Good advice from CtC

[Nikki]

Beverages down.

This has two punch lines: one in the first post and one in the last:

Post subject: CtC then option in comp?
Dear friends

As I owe a goodly amount of back tax I intend to file CtC for at least two or three years.

When the IRS gets used to the truth I plan to make an offer in comp,with no income to speak of my offer will be a big goose egg.

any thoughts on this?

Sincearly Patrick

My understanding is each year is a record - essentially independent of any other year. Thus, correcting the record for one year has little if any impact on the record for a previous or different year.

Thus, getting the irs use to the Truth will probably not have any effect on how they will look at the record for each year in question.

I'm quite sure the irs knows the Truth. They are probably not thrilled with private sector Americans learning the Truth and then acting on it. However, the Law remains the Law and Congress has limited powers. Only "We The People" have Rights!

Regards,
Tim

Send them a check with "Offer in compromise" and the tax year in question next to it.

If they cash it they've accepted your offer.

Damn Cuts right through all the forms and procedures and gets right to the chase.

[webhick]

Send them a check with "Offer in compromise" and the tax year in question next to it.

If they cash it they've accepted your offer.

I've had clients tell me that writing "Final Payment" in the memo of checks absolves you of any outstanding balances upon the deposit of such check.

One (a self-proclaimed real estate genius) went so far as to explain that it works because a check is supposedly a contract that basically says "I agree to pay you this sum of money when you present this to my bank on or after the date on the contract and for the reason written" and when the person cashes the check, they are agreeing to the contract.

Of course, this is a guy thought he'd get rich through debt-financing, so we're not exactly talking about someone with more than two brain cells to rub together.

[Nikki]

I've had clients tell me that writing "Final Payment" in the memo of checks absolves you of any outstanding balances upon the deposit of such check.

One (a self-proclaimed real estate genius) went so far as to explain that it works because a check is supposedly a contract that basically says "I agree to pay you this sum of money when you present this to my bank on or after the date on the contract and for the reason written" and when the person cashes the check, they are agreeing to the contract.

Of course, this is a guy thought he'd get rich through debt-financing, so we're not exactly talking about someone with more than two brain cells to rub together.

What a maroon!

Everyone knows that you have to write it on the ENDORSEMENT LINE.

[Famspear]

webhick wrote:

I've had clients tell me that writing "Final Payment" in the memo of checks absolves you of any outstanding balances upon the deposit of such check.

One (a self-proclaimed real estate genius) went so far as to explain that it works because a check is supposedly a contract that basically says "I agree to pay you this sum of money when you present this to my bank on or after the date on the contract and for the reason written" and when the person cashes the check, they are agreeing to the contract.

Sadly, an attorney and former IRS employee once tried this silly tactic with respect to a tax payment to the IRS of about $2,376 -- in a futile attempt to fully satisfy a liability of over $866,000. He ran afoul of Internal Revenue Code section 7122 which, ironically, he actually had the temerity to cite. Here is an excerpt from the decision of the United States Court of Appeals for the Ninth Circuit:

Laurins [the taxpayer] filed a motion to dismiss the petition at the beginning of trial, contending that any liability had been discharged in an accord and satisfaction. On March 15, 1984, Laurins sent a check to the IRS for $2376.70 for the 1977 tax year, and on the back of the check he wrote that it was in "full accord and satisfaction of 1977 and all prior years." The check was cashed. The Tax Court denied the motion to dismiss.

Laurins now argues that the proposed accord and satisfaction was effective under section 7122(a) to settle this matter. Under 26 U.S.C. §7122(a), the "Secretary may compromise any civil or criminal case arising under the internal revenue laws . . ." There are, however, formal procedures for settling tax claims, and Laurins' method is not among them.

