Can you cheat the FBAR? What happens if you don't file?

Not quite shockingly, I conclude you can't tell the IRS to shove it with impunity. What do you think?

What Tolls the 10-year Statute of Limitations on IRS Tax Debt Collections?

There are certain time limits on the IRS to collect a tax liability, which is ten years from the time it is assessed. The "Collection Statute Expiration Date (CSED)" is the last day the IRS has to collect any unpaid taxes. Once the collection statute expires, the IRS loses its right to pursue collection of a tax liability. But there are certain things that can "toll" or "stop" the statute of limitations clock from ticking.

What Actions Can Extend IRS Statute Of Limitations?

By Filing an Offer in Compromise
Filing an offer in compromise will toll the collection statute by the time the IRS considers the offer, plus 30 days. The offer can take up to twelve months to be investigated, and if accepted, the IRS allows up to two years to complete the settlement process. Remember, submitting an OIC will largely work towards the best interest of the IRS.

Leaving the Country
Living outside the United States for more than six months may stop the clock on the CSED from running. So don't assume that you can run out the IRS statute of limitations while you are staying abroad. For that reason, the IRS very specifically asks about these details on its form 433A Collection Information Statement.

Filing of a Bankruptcy
The ten year statute of limitations period will be suspended if you file for bankruptcy – the suspension will last for the entire time you are under the protection of the bankruptcy court, plus six months. This period for Chapter 7 bankruptcies would be around 6-9 months.  For Chapter 13 bankruptcy, the suspension of the CSED period can last for several years.

Installment Agreement Request
If your proposed Installment Agreement is pending with the IRS, the statute of limitations will be tolled during the entire waiting period. If the IRS rejects the proposed agreement and you appeals against it, the CSED is tolled while the appeal is pending.

IRS Collection Due Process (CDP) Hearing
The CSED is tolled after the Collection Due Process (CDP) hearing request is filed and it will last until the hearing is over. The hearing process may take six months to complete; sometimes, this can take longer time if you use the appeal right to go to tax court. But an Equivalent Hearing does not suspend the IRS statute of limitations on collections.

Fraud Cases
If the taxpayer attempts for any fraudulent action to evade taxes or files a false return, then there will be no statute of limitations on IRS collections whatsoever.

Waiver/Extension
A taxpayer may voluntarily agree to extend the statute of limitations by signing a waiver form 900. The IRS is limited to request statute extensions only in conjunction with an Installment Agreement and when the taxpayer wants to pay a lower amount each month.

Wrongful Levy (Seizure)
The limitations period will be extended during the time where the taxpayer’s assets are under the custody or direct control of a state or federal court. The same applies during the time the IRS wrongfully has a lien in place against the property or when it has wrongfully seized the property from a third party.

8 tips before calling the IRS to set up a tax payment plan

8 tips before calling the IRS to set up a tax payment plan

IRS Tax Debt Forgiveness Programs – What You Need To Know

People suffering from insurmountable tax debts look for a lifesaver, something that helps them to stay afloat and provide protection from the scary IRS collection actions. Believe it or not, that lifesaver can be in the form of IRS's best-kept secret – tax debt forgiveness. The following paragraphs will explain about the various debt forgiveness programs and situations that force the IRS to forgive your tax debts.

Under what circumstances, the IRS will forgive tax debts?

Statute of Limitations on Tax Collection: When you owe the IRS money, can you ever be off the hook from IRS collection actions? The answer is "yes" you can. There is a clock that will start to run on the IRS as soon as the tax is assessed. This is technically referred to as statute of limitations. Once the statute expires, your liability expires as well as the IRS's legal right to pursue collection efforts. So, if you can pay only X amount of dollars in the next ten years or so, what if the IRS is offered X+ $1 dollars by you to settle tax dues? Is that a good deal for the IRS? Can it work wonders for you? Yeah, it could very well be.

Reasonable Collection Potential (RCP): You may owe thousands or even millions of dollars to the IRS but what if you don't have any assets and/or income? How will you pay off the tax debt? This is where the IRS makes a determination of taxpayer's repaying potential, technically referred to as Reasonable Collection Potential (RCP). The RCP is how the IRS evaluates the taxpayer's ability to pay back their tax debts. If you are dead broke and your RCP is $0, paying just one dollar to the IRS can be a good deal to them. But settling for "pennies for the dollar" is not that likely to happen as most people aren't without any money. However, this is another instance where your tax debts could be forgiven by the IRS.

”Fresh Start”: Under certain circumstances, Chapter 7 bankruptcy can stop all the IRS collection efforts and also completely discharge back tax debts. In other words, you don't have to repay anything to the IRS, even if you have huge amount of back tax debts. Your debts forgiven and a fresh start granted – allowing you to start over a new life free of IRS liens and levies.

IRS Debt Forgiveness
So now, let's have a brief look into the specific IRS debt forgiveness programs.

Currently Non-Collectable Status
If your RCP is very low as your income or household cash flow matches the IRS "allowed expenses" and if you don't have any assets to sell, you may be able to qualify for Currently Not Collectible Status. Under this, the IRS will stop coming after you to collect back taxes and you will be protected from IRS levies, apart from your current withholding. In contrast to offer in compromise or bankruptcy that put collection statute on hold, the clock will continue to run while you are listed as non-collectible. If you have only few years left, you can run out the clock on the IRS. That means you pay the IRS nothing for your back taxes.

Partial Payment Agreement
If you do not qualify for CNC, the next best tax debt reduction plan is Partial Payment Installment Agreement. In this program, you pay a monthly amount to the IRS that you agreed upon. Similar to CNC, the collection clock continues to tick for PPIA also; you have to pay until the statute runs out. Once the statute of limitations expires, the IRS forfeits the right to collect the balance tax dues.

Doubt as to Collectibility – IRS Offer in Compromise
There are three different reasons the IRS can forgive your tax debts through the Offer in Compromise program, but the most common one is "the Doubt as to Collectability". It is based on what you afford to pay back to the IRS within the statute of limitations. At IRS Medic, we have a high success rate of reducing our client's tax debts by effectively using this program.

The IRS has realized that the chance of collecting back taxes more than what the taxpayer can afford to pay is very unlikely to happen. So they figured out it is in their best interest to forgive the tax debts either partially or fully depending on the taxpayers' ability to pay back. Remember, the IRS forgives tax debts not out of kindness towards the struggling taxpayers. The key is to offer hope and bring them back as productive, taxpaying citizens.

IRS Revenue Officer – First Contact

IRS Revenue Officer – First Contact

2015 FBAR filing procedures

2015 FBAR filing procedures

Statute of Limitations on Foreign Income

Statute of Limitations on Foreign Income