P-3 (Collection Process)

Question 1

What is it called when the IRS claims an interest in a taxpayer’s vacation house as security to pay a tax debt?

Answer 1

A Lien

Question 2

When must a taxpayer file form 9465 (installment Agreement Request)?

Answer 2

A taxpayer must file form 9465 if they wish to request an installment agreement for a tax liability above $50,000.

Question 3

Does a taxpayer have to file for 9465 if the balance due is less than $50,000?

Answer 3

No, the taxpayer can apply for a payment agreement online instead.

Question 4

What publication involves the collection process?

Answer 4

Publication 594.

Question 5

Can a federal lien attach to property inherited after the lien has been filed?

Answer 5

Yes, A notice of federal tax lien attaches to property acquired after the lien filing date.

Question 6

What affect does a bankruptcy filing have on a federal tax lien?

Answer 6

The filing of bankruptcy may not eliminate tax, but it will temporarily stop IRS enforcement action of a debt related to the bankruptcy.

Question 7

What effect will a bankruptcy proceeding have on an IRS levy of property?

Answer 7

The taxpayer receives an automatic stay and the IRS must release the levy while the bankruptcy is pending.

Question 8

What 3 step process must the IRS follow prior to filing a federal tax lien?

Answer 8

The IRS must assess the tax, send a bill to the taxpayer and allow ten days from the date of the bill (Notice and Demand for Payment) before filing a lien.

Question 9

In order for the IRS to grant a guaranteed installment agreement, a taxpayer must have not failed to file any income tax returns or pay any tax shown on such returns for last xx amount of years?

Answer 9

In order for the IRS to grant a guaranteed installment agreement, a taxpayer must have not failed to file any income tax returns or pay any tax shown on such returns for last 5 years.

Question 10

What form should a spouse who reasonably did not know about income their spouse did not report file?

Answer 10

The spouse should file an innocent spouse relief form 8857.

Question 11

What is a levy?

Answer 11

A levy is a seizure of a taxpayer’s property to satisfy a tax debt.

Question 12

Once the IRS sends a notice and demand for payment, if the taxpayer does not respond within 10 days, what are three steps the IRS can take?

Answer 12

If the taxpayer does not respond to the notice and demand for payment letter within 10 days, the IRS can:
1. apply any state refund due to the liability
2. serve a summons requiring the taxpayer to produce info regarding assets
3. Seize the taxpayer’s personal property, including salary

Question 13

Any real property used as a residence by the taxpayer may not be seized to satisfy a levy of xxx or less?

Answer 13

Any real property used as a residence by the taxpayer may not be seized to satisfy a levy of $5,000 or less.

Question 14

T/F, a taxpayer’s principal residence may not be seized without the written approval of a U.S. district court judge or magistrate?

Answer 14

True, a taxpayer’s principal residence may not be seized without the written approval of a U.S. district court judge or magistrate

Question 15

T/F, Before the sale of property, the IRS will compute a minimum bid price. If the minimum is not offered at the sale, the IRS may buy the property.

Answer 15

True, Before the sale of property, the IRS will compute a minimum bid price. If the minimum is not offered at the sale, the IRS may buy the property.

Question 16

If proceeds of a tax sale by the IRS are less than the total of the tax bill, does the taxpayer have to pay the difference?

Answer 16

Yes, If the proceeds of a sale by the IRS are less than the total of the tax bill the taxpayer must pay any remaining balance.

Question 17

For most cases, taxpayers who establish an installment agreement to pay additional taxes owed on their return have how long to repay the balance?

Answer 17

A taxpayers who establish an installment agreement to pay additional taxes owed on their return have up to 72 months to pay.

Question 18

When does a federal tax lien expire?

Answer 18

A federal tax lien expires automatically ten years after it was filed unless the IRS re-files it or releases it.

Question 19

When is a taxpayer an injured spouse?

Answer 19

You are an injured spouse if you file a joint return and all or part of your share of the refund was, or will be, applied against the separate past-due Federal tax, state tax, child support, or Federal non-tax debt (such as a student loan) of your spouse with whom you filed the joint return.

Question 20

If a taxpayer’s CDP appeal is deemed frivolous, according to IRC section 6702, what can be done to avoid the $5,000 penalty?

Answer 20

If the appeal is deemed frivolous, the taxpayer will be given 30 days to withdraw or amend the CDP appeal.

Question 21

If the IRS files a Notice of Federal Tax Lien and thereby encumbered a taxpayer’s residence. How can he appeal the lien?

Answer 21

He can appeal the lien by requesting a hearing with the Office of Appeals.

Question 22

What are three instances where the IRS can release a levy?

Answer 22

The IRS can release a levy if
1. The levy creates an economic hardship
2. The FMV of the property seized exceeds the liability for which the levy was made
3. The taxpayer timely agrees to extend the ten-year tax collection period.

Question 23

If the IRS sells a taxpayer’s real property to satisfy an outstanding tax liability, how long does the taxpayer have to redeem the property?

Answer 23

The taxpayer has 180 days to redeems real property sold by the IRS to satisfy a tax lien.

Question 24

The installment agreement is one of the acceptable methods of paying off a tax debt to the United States Treasury. Financial information on a Collection Information Statement may be required as a condition of the installment agreement. An installment agreement will be accepted without this statement if the dollar amount is:

Answer 24

An installment agreement will be accepted without form 433-F if the dollar amount is less than $25,000.

Question 25

When is the IRS required to accept a request for an installment plan?

Answer 25

The IRS is required to accept a request for an installment plan if the amount owed is $10,000 or less and the taxpayer filed and paid taxes for the last five years (without an installment plan), and the tp agrees to pay the amount in full within 3 years.
Additionally, the taxpayer must have a confirmed inability to pay taxes.

Question 26

If a taxpayer has both an outstanding tax liability and a pending bankruptcy case what should he do?

Answer 26

Advise the IRS of the bankruptcy case.

Question 27

A Notice of Termination of an Installment Agreement requires what type of appeal?

Answer 27

A taxpayer who receives a Notice of Termination of an Installment Agreement must utilize the Collections Appeal Process (CAP).

Question 28

Where does the proceeds from the sale of levied property go before being applied to the taxpayer’s tax liability?

Answer 28

The IRS will apply the proceeds from the sale to the cost of the levy and sale first before applying it to the tax liability. If the proceeds do not satisfy the cost of the levy and sale and the tax liability, the taxpayer will still have to pay the unpaid tax.

Question 29

If, after a Collection Due Process hearing with the Office of Appeals to discuss an Internal Revenue Service levy or lien, a taxpayer does not agree with the Appeals determination, what can he do?

Answer 29

He can commence a lawsuit in the appropriate federal court within thirty days from the determination.

Question 30

If the IRS discharges a property from a federal tax lien, what form must the Taxpayer file prior to the real property being sold?

Answer 30

If the IRS discharges a property from a federal tax lien, the taxpayer must file form 14135, (Application for Certificate of Discharge of Federal Tax Lien), found in publication 783 in advance of a scheduled sale of property.

Question 31

If a lien encumbers more than one piece of property and the value of all the properties taken together exceeds twice the amount of the lien, can the property be discharged from a federal lien?

Answer 31

Yes, If the lien encumbers more than one piece of property and the value of all the properties taken together exceeds twice the amount of the lien, discharge of property from the federal lien may be granted.