The regulations and procedures for compromises under 26 U.S.C. §7122 are the exclusive method of settling claims. Schumaker v. Commissioner, 648 F.2d 1198, 1199-1200 (9th Cir. 1981). First, an offer of compromise must be submitted on special forms prescribed by the Secretary, and an offer will not be considered to have been accepted until and unless the taxpayer is notified in writing of the acceptance. 26 C.F.R. §301.7122-1(d)(1), (d)(3). Laurins did not submit his offer of compromise on the appropriate form, and the record does not indicate, nor does he argue, that he received notice that his offer was accepted. No one with authority to settle claims handled his check. Laurins did not follow the correct procedures to settle the claim. Indeed, the record fully supports the observation of the Tax Court that Laurins was attempting to trick the government into a settlement. The Tax Court properly denied the motion to dismiss.

---from Laurins v. Commissioner, 889 F.2d 910, 89-2 U.S. Tax Cas. (CCH) paragr. 9636 (9th Cir. 1989) (bolding added).

[Question everything]

Post subject: CtC then option in comp?
Dear friends

blah blah blah...
any thoughts on this?

Sincearly Patrick

Yep. You're an idiot.

[Imalawman]

webhick wrote:

I've had clients tell me that writing "Final Payment" in the memo of checks absolves you of any outstanding balances upon the deposit of such check.

One (a self-proclaimed real estate genius) went so far as to explain that it works because a check is supposedly a contract that basically says "I agree to pay you this sum of money when you present this to my bank on or after the date on the contract and for the reason written" and when the person cashes the check, they are agreeing to the contract.

Sadly, an attorney and former IRS employee once tried this silly tactic with respect to a tax payment to the IRS of about $2,376 -- in a futile attempt to fully satisfy a liability of over $866,000. He ran afoul of Internal Revenue Code section 7122 which, ironically, he actually had the temerity to cite. Here is an excerpt from the decision of the United States Court of Appeals for the Ninth Circuit:

Laurins [the taxpayer] filed a motion to dismiss the petition at the beginning of trial, contending that any liability had been discharged in an accord and satisfaction. On March 15, 1984, Laurins sent a check to the IRS for $2376.70 for the 1977 tax year, and on the back of the check he wrote that it was in "full accord and satisfaction of 1977 and all prior years." The check was cashed. The Tax Court denied the motion to dismiss.

Laurins now argues that the proposed accord and satisfaction was effective under section 7122(a) to settle this matter. Under 26 U.S.C. §7122(a), the "Secretary may compromise any civil or criminal case arising under the internal revenue laws . . ." There are, however, formal procedures for settling tax claims, and Laurins' method is not among them.

The regulations and procedures for compromises under 26 U.S.C. §7122 are the exclusive method of settling claims. Schumaker v. Commissioner, 648 F.2d 1198, 1199-1200 (9th Cir. 1981). First, an offer of compromise must be submitted on special forms prescribed by the Secretary, and an offer will not be considered to have been accepted until and unless the taxpayer is notified in writing of the acceptance. 26 C.F.R. §301.7122-1(d)(1), (d)(3). Laurins did not submit his offer of compromise on the appropriate form, and the record does not indicate, nor does he argue, that he received notice that his offer was accepted. No one with authority to settle claims handled his check. Laurins did not follow the correct procedures to settle the claim. Indeed, the record fully supports the observation of the Tax Court that Laurins was attempting to trick the government into a settlement. The Tax Court properly denied the motion to dismiss.

---from Laurins v. Commissioner, 889 F.2d 910, 89-2 U.S. Tax Cas. (CCH) paragr. 9636 (9th Cir. 1989) (bolding added).

But I would guess that the person who authorized the cashing of that check got into a wee bit of trouble. I know on the state level, the Department won't deposit those checks for the purpose of avoiding stupid and silly litigation. Its not a good policy to cash such a check. It will only come back to be a giant waste of time.

[Nikki]

Lock box depositories don't read the checks. They just process them.

[Imalawman]

Lock box depositories don't read the checks. They just process them.

Right, sometimes I forget just how different the IRS operates compared to a state entity. (not that all the checks are read, but that checks that are unusual are flagged for attention)

[Quixote]

As the Laurins case makes clear, the OIC procedures long ago supplanted accord and satisfaction with regard to federal tax liabilities. But isn't accord and satisfaction still alive and well in the private sector?

