OK, now I'm really confused...

[gottago]

Will be speaking with attorney again on Monday but I am a bit confused at this point.

As many of you know, OIC was submitted 9/06 and accepted for processing 10/06. Have sent 3 sets of documentation (bank statements, check stubs, bills, etc.) periodically as requested. OIC is still pending. What spouse is earning (and having withholding on like a good boy) is basically about the amount allowed by the "national standards"--even though it is not enough to pay our actual monthly bills--so there is no current "discretionary" income.

Now, the Appeals office in Houston (4th office so far that has corresponded with us) is considering putting account on "currently not collectible" status since I have still been unable to find a job. Is this something that usually occurs in the middle of the OIC process?

We did not request currently not collectible status. Clearly, the balance we owe for the years in question will never be collectible unless we hit the lottery (which would be hard since I have not bought a ticket in many years). The returns for 2002 and 2003 submitted in June (that show the huge liability assessed for those years is not correct) have still not been processed but the ones for 2004 and 2005 submitted at the same time have. Submitting these returns was the last thing requested by the IRS and we complied.

Does the CNC status change the amount of time they have to accept or reject the OIC (24 months as far as I can tell)? Is there any advantage (or disadvantage) to being declared CNC during the OIC process? Will be asking these questions of the attorney but would appreciate any insight from those on here.

Thanks in advance!!

Gottago

[The Observer]

Now, the Appeals office in Houston (4th office so far that has corresponded with us) is considering putting account on "currently not collectible" status since I have still been unable to find a job. Is this something that usually occurs in the middle of the OIC process?

The only thing that makes sense from the above is that Appeals has come up with a dollar amount that they have considered acceptable for the offer - an amount that apparently you are not agreeing to or cannot fund - possibly due to equity in some asset that you have no ability to borrow from. In which case, Appeals is going to sustain the rejection of the offer and put you in currently not collectible status as an alternate resolution. The status could be reversed in as early as a year from now for new collection activity.

We did not request currently not collectible status.

You do not have to request a currently not collectible status - the IRS can make this determination with or without your input.

Does the CNC status change the amount of time they have to accept or reject the OIC (24 months as far as I can tell)? Is there any advantage (or disadvantage) to being declared CNC during the OIC process? Will be asking these questions of the attorney but would appreciate any insight from those on here.

The 24 month rule only applies while the offer is pending consideration. Once a decision has been made by the IRS - in this case your description strongly suggests a rejection was decided on - the countdown on the 24 months stops. A CNC status has no bearing on the 24 month rule.

[gottago]

The only dollar amount they came up with (about 5 months ago) was one that included assets/amounts already taken by levy and used incorrect monthly income figures (including income from a business even though we do not and never have owned or operated a business) and these errors were pointed out to them by the attorney. At that point, they requested original 1040s w/schedules for some of the years in question to be filed and this was done in June. Nothing since then.

If the OIC was rejected, is it required that we and/or the attorney are notified of this? This has not occurred and the attorney states the OIC has not been rejected. I guess I just do not understand what currently not collectible means.

[The Observer]

The only dollar amount they came up with (about 5 months ago) was one that included assets/amounts already taken by levy and used incorrect monthly income figures (including income from a business even though we do not and never have owned or operated a business) and these errors were pointed out to them by the attorney. At that point, they requested original 1040s w/schedules for some of the years in question to be filed and this was done in June. Nothing since then.

Then you need to start asking questions of the Appeals officer assigned to your case. They should be able to explain if they have changed their determination about you having income from a business and the status of the original 1040s they received from you. The only thing I can possibly offer is that they are waiting for the years in question to be adjusted before proceeding with the conclusion of the offer. But that doesn't explain why they want to report you as being currently uncollectible.

If the OIC was rejected, is it required that we and/or the attorney are notified of this?

In some manner, yes. If you had initiated the offer through Collections, you would receive a formal notice of rejection of the offier with appeal rights. If the offer was initiated directly with Appeals as the result of a Collection Due Process hearing, Appeals may, as apart of the determination letter they issue that the offer is not a proper remedy and sustain Collection's levy or lien action that a person was appealing. Either way, you would have the right to take the issue to court.

This has not occurred and the attorney states the OIC has not been rejected.

Then I have no idea what is transpiring with Appeals. As I said before, it would not make any sense to report a taxpayer as being currently not collectible if there was a offer that merited consideration.

I guess I just do not understand what currently not collectible means.

It means that the IRS has deemed at this point in time they cannot collect any money from you. It does not necessarily mean that they cannot ever collect from you before the statute of collection expires.

