Delinquent Taxpayers: Avoiding Passport Revocations, Statutes of Limitations, OICs and Penalties

Most practitioners rightly focus on clients who are in a position to pay, but all practitioners have handled clients who either encounter a large unexpected tax bill or are in arrears with the IRS. After asking for a retainer, there are steps an adviser can take to potentially lessen a taxpayer's balance due and simplify the process of resolving the account with the IRS.

Most payment plans allow payment of the full amount owed over time. Offers in compromise (OIC) afford the chance to reduce a balance due. Being able to settle for less than the total tax debt is preferred, but what is the likelihood of acceptance? Knowing this before preparing and submitting the paperwork could be a significant time saver.

Under Section 7345(b)(1) a seriously delinquent tax debt of $52,000 (2019 indexed amount) or more can result in the denial, revocation, or limitation on use, of a passport. Once the IRS certifies to the State Department the debt is seriously delinquent, the debt will need to be resolved before the IRS will reverse the certification. Paying the debt below the $52,000 threshold will not result in a reversal. Now with passport revocation in the news, more clients are anxious to resolve past liabilities. Still, others need to be alerted of the new sanction.

Practitioners and taxpayers alike are familiar with the three-year statute to audit a return but often more critical are the collection statute and the refund statute. Generally, the IRS has 10 years from the date of assessment to collect the tax. Understanding the date of assessment and when the clock has run is critical when advising taxpayers with prior tax debt.

Under 6511(a) a taxpayer has three years from the filing date or two years from the date of payment to claim a refund. Not filing a return can cause a client to lose an overpayment carried forward. How can a practitioner track this, and is he obligated to?

Listen as our panel of experts explains the types of the statutes of limitation, the new passport revocation initiative, criteria for qualifying for an OIC, and how to lessen penalties and problems of delinquent taxpayers.

1. Statutes of limitation
2. Penalties
3. Offers in compromise
4. Collection alternatives and payment plans
5. Passport revocation

The panel will review these and other important issues:

• The statutes of limitation for filing, collections and refund claims
• Handling taxpayers in jeopardy of losing their passports
• When and how to file an OIC
• When and how to establish a payment plan
• Mitigating penalties for delinquent taxpayers

Learning Objectives

After completing this course, you will be able to:

• Ascertain when an OIC, payment plan, or other collection alternative is the right choice
• Determine how to aid a client in danger of passport revocation
• Recognize steps to mitigate taxpayers' delinquency penalties
• Identify methods and measures to resolve IRS debt

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and sole proprietorships, qualified business income, net operating losses and loss limitations; familiarity with net operating loss carry-backs, carry-forwards and carried interests.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).