous arguments as to why he was not liable for an income tax for those two years…With regards to the 1998 tax return, the IRS then sent Plaintiff a letter dated May 24, 1999, advising him that a frivolous return penalty of $500 under 26 U.S.C. § 6702 would be assessed against him unless he corrected his position within 30 days…Plaintiff failed to correct the Form 1040 and the IRS assessed § 6702 penalty against him on September 13, 1999, with respect to the 1998 Form 1040…The IRS also accessed Plaintiff a § 6702 penalty on November 13, 2000, with respect to the 1996 Form 1040, because he submitted a Form 1040 for tax year 1996 showing no income with an attached statement containing frivolous arguments on July 21, 2000.”

So, it sounds like Rohner may have been using an early Cracking the Code strategy; or possibly, something taught by Irwin Schiff. He appears to be using the hearing to get the hearing officer to agree with his position on why he had no taxable income and to get out of paying frivolous return penalties. The IRS sent Rohner a Notice of Intent to Levy that informed him of his right to a CDPH hearing and he requested the hearing. After losing in the CDPH hearing, Rohner lost on appeal to the Federal District Court:

1) According to the published decision, the Court said that Rohner contended that he had the right to record the collection due process hearing or have a court reporter transcribe the hearing. The Court held that Rohner misstated the law and held that he did not have the right to have the collection due process hearing recorded or to have a court reporter transcribe the hearing.

2) According to the published decision, the Court said that Rohner complained that the hearing officer would not give him a separate hearing with respect to the frivolous return penalties for each of the two different tax years. The Court held that collection due process hearings consist of more than just the face to face meeting between the taxpayer and the officer. It held that written communications, telephone conversations and face-to-face meetings all suffice for an adequate hearing.

The Court ended up holding that the Internal Revenue Service’s administrative determination was to be upheld. In the videos at www.irsterminator.com I discuss how to use Rohner’s losing issues above to your own advantage. Check them out.

“Fastest Way to Stop an IRS Levy Articles” at www.irsterminator.com.

Follow me on Twitter.com/legalbear See you there.

I was poking around in the Internal Revenue Manual (IRM) and came across instructions to IRS personnel respecting the handling of 26 USC § 7433 exhaustion of administrative remedy damage claims:

“25.3.3.5.2  (08-28-2006)
“Evaluation of a Claim for Damages Under IRC § 7433″

“1.  Date stamp the claim upon receipt. Advisory should complete the initial review of the claim within 30 days of receipt.”

Would you look at that! No wonder I have several stories of people who sent in a notice of intent to sue based on my Calling Off the Dogs package because of an IRS levy that got a check for the full amount the next month. Apparently, when the IRS does their job they complete the initial review in 30 days like the IRM says too.

Now it is clearer that when no response is received by people who send a notice of intent to sue over an IRS levy that someone in the IRS is messing up. It is possible that whoever was attempting to exhaust their administrative remedies did a poor job of writing their claim. Continuing from IRM 25.3.3.5.2:

“2. Open an OI on ICS under 101 – Claim Other. Review the closed files for any prior claims.”

Keep this in mind when you send in an administrative claim for damages under § 7433; they are going to be reviewing your history. Continuing from IRM 25.3.3.5.2:

“3. The statutory elements contained in IRC § 7433 must be applied to each processable claim.”

Simply put; you must address each and every aspect of both § 7433 and the regulation 26 CFR 301.7433-1 in your administrative claim. You have to treat it like you would a jury instruction or a civil complaint. They are making an evaluation of your litigation ability. It’s your chance to show them what you got. Reading further in IRM 25.3.3.5.2(3):

“In determining whether a claim is administratively allowable the reviewer must determine whether:

“A. an officer or employee of the IRS intentionally, negligently, or recklessly disregarded any legal or regulatory provision of the Internal Revenue Code in connection with the collection of any federal tax ; and

“B. the taxpayer sustained direct, economic damages as a result.”

As the old saying goes, to be forewarned is to be forearmed. Here they are breaking down what the elements of a 26 USC § 7433 claim are for you. Address the above issues and you should be good to go. Reading further in IRM 25.3.3.5.2:

“4. The facts and circumstances of each case must be evaluated. The reviewer must determine if the alleged infraction did, in fact, take place.”

If you are lazy respecting point 4 above you will make it harder for the one doing the evaluation to determine whether there really are facts that warrant the claim. If you make it harder to evaluate the factual basis of the claim, you are just making it easier for the evaluator to rule against you. Another view, if you pay attention to 26 CFR 301.7433-1(e)(2)(ii) & (iii), included in my Calling Off the Dogs package, then you will have included the grounds, in reasonable detail, for the claim and you will have included copies of any available substantiating documentation or correspondence with the Internal Revenue Service; and, you will have included a description of the injuries incurred by you when you filed the claim. When you want somebody to do something for you it is always best to do what you can to make it easy for them to give you what you want. It seems you would want to help the reviewer by including photo copies of any available substantiating documentation or evidence that supports your administrative claim for damages. This is how you make it as easy as possible for the evaluator to do the next part of IRM 25.3.3.5.2(4):

“… determine whether or not the infraction was a reckless, intentional, or negligent disregard of the law.”