As I have pointed out before, your claim of being unemployed is not going to be accepted by the IRS as being proof that you cannot offer more money for the offer. You have professional skills, I presmume you are still at an age where you can work, and are in good health. The mere fact that you don't wish to commute a farther distance to earn a decent wage or relocate will not be treated by the IRS as proof that you will never work again. That is interpreted as being a lifestyle choice and not one of an economic obstacle beyond your control. In my opinion it appears the IRS has determined there is a potential for future income from you and that they are willing to wait and see if you will choose to go without income for the remaining years left on the statute to collect.

[gottago]

Thanks for you thoughts--at least it appears I have reason to be confused. Will address these issues with attorney on Monday.

Gottago

[Nikki]

While under CNC status:

interest continues to run

any outstanding liens and/or levies/garnishments remain in place

all collection activities, except for occassional review of collectibility grind to a halt.

So, keep being a good person. Pay all the taxes as they are due. Avoid all the potential penalties.

Start up the 10-year clock.

[The Observer]

While under CNC status:
.
.
.
any outstanding liens and/or levies/garnishments remain in place

Regarding levies, that information is wrong and misleading. The law requires that if a taxpayer's account is being reported currently not collectible due to financial hardship, any outstanding levies must be released. There are circumstances that may allow for exception to that, but they are few and far between.

[Nikki]

That's even better.

Now, does any good-faith effort on the part of the taxpayers to repay the debt, even in trivial amounts, upset the CNC status or the 10-year clock?

[gottago]

In our case, since there are no current levies in place, only the multiple NOFTL's would stay in place which would effectively prevent us from relocating, refinancing or otherwise do anything to improve the situation. Even if I did take say a minimum wage job any payments would be eclipsed by the interest charged by the IRS so it would not impact our liability. The housing market here, like many places, is BAD. Two houses on our block have been on the market for about 9 months with no takers.

I suppose just stopping making house payments and letting the house go to foreclosure would be an option (to enable us to save the payments in order to finance moving and paying rent somewhere) but doing that will effectively eliminate any proceeds the IRS would receive from the equity we do have so that would really not do anything to help the situation.

I go over and over this in my mind but still am unable to see a solution. I guess it is just one step at a time...

[gottago]

I apologize if the above post sounds whiny --really, I am just trying to find the solution or at least understand what it will take to get there.

[Question everything]

In our case, since there are no current levies in place, only the multiple NOFTL's would stay in place which would effectively prevent us from relocating, refinancing or otherwise do anything to improve the situation. Even if I did take say a minimum wage job any payments would be eclipsed by the interest charged by the IRS so it would not impact our liability. The housing market here, like many places, is BAD. Two houses on our block have been on the market for about 9 months with no takers.

I suppose just stopping making house payments and letting the house go to foreclosure would be an option (to enable us to save the payments in order to finance moving and paying rent somewhere) but doing that will effectively eliminate any proceeds the IRS would receive from the equity we do have so that would really not do anything to help the situation.

I go over and over this in my mind but still am unable to see a solution. I guess it is just one step at a time...

And remember as well - if your house is foreclosed on and the bank sells it for less than you owe, they may issue you a 1099 for the difference as discharge of indebtedness, and (unless you're insolvent) you'll owe income tax on that.

[Quixote]

I always get confused when someone responds substantively to a post that is incomplete or inconsistent.

OIC is still pending.

Now, the Appeals office in Houston (4th office so far that has corresponded with us) is considering putting account on "currently not collectible" status since I have still been unable to find a job.

How did Appeals get involved with the OIC? The OIC wasn't rejected, or at least Gottago didn't appeal the rejection if it was. Was a CDP request pending? (A strange fact to leave out of the post, if so.)

[gottago]

A week before we hired the attorney (8/3) to file the OIC, we did submit a timely request for a CDPH via certified mail (7/31)in response to the multiple levies sent to our banks, broker, and my job.

At the time, the CDPH was not responded to and all bank accounts were levied and I was fired from my job (8/9). We amended all the past frivolous returns as instructed by the attorney and filed them in person (8/18 ). The OIC was then submitted to Memphis COIC 9/13. IRA account was then levied (9/18 ) and the IRS received the proceeds (10/16 ) in response to a demand for payment faxed by the revenue officer that day. OIC was then accepted for processing 10/25.

In December we started getting calls and letters regarding the CDPH. It started via New Mexico, then Kansas City, Louisville and finally Houston. At first a face to face hearing was set but then the Appeals Officer stated we could not get one since all returns were not filed. The amended returns "did not process" so we submitted original 1040's with all schedules for the 4 years they requested back in June and 2 of the years have still not been processed. At this point, Appeals is saying that she is considering granting us collection alternatives as well as our OIC.

