Dr. GP has retired, closed his practice, and lost his memory. What he didn’t lose was the $150,000 of unpaid payroll taxes or the $500,000 of unpaid personal income taxes. When he and his wife showed up at our office they were five years behind in filing personal income tax returns. The doctor barely knew his own name. Mrs. GP, although sound mentally, had never written a check in her life and English was her second language. She was desperate for help as a “government lady” was after her and the good doctor.
Mrs. GP explained that her husband tried to treat his patients and to keep his staff working, but the degenerative nature of his dementia had eroded his ability to deal with simple daily tasks over the last several years. She was never involved in his medical practice and was unaware of the state of their finances.
Ultimately, we determined that during his and his practice’s decline the doctor had dissipated most of their assets while trying to maintain their pre-dementia life. They were eligible for Social Security and had a small pension, this was the extent of their income. They were willing to sell their paid-for home, but would need the proceeds to supplement their income due to their medical needs. They also owned a summer home, which was a real sticking point as it was owned without a mortgage. The problem was that it needed repairs to meet code and be salable. The taxpayers didn’t have the money to make the repairs.
The “government lady” turned out to be Revenue Officer Morticia. She levied the taxpayer’s pension and Social Security. If the taxpayer’s adult children – living in a distant state – had not assisted Dr. and Mrs. GP, the couple would have been forced to forego medical care and food.
R.O. Morticia believed the taxpayer to be a tax scofflaw and our protest of dire economic hardship fell on the unsympathetic ears of both the R.O. and her Group Manager. After complying with the R.O.’s demand (within 3 weeks) for the five unfiled returns, she continued to deny our request to lift the levies.
As practitioners, we all need to be aware of our alternatives when confronted with a difficult IRS case being pursued by a relentless Revenue Officer. This case left no option but to request intervention by the taxpayer’s congressman.
I researched the contact information for the taxpayer’s congressman and sent a letter requesting his intervention. The letter was addressed to the congressman’s constituent services manager. Within fifteen business days the Taxpayer Advocate’s Office was involved, the levies were lifted, and we were able to commence negotiations with the Offer in Compromise Unit. Our offer was to allow the taxpayers to sell their home, use the proceeds to repair the summer home, and retain the remaining proceeds for living expenses. Thereafter, under the offer and a collateral agreement, the IRS would receive the net proceeds from the sale of the summer home. A good result for all.
Here’s what you need to consider when faced with a difficult case that cannot be resolved by conventional means:
1. Is the taxpayer’s situation being handled unfairly considering their circumstances?
2. Can you document attempts to resolve a case through normal channels?
3. Has the case dragged on despite your efforts to resolve the matter?
4. Is there a lack of necessary information or explanation from the IRS?
5. Has the IRS mishandled aspects of the case?
Here’s the steps to take to make the Congressional Referral:
1. Address the taxpayer’s congressman, not yours.
2. Start with the taxpayer’s representative, not his Senator.
3. On the congressman’s website, locate the Constituent Services page.
4. Print the release form and have the taxpayer sign it.
5. Mail, the following:
a. Cover letter to Casework Manager describing the need for assistance and result sought,
b. Congressman’s Release Form,
c. Copies of pertinent documents and IRS Notices, and
d. Your Power of Attorney.
6. Call the Casework Manager once sufficient time has elapsed for him to review your submission.
7. Await contact from the IRS.
The Casework Manager will forward the matter to the IRS who will assign it as part of the Congressional Affairs Program wherein the IRS Legislative Affairs office will refer it to the Taxpayer Advocate. The case will be carefully monitored to assure it receives elevated attention. I recommend use of a congressional sparingly as its power is diminished if you constantly cry “the sky is falling” admonition.
Congressmen may only work cases for their own constituents. Locate the proper congressman for your taxpayer at: www.house.gov/representative/find. Further information may be found in IRM 13.1.8.
By: Lawrence Lawler, CPA, EA, CTRS