IRS TAX PROBLEMS –
What is a “Taxpayer Assistance Order” (TAO)?
When an application for a “Taxpayer Assistance Order” (TAO) is filed by a taxpayer or the taxpayer’s Tax Lawyer or Tax Attorney, the National Taxpayer Advocate (NTA) may issue a TAO if, in the determination of the NTA, the taxpayer is suffering or is about to suffer a “significant hardship” as a result of the manner in which the internal revenue laws are being administered by the Internal Revenue Service (IRS), including action or inaction on the part of the IRS. The term “National Taxpayer Advocate” includes any designee of the NTA, such as a “Local Taxpayer Advocate”.
Significant hardship – Before a TAO may be issued, the NTA is required to make a determination regarding significant hardship. The term “significant hardship” means a serious privation caused or about to be caused to the taxpayer as the result of the particular manner in which the revenue laws are being administered by the IRS. Significant hardship includes situations in which a system or procedure fails to operate as intended or fails to resolve the taxpayer’s problem or dispute with the IRS. A significant hardship also includes, but is not limited to:
- An immediate threat of adverse action;
- A delay of more than 30 days in resolving taxpayer account problems;
- The incurring by the taxpayer of significant costs (including fees for professional representation) if relief is not granted; or
- Irreparable injury to, or a long-term adverse impact on, the taxpayer if relief is not granted.
Examples of significant hardship.
Example 1. Immediate threat of adverse action.
The IRS serves a Levy on the taxpayer’s bank account. The taxpayer needs the bank funds to pay for a medically necessary surgical procedure that is scheduled to take place in one week. If the Levy is not released, the taxpayer will lack the funds necessary to have the procedure. The taxpayer is experiencing an immediate threat of adverse action.
Example 2. Irreparable injury.
The taxpayer has arranged with a bank to refinance his mortgage to lower his monthly payment. The taxpayer is unable to make the current monthly payment. Unless the monthly payment amount is lowered, the taxpayer will lose his residence to foreclosure. The IRS refuses to subordinate the Federal Tax Lien, or discharge the property subject to the Lien. As a result, the bank will not allow the taxpayer to refinance. The taxpayer is facing an irreparable injury if relief is not granted.
Taxpayer Assistance Order (TAO) – A TAO is an order by the NTA to the IRS. The IRS will comply with a TAO unless it is appealed and then modified or rescinded by the NTA, the IRS Commissioner, or the IRS Deputy Commissioner. A request for a TAO shall be made on a IRS Form 911, “Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order)” (or other specified form) or in a written statement that provides sufficient information for the Taxpayer Advocate Service (TAS) to determine the nature of the harm or the need for assistance. A taxpayer’s right to administrative or judicial review will not be diminished or expanded in any way as a result of the taxpayer’s seeking assistance from TAS.
After establishing that the taxpayer is facing “significant hardship” and determining that the facts and law support relief to the taxpayer, the NTA may issue a TAO ordering the IRS within a specified time to—
(1) Release an IRS Levy. Release levied property (to the extent that the IRS may by law release such property); or
(2) Take certain other actions. Cease any action, take any action as permitted by law, or refrain from taking any action with respect to a taxpayer;
(3) Expedite, review, or reconsider an action at a higher level. Although the NTA may not make the substantive determination, a TAO may be issued to require the IRS to expedite, reconsider, or review at a higher level an action taken with respect to a determination or collection of a tax liability.
TAO Examples. The following examples assume the existence of “significant hardship”:
Example 1. The taxpayer’s Tax Lawyer or Tax Attorney contacts a Local Taxpayer Advocate because a wage Levy is causing financial difficulties to the taxpayer. The NTA determines that the Levy should be released as it is causing economic hardship. The NTA may issue a TAO ordering the IRS to release the Levy in whole or in part by a specified date.
Example 2. The IRS rejects the taxpayer’s Offer in Compromise (OIC). The taxpayer’s Tax Lawyer or Tax Attorney files an IRS Form 911, “Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order).” The NTA discovers facts that support acceptance of the Offer in Compromise (OIC). The NTA may issue a TAO ordering the IRS to reconsider its rejection of the OIC or to review the rejection of the OIC at a higher level.
Suspension of statutes of limitations— The running of the applicable period of limitations for any action which is the subject of a Taxpayer Assistance Order (TAO) shall be suspended for the period beginning on the date the Ombudsman receives an application for a Taxpayer Assistance Order (TAO) and ending on the date on which the Ombudsman makes a determination with respect to the application, and for any additional period specified by the Ombudsman in an order issued pursuant to a taxpayer’s application. For the purpose of computing the period suspended, all calendar days except the date of receipt of the application shall be included.