Even when I write this I don't understand it. The CDPH seems kind of moot at this point since all the collection has taken place over a year ago.

[Nikki]

GottaGo's case is an excellent example of an improvement the IRS sorely needs: single point of contact.

From the first contact with the IRS until the case at hand is closed, a taxpayer should have to deal directly with only ONE person or others specifically identified by that ONE person. In any case, the ONE person should be responsible for all coordinating activities and for ensuring all paperwork is correct and complete, all administrative steps are being followed and all information is timely processed in both directions.

Kiddies, write your congress critters and let them know that this is a VITAL change the IRS needs to make. Help them put the 'servie' back into the Srvice.

[gottago]

In reading on the irs site I also noted that the "currently not collectible" status is something that needs to be requested by filling out a form 433-F which I assume is similar to the 433-A that was completed as part of the OIC package. I guess that could have been done without even hiring an attorney.

Your answers has been very helpful to give me specific questions for the attorney when we speak tomorrow.

Gottago

[Burzmali]

GottaGo's case is an excellent example of an improvement the IRS sorely needs: single point of contact.

From the first contact with the IRS until the case at hand is closed, a taxpayer should have to deal directly with only ONE person or others specifically identified by that ONE person. In any case, the ONE person should be responsible for all coordinating activities and for ensuring all paperwork is correct and complete, all administrative steps are being followed and all information is timely processed in both directions.

Kiddies, write your congress critters and let them know that this is a VITAL change the IRS needs to make. Help them put the 'servie' back into the Srvice.

True, it would even save wacky mail bombers money in postage!

[Quixote]

we did submit a timely request for a CDPH via certified mail (7/31)in response to the multiple levies

It isn't possible to submit a timely request for a CDPH in response to a levy. No levy can be issued until the deadline for a CDPH request for that tax year has passed. If a levy was issued, the dealine had already passed.

GottaGo's case is an excellent example of an improvement the IRS sorely needs: single point of contact.

Gottago had a single point of contact, the revenue officer assigned to her case.

[The Observer]

It isn't possible to submit a timely request for a CDPH in response to a levy. No levy can be issued until the deadline for a CDPH request for that tax year has passed. If a levy was issued, the dealine had already passed.

Perhaps. But the IRS has been known to issue duplicate final notices (Letter 1058 letters) either due to the issuer thinking that they had a bad address previously or erroneously believeing that no previous L1058 had been issued.

But regardless, even an untimely CDP filing results in an equivalent hearing being provided to the taxpayer in Appeals. The only difference is that the taxpayer cannot file suit in federal court if they disagree with the Appeal result.

Gottago had a single point of contact, the revenue officer assigned to her case.

But that doesn't mean that the revenue officer gets to retain jurisdiction of the case. Once a CDP is filed by the taxpayer and processed, if the taxpayer insists on their case proceeding to Appeals, the revenue officer can no longer take action on the involved periods. Some representatives file multiple CDP responses knowing that this will tie the case up and result in a number of IRS employees responding to process the request to get it to Appeals.

[Quixote]

The only difference is that the taxpayer cannot file suit in federal court if they disagree with the Appeal result.

As Gottago found out there is one other big difference. An equivalency hearing does not stop enforced collection as a matter of law, only as a matter of policy.

Some representatives file multiple CDP responses knowing that this will tie the case up and result in a number of IRS employees responding to process the request to get it to Appeals.

Right, but the ones with smarts file them through the RO so the RO doesn't levy because he didn't know that a CDP request had been filed.

[gottago]

In this case, the RO was contacted several times by the attorney before and after the OIC was submitted and the CDPH request was in fact sent to her by certified mail on 7/31 as well as the amended returns as soon as they were filed. She works in the same office where we filed them. The bank accounts were levied in mid August. No wage levy occurred since I was fired. The IRA levy was dated 8/22/07 but was received 9/18/07 by the custodian (per time date stamp) We only received a copy of this levy on 9/24/07.

RO finally returned a call to the attorney (10/16) stating she needed to keep the IRA account "frozen" until the amended returns were processed and faxed a "Demand for Payment" to the IRA custodian the same day. Money was sent to RO the next day.

She ignored all of this in order to accomplish the final levy on the IRA. She has continued to file NOFTLs, as recently as April of this past year, and continues to mail collection letters from time to time. She is not the Appeals person we are currently dealing with but apparently was recently transferred to the same campus.

You all know and understand IRS procedure much better than I do. From mid July until mid August I think we received about 30 separate letters from the IRS both certified and regular mail. I am sure we must have missed a deadline somewhere. Also since some of the levies were for civil penalties and some were for assessed taxes maybe that has some significance.