Irs debt relief


Most tax practitioners prepare returns and give planning advice. The tax practitioners rarely give advice clients about collection remedies. Nonetheless, such a tax practitioner may still be deemed an IRS debt relief agency. If deemed an IRS debt relief agency, and, if giving advice to an assisted person, the tax practitioner must provide a specific list of documents to the client. In addition, the IRS debt relief agency must make specific disclosures in any advertising. Life will be simpler for the tax practitioner if the IRS debt relief agency designation can be avoided.

 

An IRS debt relief agency includes any person who provides bankruptcy assistance person for money or other valuable consideration.

 

Providing bankruptcy assistance includes providing information, advice, or counsel with respect to a case or proceeding under the bankruptcy code. The definition implies both an actual or potential case. This bankruptcy counsel is providing bankruptcy assistance. To avoid an IRS debt relief agency, the tax practitioner should avoid being paid for advising clients about bankruptcy remedies.

 

An assisted person is any person whose debts are primarily consumer debts and the value of that persons nonexempt property is less. In metropolitan areas, where housing is expensive, it will be difficult for a homeowner to be an assisted person. Note, this outcome may be different in Florida and Texas, where the entire homestead can be considered exempt property. If the tax debt exceeds the mortgage debt and the credit card debt, then the tax debtor is not an assisted person.

 

IRS debt relief agencies that provide bankruptcy advice to assisted persons must provide the following documents:

 

  • Information about the bankruptcy process using the language specifically set forth.
  • Information about the different types of bankruptcy and the types of services available from credit counseling agencies.
  • Information about the debtors duties during bankruptcy, and, supplement, if required, with information on how to prepare and provide information for the bankruptcy petition.
  • A written contract that explains clearly and conspicuously the services to be provided, the fees and charges for the services, and the terms of payment.

Restrictions of irs debt relief agencies

 

Under the new law an IRS debt relief agency may not:

 

  • Fail to perform any service that the agency informed you it would perform in connection with your bankruptcy case.
  • Counsel you to make any statement in a document that is untrue and misleading or that the agency should have known was untrue or misleading.
  • Advise you to incur more debt in order to pay for the agencys services.

Any contract that does not comply with the new requirements on IRS debt relief agencies may not be enforced against you. A debt relief agency is liable to you for costs and fees, including legal fees, if the agency negligently or intentionally:

 

  • Fails to comply with the new laws restrictions on IRS debt relief agencies, or
  • Fails to file a document that results in dismissal of your case or conversion to another.

In sum, IRS debt relief agencies are on the hook if they are negligent in performing the services required by the bankruptcy law or other services they have agreed to provide.

 

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