Tax Brake with Robert G. Nath, Esq.

Item 2. Collection Due Process Hearings

When the IRS seeks to collect your back taxes, it will send you a series of notices, including a “Final Notice” which gives you the right to an administrative hearing. That's a “Collection Due Process” hearing, used to argue that you should be able to use alternatives to the seizure such as offer in compromise or installment agreement.

If you are not happy with the result of that hearing, you can go to court, specifically United States Tax Court. In two of the first reported cases in court, taxpayers were held to a strict burden of proof, that is, they failed to prove that the hearing officer “abused his/her discretion” in denying relief. These courts will therefore give liberal room for the IRS to do its job, and will be very reluctant to grant you judicial relief.

For this reason, it is important to make your case with the hearing officer if you are going to make it at all. Better yet, make your case with the collection agent.

Item 3. The IRS' new “Small Business/Self-employed” Division has issued a “mea culpa” with respect to examinations. Well, maybe not that far, but it has indicated an intention to do a better job of auditing small business and self-employed returns. The Director has indicated it will try to improve the selection of returns, discuss and agree on an earlier audit plan, and generally try to make the audit less intrusive and disruptive of the taxpayer's business.

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