Reading further in IRM 25.3.3.5.2 (with my emphasis added):

“5. The reviewer must also ascertain when, in time, the taxpayer became aware of the violation or should have become aware of the violation. Claims filed more than two years after the violation must receive special scrutiny. The taxpayer’s two year limitation to bring suit begins at the point when the taxpayer has had a reasonable opportunity to discover all essential elements in a possible cause of action. The reviewer must determine when the taxpayer knew or should have known of the violation. Claims filed outside the two year limitation will be rejected.”

Don’t be a dunderhead! This is telling us to address in our administrative claim the statute of limitation. We need to just do it and do it in an intelligent manner. If the statute of limitations is about to run out, it would serve you well to keep in mind that elements of the claim that you can assert are a factual matter which you must find a way to truthfully assert were discovered later that would extend the two year statute of limitations. Why waste your time writing a claim If you are unwilling to do this. Let’s stash this info away in our minds and make it a point to get our claims in timely.

“6. Certain criteria guide the amount of an administrative settlement, under this section. For example:

“A. the amount of the award is to be reduced by the damages that reasonably could have been avoided by the taxpayer;

“B. only actual, direct economic damages are recoverable in an administrative claim. No litigation or administrative costs are recoverable in an administrative claim. To the extent that any costs are recoverable under § 7433, such costs are recoverable only in a court proceeding; and

“C. the actual, direct economic damage reimbursement cannot exceed $1,000,000 ($100,000 in the case of negligence).”

I’ve been telling people all along that it is possible to get a check for damages without going to court. There, they say it plainly; it is possible to get a check for damages by making an administrative claim! I suspect that in the entire history of the existence of 26 USC § 7433 that no one has ever gotten a check for damages; that is, unless a relative or close friend to an IRS agent got one. Why not do a super job of writing an administrative claim and be the first one to get a check for damages on an administrative basis? Continuing from IRM 25.3.3.5.2:

“7. Acceptance or rejection of each claim will be reviewed by Area Counsel for agreement. Include the Advisory administrative file and all related information.

“8. After concurrence by Area Counsel, submit the file to the Advisory Territory Manager for approval.”

See, if you do your job and write a good administrative claim; and they do their job and review and approve your claim, there are going to be some highly educated eyeballs examining your work of art administrative claim. This is why it is a good idea to get my Calling Off the Dogs package and study up on the use of 26 USC § 7433 before writing your administrative claim and attempting to exhaust your administrative remedies.

Follow me on Twitter.com/legalbear See you there.

Did the IRS Levy Your Bank or Employer?

There are probably not many feelings worse than the one that happens when your financial institution or your work give notice you that they have been served a Notice of Levy by the Automated Collections at the IRS allegedly ordering them to keep most all of your next paycheck or deliver the funds in your bank account to them. Actually, if the IRS has complied with the law, a Notice of Levy should never be a surprise. 26 USC § 6330 provides in pertinent part:

(a)  Requirement of notice before levy
(1) In general
No levy may be made on any property or right to property of any person unless the Secretary has notified such person in writing of their right to a hearing under this section before such levy is made. Such notice shall be required only once for the taxable period to which the unpaid tax specified in paragraph (3)(A) relates.

26 USC § 6330 provides this respecting the timing and manner of service of the notice:

(a)(2)  Time and method for notice
The notice required under paragraph (1) shall be-
(A) given in person;
(B) left at the dwelling or usual place of business of such person; or
(C) sent by certified or registered mail, return receipt requested, to such person’s last known address;
not less than 30 days before the day of the first levy with respect to the amount of the unpaid tax for the taxable period.

When you get the aforementioned notices and study them timely, you should see that 26 U.S.C. § 6330(e) provides that as soon as a Collection Due Process Hearing (CDPH) is timely requested “the levy actions which are the subject of the requested hearing…shall be suspended for the period during which such hearing, and appeals therein, are pending…” This provision renders the request for a Collection Due Process Hearing (CDPH) a extremely effectual means to end an IRS levy on a bank account or paycheck.

In the instance in which a levy was received by an employer but the notice had not been served as required by the above statutes, I have seen the IRS fax a release of levy to an employer in as little as two days subsequent to CDPH hearing request being sent. Now, employees knowledgeable about these provisions in the Internal Revenue Code (IRC) will be able to get all of their pay while the hearing is pending. Almost anyone can bring a halt to an IRS levy by timely requesting a CDPH hearing as provided in 26 U.S.C. § 6330(b)(1). I make available the forms to competently request a CDPH hearing in a situation where the statutorily required notice has not been sent at www.irsterminator.com.

When you receive the notice, it is VERY important that your request for the hearing be made timely. 26 USC § 6330(a)(3) specifies that the information included with the notice the IRS sends you shall include:

“The notice required under paragraph (1) shall include in simple and nontechnical terms-
(B) the right of the person to request a hearing during the 30-day period under paragraph (2);”

However, if the IRS never served you with the required notice, it is impossible to find out when the 30 day period begins and ends. The free videos at www.irsterminator.com explain how to inform the IRS that their failure to serve you with the statutorily required notice renders your request for a hearing timely and entitles you to the suspension of collection activities including the levy at your bank or employer. Discussed on those videos are plans that I have come up with to keep collection activity suspended permanently which is the challenging part.