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Tax Tips and Resources in Twin Cities, MN


 
 

Resources

 
Internal Revenue Service www.irs.gov

MN Department of Revenue http://taxes.state.mn.us

Social Security Administration www.socialsecurity.gov

MN Dept of Employment and Economic Development www.uimn.org

MN Secretary of State www.sos.state.mn.us

MN Attorney General www.ag.state.mn.us

MN New Hire www.mn-newhire.com
 
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Resources


 

Archived Tuesday Tax Tips

 

Taxpayer Bill of Rights (Part IX): The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Right #6: The Right to Finality (cont.)


Taxpayers have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year. Taxpayers have the right to know when the IRS has finished an audit.

What This Means for You



  • The IRS generally has three years from the date your return was filed to assess the tax. There are some limited exceptions to the 3-year rule, such as not filing a return or filing a fraudulent return. IRC § 6501

  • I The IRS generally has ten years from the assessment date to collect unpaid taxes from you. However, there are a number of circumstances where the ten year collection period may be suspended, such as during the period when the IRS cannot collect, e.g., bankruptcy or a collection due process proceeding, or an offer in compromise is pending. IRC § 6502

  • If you believe you have overpaid your taxes, you can file a refund claim asking for the money back. Generally, you must file a refund claim within 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later. IRC § 6511

    See also IRC § 6402: Administrative claim for refund under the Right to Pay No More than the correct amount of tax.


  • If you or the IRS does not file a timely appeal, the decision of the U.S. Tax Court is final. IRC § 7481

  • Generally, you will only be subject to one examination per taxable year. However, the IRS may reopen a taxable year that has been previously examined if the IRS finds it necessary (e.g., there is evidence of fraud). IRC § 7605(b)

(IRS NTA web site) (TTT 3/20/18 and 3/27/18)


 

Taxpayer Bill of Rights (Part VIII): The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Right #6: The Right to Finality

Taxpayers have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year. Taxpayers have the right to know when the IRS has finished an audit.

What This Means for You

  • In order to timely challenge a statutory notice of deficiency in Tax Court, you must file your petition within 90 days of the date of the statutory notice of deficiency or 150 days if the taxpayer’s address on the notice is outside the United States or if the taxpayer is out of the country at the time the notice is mailed. If you do not timely file a petition, the amount proposed in the statutory notice will be assessed and you will receive a bill. IRC § 6213

For more information about filing a petition, see the United States Tax Court’s taxpayer information page.

  • If you receive a notice proposing additional tax (statutory notice of deficiency), the notice must include the deadline for filing a petition with the Tax Court to challenge the amount proposed. IRC § 6213(a)

More information next week on Right 6 (IRS NTA web site) (TTT 3/13/18)

 

Taxpayer Bill of Rights (Part VII):

The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Rights #5: The Right to Appeal an IRS Decision in an Independent Forum (cont.)

  • You can generally request that an issue you have not been able to resolve with the IRS examination or collection division be transferred to the Office of Appeals. For issues that are unresolved after working with Appeals, you may request non-binding mediation (where a neutral third party will help you try to reach a settlement) or binding arbitration (where you and the IRS will be bound by a third party’s decision). You may also request non-binding mediation or arbitration after unsuccessfully trying to enter into a closing agreement or offer in compromise. IRC § 7123

  • Generally, if you have fully paid the tax and your tax refund claim is denied or if no action is taken on the claim within six months, then you may file a refund suit in a United States District Court or the United States Court of Federal Claims. IRC § 7422

  • In very limited circumstances, you can ask a court to make a determination on certain tax issues prior to there being an actual dispute between you and the IRS. For example, a court may be able to determine whether an organization is tax-exempt or if a retirement plan is valid. IRC §§ 7428, 7476-7479

  • A jeopardy levy or assessment allows the IRS, in very limited circumstances, to bypass normal administrative safeguards and protections. For example, the IRS may issue a jeopardy levy if the IRS has knowledge that the taxpayer is fleeing the country. If the IRS makes such a jeopardy levy or assessment, you have the right to file a law suit and the court will determine whether the levy or assessment was reasonable under the circumstances and whether the amount is appropriate. IRC § 7429

(IRS NTA web site) (TTT 3/6/18)
 

Taxpayer Bill of Rights (Part VI):

The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Rights #5: The Right to Appeal an IRS Decision in an Independent Forum (cont.)