[Dezcad]

As the Laurins case makes clear, the OIC procedures long ago supplanted accord and satisfaction with regard to federal tax liabilities. But isn't accord and satisfaction still alive and well in the private sector?

Yes, but there are statutes in many states to deal with the "paid in full" notation on a check. For example in Florida,

F.S. 725.05 Satisfaction for less than amount due.--When the amount of any debt or obligation is liquidated, the parties may satisfy the debt by a written instrument other than by endorsement on a check for less than the full amount due.

[Famspear]

I haven't researched the state of the law on the doctrine of accord and satisfaction for non-tax debts in Texas, but I note that for state tax debts, Texas law provides:

§ 31.073. RESTRICTED OR CONDITIONAL PAYMENTS PROHIBITED. A restriction or condition placed on a check in payment of taxes, penalties, or interest by the maker that limits the amount of taxes, penalties, or interest owed to an amount less than that stated in the tax bill or shown by the tax collector's records is void unless the restriction or condition is authorized by this code.

--Tex. Tax Code sec. 31.073 (bolding added).

So, at least for taxes, Texas law is similar to the Federal tax rule: Sneaky taxpayers cannot generally "trick" the tax collector by writing putative "accord and satisfaction"-type language on the check. The Texas tax collector can simply ignore the writing, cash the check, and initiate (or continue) collection actions for the remaining unpaid amount.

I haven't researched what exceptions to this rule may be "authorized by this code [i.e., by the Texas Tax Code]."

[grixit]

Lock box depositories don't read the checks. They just process them.

Right, sometimes I forget just how different the IRS operates compared to a state entity. (not that all the checks are read, but that checks that are unusual are flagged for attention)

I once accidently put a check made out to the gas company in the envelope for phone company. The phone company deposited it and it cleared. Sometimes things just slip through.

[webhick]

Lock box depositories don't read the checks. They just process them.

Right, sometimes I forget just how different the IRS operates compared to a state entity. (not that all the checks are read, but that checks that are unusual are flagged for attention)

I once accidently put a check made out to the gas company in the envelope for phone company. The phone company deposited it and it cleared. Sometimes things just slip through.

I've noticed that some utility companies have instituted policies about being able to cash your check whether it's post-dated, not signed, or made out to the wrong company. The old tricks of sending the wrong check to the wrong company to hold off having to pay them for a few more days doesn't work quite as well as it used to (not that that's what you did).

[Quixote]

Lock box depositories don't read the checks. They just process them.

Right, sometimes I forget just how different the IRS operates compared to a state entity. (not that all the checks are read, but that checks that are unusual are flagged for attention)

I once accidently put a check made out to the gas company in the envelope for phone company. The phone company deposited it and it cleared. Sometimes things just slip through.

UCC 3-203. Wrong or misspelled name.

Where an instrument is made payable to a person under a misspelled name or one other than his own he may indorse in that name or his own or both; but signature in both names may be required by a person paying or giving value for the instrument.

The phone company knew you were trying to pay them, but had misspelled their name on the check.

[Evil Squirrel Overlord]

When I was dirt poor and living on the road in my 20's I had an accident and no insurance. The medical bills piled up. I read a book about beating bill collectors, they listed the states where it was legal to write paid in full and if cashed would satisfy the debt. They were very few. Two states still had debtors prison (NJ and Wisc) although you had to willfully defraud creditors to get "admitted". Of course this was in the 1980's... I'm sure the odds are more stacked against debtors.

I'd think it would be worth a shot in those states that do not have laws against it, but NOT with the IRS or any powerful organization. My soulution: talk to you debtors, set up a payment plan or agree to pay a percentage if you can.

Also:
Do humans even touch checks anymore? I know as a skwerl I never look at the name on the checks I cash, they could be written out to Joseph Stalin and I would never notice.

[tracer]

What about those payments I receive from insurance companies, where on the back it reads:

"By endorsing and depositing this check, you agree that this settles all amounts for the claim in question in full and that the insurance company doesn't have to pay you any more, even if you change your mind later."