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Corporation Levies

It is the present position of the IRS and Treasury, that a levy cannot be halted on a corporation even if the levy is causing a “hardship” to the business, as defined in §6343(a)(1)(C) of the Code[1].

Section 6343 of the Code provides in part:

6343(a)(1) IN GENERAL. --Under regulations prescribed by the Secretary, the Secretary shall release the levy upon all, or part of, the property or rights to property levied upon and shall promptly notify the person upon whom such levy was made (if any) that such levy has been released if –

* * * * *

6343(a)(1)(D) the Secretary has determined that such levy is creating an economic hardship due to the financial condition of the taxpayer * * * *.

The mandatory levy release statute does not distinguish between businesses and individuals. It is the position of the IRS that a tax levy must be released if it creates a financial “economic hardship” for an individual but not for a business. It is the tax policy of the IRS and Treasury that a business cannot suffer a hardship within the meaning of §6343(a)(1)(D).

IRS cutback may mean fewer estate tax audits

By Lisa Shidler

August 21, 2006

CHICAGO - Some financial planners and tax lawyers may change the advice they give on estate tax issues to high-net-worth clients now that the Internal Revenue Service is reducing the number of agents who enforce the taxes.

The Bush administration recently said it planned to cut 157 of the IRS’ 345 estate tax lawyers and support staff. Some industry observers believe this is a backdoor move for President Bush to reduce the estate tax on his own. A recent bill to repeal the estate tax was rejected by Congress.

Industry leaders believe the decision likely will lead to fewer audits.

Joe Dolan, a tax lawyer and certified public accountant, says of the cutback, "It may cause me to be more aggressive in taking a position on an estate tax return in the future." Mr. Dolan is tax lawyer at Porzio Bromberg & Newman PC in Morristown, N.J.

Unlawful IRS Garnishment of Income and Assets

The IRS has the legislative authority to “levy” a taxpayer’s income and assets when there is a demand for payment and there has been a refusal or an inability to pay by the taxpayer subject to the levy. There are statutory limitations on the legislative authority delegated to the IRS by Congress in circumstance where an IRS levy of income and assets creates an economic hardship on individuals and businesses.

Congress has passed law clearly indicating that it does not want the IRS to levy a taxpayer in any circumstance which results in an economic hardship[1] to the taxpayer.

Tax regulations have defined economic hardship as money needed for reasonable basic living expenses[2]. In general, the IRS is prohibited by law from levying income or assets that will deprive a taxpayer of food, housing, transportation, medication and other reasonable and basic necessities.

Compliance Week

Next Backdating Headache Looms: The IRS

By Tammy Whitehouse — July 11, 2006

Companies mired in investigations over backdated stock options already worry about visits from the Securities and Exchange Commission, the Justice Department and plaintiff lawyers representing angry shareholders.

Next up might be the most unwanted guest of them all: the Internal Revenue Service.

Tax experts say the potential backlash for companies caught up in questions about backdating of stock options is sure to include an examination of tax records—whether companies have paid enough and withheld enough tax, and whether compensation classified as "deferred" or "performance-based" for tax purposes does in fact qualify for such treatment. All of that is certain to cascade into earnings figures, too.

Alvin Brown
Brown

IRS cutback may mean fewer estate tax audits

By Lisa Shidler

August 21, 2006

CHICAGO - Some financial planners and tax lawyers may change the advice they give on estate tax issues to high-net-worth clients now that the Internal Revenue Service is reducing the number of agents who enforce the taxes.

The Bush administration recently said it planned to cut 157 of the IRS’ 345 estate tax lawyers and support staff. Some industry observers believe this is a backdoor move for President Bush to reduce the estate tax on his own. A recent bill to repeal the estate tax was rejected by Congress.

Industry leaders believe the decision likely will lead to fewer audits.

Joe Dolan, a tax lawyer and certified public accountant, says of the cutback, "It may cause me to be more aggressive in taking a position on an estate tax return in the future." Mr. Dolan is tax lawyer at Porzio Bromberg & Newman PC in Morristown, N.J.

Others fear the Bush administration’s decision is effectively eliminating the tax, even though lawmakers didn’t vote to repeal it.

Winds of Change

There definitely is a breeze blowing through the halls of nonprofit hospitals in the wake of an IRS inquiry into the community benefit standard. What remains to be seen is whether that wind is a breath of fresh air resulting from a new openness about the good works that tax-exempt hospitals do in their communities or the precursor to a storm of heightened scrutiny by a feared federal agency.

The issue gained prominence in May when the Internal Revenue Service sent a survey with 80-plus questions to 550 of the nation’s largest nonprofit hospitals, asking about uncompensated care, billing practices for the uninsured, emergency department policies, and salaries of top executives. Hospitals were given a month to complete the survey, but many asked for an extension because of its complex nature, said Melinda Hatton, chief Washington counsel for the American Hospital Association.