  • To exercise your right to challenge the proposed adjustment in Tax Court without first paying the proposed adjustment, you must file a petition with the Tax Court within 90 days of the date of the notice being sent (or 150 days if the taxpayer’s address on the notice is outside the United States or if the taxpayer is out of the country at the time the notice is mailed). IRC § 6213

For more information about the United States Tax Court, see the Court’s taxpayer information page.

  • In certain circumstances, the Office of Appeals has exclusive authority to settle your case. Generally, for the four months after you petition Tax Court, Appeals will be the only office within the IRS who can settle your case as long as the statutory notice of deficiency or other notice of determination was not issued by Appeals. Statement of Procedural Rules, 26 C.F.R. § 601.106

For more information about the United States Tax Court, see the Court’s taxpayer information page.

  • If the IRS rejects your request for an offer in compromise asking the IRS to settle your tax debt for less than the amount owed, or a payment plan, called an installment agreement, then you may seek an independent review of the rejection with the IRS Office of Appeals. IRC § 6159(f) / IRC § 7122(e).

More information next week on Right #5 (IRS NTA web site) (TTT 2/27/18)
 

Taxpayer Bill of Rights (Part V):

The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Rights #5: The Right to Appeal an IRS Decision in an Independent Forum (cont.)

What This Means for You

  • In certain situations, a taxpayer has the opportunity to request a conference with the Office of Appeals. Statement of Procedural Rules, 26 C.F.R. § 601.103(c)(1)
  • You have the right to request an independent review conducted by the Office of Appeals prior to the termination of your installment agreement. IRC § 6159(e)
  • If the IRS is proposing to adjust the amount of tax you owe, you will typically be sent a statutory notice of deficiency, which informs you of the proposed change. This notice provides you with a right to challenge the proposed adjustment in Tax Court without first paying the proposed adjustment. Thus, the statutory notice of deficiency is your ticket to Tax Court. IRC § 6212

For more information about the United States Tax Court, see the Court’s taxpayer information page.

More information next week on Right #5 (IRS NTA web site) (TTT 2/20/18)
 

Taxpayer Bill of Rights (Part IV):

The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson

Bill of Rights #5: The Right to Appeal an IRS Decision in an Independent Forum

Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and have the right to receive a written response regarding the Office of Appeals’ decision. Taxpayers generally have the right to take their cases to court.

What This Means for You

  • The Commissioner must ensure an independent IRS Office of Appeals that is separate from the IRS Office that initially reviewed your case. Generally, Appeals cannot discuss a case with the IRS unless you or your representative is given the opportunity to be present. RRA 98 § 1001(a)(4), Rev. Proc. 2012-18

See IRS Publication 4227, Overview of the Appeals Process.

  • The IRS must ensure that an appeals officer is regularly available within each State.

  • If you do not agree with the proposed adjustment as a result of an examination (audit), you have the right to an administrative appeal. Statement of Procedural Rules, 26 C.F.R. § 601.103(b)

More information next week on Right #5 (IRS NTA web site) (TTT 2/13/18)

 
 
Public Account Standing in Door way - Public Accountant in Oakdale, MN
 

Taxpayer Bill of Rights (Part III): The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson.

Bill of Rights #4: The Right to Challenge the IRS’s Position and Be Heard (cont.)


  • Immediately after the IRS files a notice of federal tax lien in the appropriate state filing location, the IRS must generally provide you with an opportunity for a hearing before an independent IRS Appeals/Settlement Officer. At that hearing, you can raise alternatives to the IRS’s collection action and may even be able to challenge whether you actually owe the tax. If you disagree with Appeals’ determination, you can go to Tax Court. IRC § 6320

For more information about the United States Tax Court, see the Court’s taxpayer information page.


  • Before the IRS takes its first enforcement action to collect a tax debt by levying, for example, your bank account, the IRS must generally provide you with an opportunity for a hearing before an independent IRS Appeals/Settlement Officer. At that hearing, you can raise alternatives to the IRS’s collection action and may even be able to challenge whether you actually owe the tax. If you disagree with Appeals’ determination, you can go to Tax Court. IRC § 6330

For more information about the United States Tax Court, see the Court’s taxpayer information page.


(IRS NTA web site) (TTT 2/05/18)


 

Taxpayer Bill of Rights (Part II):The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson.

