Both the IRS and the Oregon Department of Revenue are statutorily authorized to seize property including foreclosing on your home or other residences. If you are unable to resolve your tax issue and you refuse to remit payment/agree to assessment, this is the final step taken.

You could be charged with wilfully failing to timely file and/or pay taxes, which is a misdemeanor offense.  If convicted, you could face a prison term of up to 1 year for each unfiled and/or unpaid year.

The short answer is “yes.”  However, before the IRS can seize/garnish, the IRS must send 3 separate notices demanding payment.  The third notice which is a notice of your right to a Collection Due Process hearing is the last step before the IRS may proceed with seizure/garnishment.  This notice allows you to request a Collection Due Process hearing where you may provide some form of payment arrangement resolution offer (settlement or installment).  Please note that the Oregon Department of Revenue (“ODR”) does not offer a collection due process procedure.  Once ODR issues a distraint warrant indicating a balance due, it may begin garnishment/seizure within 30 days, and such action will not stop until either the balance is paid in full, or you make separate payment arrangements with ODR (settlement agreement or installment).

Yes.  The IRS allows taxpayers to present an Offer In Compromise which allows a taxpayer to settle tax debt for less than the full amount owed.  The IRS has three different approaches for settlement: (i) Doubt as to Collectability – A doubt as to collectability OIC is used when you are not disputing the amount of the tax debt that is owed. Instead, you are simply showing that based on your current financial situation or reasonable collection potential that you do not have the means to pay back the tax debt.  In essence, the net equity in your assets combined with monthly disposable income will not yield sufficient income to pay the IRS in full within the 10-year statute of limitations for collection; (ii) Doubt as to Liability – This exists when there is an actual dispute as to whether the amount of the tax debt owed is correct or if the tax debt should have been assessed at all. In addition, there must be supporting evidence to create that doubt.  Specifically, the evidence presented must alter the IRS’ viewpoint on whether they made the correct assessment; (iii) Effective Tax Administration-Hardship -  Offers in compromise to promote effective tax administration are utilized when factors supporting (but not conclusive of) a determination that collection would cause the taxpayer significant economic hardship. Now, in layman’s terms this is stating ETA OICs are available when it would be inequitable for the taxpayer to pay the taxes because doing so would create a further economic hardship. ETA OICs can also encompass cases regarding non-economic hardship factors like public policy and equity factors.  In order to qualify under these circumstances there are certain factors that must be met.

1. The taxpayer must have remained in compliance since the liability was incurred.
2. The taxpayer must have acted reasonably and responsibly during the situation that caused the tax debt.
3. If the tax debt is compromised the taxpayer will not be in a better position than if they had timely and fully met their obligations, unless special circumstances justify the compromise.

Please note that Oregon only has one form of OIC which is Doubt as to Collectability.  They do not recognize Doubt as to Liability or Hardship.

The IRS and the Oregon Department of Revenue have established penalty relief for “reasonable cause reliance on a professional tax advisor.  When considering a claim of reliance on the advice of a tax advisor, the IRS/ODR will consider, among other things, the nature of the tax investment, the complexity of the tax issues, the competence of the tax advisor, the education of the taxpayer and the quality of the opinion relied upon to determine whether the reliance was reasonable and whether the taxpayer acted in good faith.  The taxpayer should be prepared to provide the following information:

1. Was the advice in response to a specific request?
2. Was the advice received related to the facts contained in the taxpayer’s request?
3. Did the taxpayer reasonably rely on the advice?

Reliance on a tax opinion provided by a tax advisor must be objectively reasonable in order to justify abatement based on reasonable cause.  The taxpayer must supply the advisor with all the necessary information, and the advice must be based on all pertinent facts, circumstances, and the law as it relates to those facts and circumstances.