TAX BRAKE
By Bob Nath, Esq.
http://www.eirshelp.com http://www.divorcenet.com
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"Due Process - There's a Right and a Wrong Way"

One of the cornerstones of the 1998 tax reform legislation was a new taxpayer right, the right to a "Collection Due Process Hearing." Form 12151 is used to request this right, which follows after 1-4 IRS notices, of increasing urgency,
to PAY YOUR TAXES - OR ELSE! If you lose at the hearing, you can take the matter to federal court.

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This right is especially useful in collection proceedings involving spouses who are left without major assets following the filing of joint returns and a divorce. Often the "innocent" spouse signed the return but is not eligible for formal innocent spouse relief. So he/she is left to face the IRS Collection Division. This right to a hearing is an excellent way to prevent an unknowing collection disaster.

However, what you may not do is to use the collection due process hearing solely for delay. In a recent case, that's what happened, or at least the judge came close to saying so. The taxpayer racked up seven years of tax delinquencies, totaling $700,000, and then filed the hearing request when the
IRS was about to levy on assets. Compucel Service Corporation v. Commissioner of Internal Revenue (USDC D-Md.)

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The Judge (a former Tax Division, US Justice Department attorney) saw right through that ploy. The law itself, the judge said, "permits a taxpayer who does not deny that he owes a tax liability to block IRS collection by levy for so
long as it may take to provide a Due Process Hearing and for the judicial process to be completed." If you file for a hearing in good faith because the IRS is threatening unfair collection, that's OK. But here, the Court said, that
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The Court threw out the case, holding that the IRS was free to levy, that there was no requirement for a transcript at the due process hearing, that a record of the arguments for both sides was sufficient, that there was no requirement that
the IRS make any compromise, and that the IRS' decision at the hearing was reversible only for "abuse of discretion."

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Ask Bob Nath, Esq. your questions at
http://www.eirshelp.com
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