Freedom of Information Act Guidance

The Freedom of Information Act can be a great tool if you have a tax problem.  Not all cases will need it, but knowing that it’s out there may be helpful.

The Freedom of Information Act allows a taxpayer to get that information that the IRS has about them.

Oftentimes when a taxpayer hasn’t filed in many years they do not have all the information necessary to file tax returns, so they are at a loss on how to proceed.  The IRS has copies of all income items (and certain personal deductions, such as mortgage interest) that have been supplied by employers and banks.  They use this information to match what you have included in your tax returns to what outside parties have provided to them.  Under the Freedom of Information Act the IRS has to provide this information to you if you request it properly.

It is also possible to get the Information by just calling the IRS.  This is a cheaper and faster method to get the income information.  There is some judgment that is needed when determining how to proceed to get that necessary information.  For example, if the IRS is already garnishing your wages there is no secret and you are in the bulls-eye, so you may as well just call and ask for it to be able to speedily prepare any outstanding returns and propose a solution to stop the levy as fast as possible.

On the other hand, it may be that you have been under the radar and the IRS hasn’t been contacting you at all.  If you call the IRS a few things will happen.  They will always ask where you work and where you bank.  They will always put you on a deadline when you will have to file returns and it’s generally 14 to 30 days.  If you don’t meet their deadline they use collection actions (where you work, where you bank) to encourage you to hurry.  If they empty your bank account and take your paycheck, you will hurry.  Unfortunately, sometimes it takes a lot of time to do a good job on preparing tax returns. For instance, if there is information that is missing due to stock sales and you need to contact a broker to determine the basis, it may take more than 30 days.  Likewise, if you have a business and haven’t filed in 5 years, just preparing an accounting of your business expenses can take months. 30 days may just not be enough time. In cases such as these, a Freedom of Information Act request may be more appropriate by allowing more time to prepare the returns.  It is terrible to try to do an adequate job while the IRS is breathing down your back or levying your wages and bank accounts!

One of our favorite Freedom of Information Act tips is using time to your advantage and relates to the Statute of Limitations for collections.  The IRS has 10 years to collect a tax. There are certain types of transcripts that can be acquired from the IRS via the Freedom of Information Act that plainly list the exact date the taxes will expire and be written off by the IRS.

If you call the IRS and ask them for the dates via a phone call, they may give it to you, but they will also start asking questions relating to collections as you have just brought your file to the front of the line for collections.  By law the Disclosure Office of the IRS cannot communicate with any other division to let them know you requested it.  Sometimes if you are not in the collections bulls-eye, it’s best to stay out of it and request the information through the Freedom of Information Act and perhaps wait for the statute to expire.

Every tax situation is different, and there are many ways to fix a tax problem.  Our free initial consultation is designed to determine which strategies may be best for your individual circumstances.  Call today for an appointment and let us help you.  Peace of mind is the biggest benefit most of our clients write about in our client surveys.  Call and get your peace of mind today!