Bill of Rights #4: The Right to Challenge the IRS’s Position and Be Heard (cont.)

  • If you are notified by the IRS that it has adjusted your return because of a mathematical or clerical error, you have 60 days to tell the IRS that you disagree. If the IRS is not persuaded, it will issue you a Statutory Notice of Deficiency proposing a tax adjustment. This notice provides you with a right to challenge the proposed adjustment in Tax Court by filing a petition within 90 days of the date of the notice (150 days if the notice is addressed to a person outside the United States), without first paying the proposed adjustment. IRC § 6213(b)

For more information about the United States Tax Court, see the Court’s taxpayer information page.
More information next week. (IRS NTA web site) (TTT 1/30/18)

Taxpayer Bill of Rights (Part I):

The IRS has adopted a Taxpayer Bill of Rights as proposed by National Taxpayer Advocate Nina Olson. It applies to all taxpayers in their dealings with the IRS. The Taxpayer Bill of Rights groups the existing rights in the tax code into ten fundamental rights, and makes them clear, understandable, and accessible. The Tuesday Tax Tip will discuss a few of them during the next few weeks.

Bill of Rights #4: The Right to Challenge the IRS’s Position and Be Heard

Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions, to expect that the IRS will consider their timely objections and documentation promptly and fairly, and to receive a response if the IRS does not agree with their position.

What This Means for You

  • If you submit documentation or raise objections during an examination, and the IRS does not agree with your position, it will issue a statutory notice of deficiency explaining why it is increasing your tax, which gives you the right to petition the U.S. Tax Court prior to paying the tax. IRC § 6212

More information next week. (IRS NTA web site) (TTT 1/23/18)

Freedom of Information Act (FOIA):

The Freedom of Information Act (or FOIA) was enacted in 1966. It gives any person the right to access federal agency records or information. The act is based on the presumption that the government and its information belong to the people. The FOIA law was amended in 1996 requiring federal agencies to make many types of record available online. Visit the IRS eReading Room to learn more.

The IRS offers routine access to other records through procedures designed to make access quick and easy. For more information, use the IRS web site, Freedom of Information page “Routine Access.”

If you plan to make a FOIA request to obtain the records you seek, you may refer to the IRS FOIA Guide. IRS may withhold records protected from disclosure by one of the law’s nine exemptions and it must withhold when law prohibits disclosure of the records. (IRS Web Site – Freedom of Information) (TTT 1/16/18)

Injured Spouse:

You may be an injured spouse if you file a joint tax return and all or part of your portion of the overpayment was, or is expected to be, applied (offset) to your spouse's legally enforceable past-due federal tax, state income tax, state unemployment compensation debts, child or spousal support, or a federal nontax debt, such as a student loan.

Form 8379, Injured Spouse Allocation, is filed by one spouse (the injured spouse) on a jointly filed tax return when the joint overpayment was (or is expected to be) applied (offset) to a past-due obligation of the other spouse. By filing Form 8379, the injured spouse may be able to get back his or her share of the joint refund.

The form should be filed when you become aware that all or part of your share of an overpayment was, or is expected to be, applied (offset) against your spouse's legally enforceable past-due obligations. You must file Form 8379 for each year you meet this condition and want your portion of any offset refunded.

You can file Form 8379 with your joint tax return or amended joint tax return (Form 1040X), or you can file it afterwards by itself. You must file Form 8379 within 3 years from the due date of the original return (including extensions) or within 2 years from the date that you paid the tax that was later offset, whichever is later. (IRS Form 8379 instructions) (TTT 01/09/18)

Innocent Spouse – Types of Relief (Part II):

Three types of innocent spouse relief are available.


Innocent Spouse Relief – By requesting innocent spouse relief, you can be relieved of responsibility for paying tax, interest, and penalties if your spouse did something wrong on your tax return.

Relief by Separation of Liability – Under this type of relief, you allocate (divide) the understatement of tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse).

Equitable Relief – If you do not qualify for innocent spouse relief or separation of liability, you may still be relieved of responsibility for tax, interest, and penalties through equitable relief.

For more information, refer to the Innocent Spouse Questions & Answers on the IRS web site.
Part III will explain how to file for Innocent Spouse Relief.

(IRS.gov – Introduction to Innocent Spouses) (TTT 12/19/17& 12/26/17)