Specialized Tax Representation

for Individuals and Small Businesses

Speaking to the IRS, so you don’t have to.

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Specialized Tax Representation

for Individuals and Small Businesses

Speaking to the IRS, so you don’t have to.

Installment Agreements

Maine Revenue Service (MRS) Installment agreements function differently than the Internal Revenue Service (IRS) agreements. The State of Maine fluctuated over the years regarding the duration of payment plans they accept. At certain times, they allowed three-year plans in certain circumstances. In other years, they limited plans to two years.

Anything outside of these limitations is considered a non-compliant payment plan. The important thing to remember about amounts paid under a non-compliant payment plan is that while the payments go to the principal first, the taxpayer risks filing a lien. Certain enforced collections action may be taken. Practically speaking, those on a non-compliant payment plan are much less likely to be levied or have their wages garnished.

Offer in Compromise Program

While Maine generally conforms to federal guidelines around tax issues, this isn’t the case for their Offer in Compromise program. We’ve found that many people go to the state expecting the same treatment they would get at the Federal Level. Maine does have a program they refer to as an “Offer in Compromise,” but it varies greatly from the Federal one.

Except in the most extreme cases, the Maine Revenue Service generally only waives penalties and some interest if they accept their version of an Offer in Compromise. Besides, the amount must be paid in full in months rather than years. While a Maine OIC can be a useful tool on some occasions, its usefulness is more limited than the already restrictive Internal Revenue Service Offer in Compromise program.

Wage Garnishment Release

Wage garnishments at the state level can follow similar hardship guidelines as the Internal Revenue Services. Some states have standard state garnishment protections, like those in Maine. There can be slightly different garnishment protections for tax debts compared to commercial debts.

Uncollectible Status

Both the IRS and the Maine Revenue Service have “Hardship” or “Uncollectible statuses. These statuses temporarily halt collections on taxpayers who can prove a hardship status. Generally, once the status is approved, they are subject to annual or biannual review. Also, if the taxpayer files a return with income above a certain threshold, they may lose their Hardship status.

Wage Garnishments & Multi-agency Issues

An important issue for taxpayers is how their case is handled synergistically before multiple agencies. Because of tough economic times or other unforeseen circumstances, some taxpayers have balances with more than one agency. The most important issue for taxpayers in this situation is to ensure that their choices and actions before each agency do not inadvertently either relinquish rights before another agency or damage their ability to have full access to all the available programs agency has to offer.

This type of situation is widespread in the timing of different submissions. For example, the order of release of Wage Garnishments can be particularly vexing. The expenses that the Federal Government allows in determining whether a garnishment causes undue hardship is very different from many states.

Without getting into too much detail, the net effect of this is that if a garnishment at either the state or federal level is considered an expense at the other level removing them in the wrong order can mean that a taxpayer may lose their ability to have the other removed.

A garnishment at the state level can be challenged based on the state’s tax garnishment protections. In some cases, both agencies may also allow for the substitution of an installment agreement for a wage or other garnishment.

Innocent Spouse

The Maine revenue services have indicated that it normally accepts Innocent Spouse Claims on the state level that have been approved on the Federal level. This has particular advantages and disadvantages. Mirroring the Federal guidelines, it only requires the federal forms.

This cuts down on work and redundancy. It also means that Maine hasn’t invested significant time or training in how to process these claims. Issues likely arise with employees unfamiliar with the details of Innocent Spouse Relief.

State License Issues

When a government agency issues a license in many circumstances, they require background and other suitability checks. Failure to immediately pay taxes due, for whatever reason, even if there were mitigating circumstances or the taxes were the result of an audit, can lead to issues with license renewal. In Maine, this is also true around state licenses.

The Maine Revenue Service has gone so far as to say they consider denying Driver, Fishing, Hunting, and Occupational licenses to be a valid tactic to enforce collections. We’re not sure how stopping someone from driving to work or working at all helps collect taxes, but that is their stance. Much like licensing issues, security clearance issues can come up from Notice of Federal Tax Liens and other IRS actions.

However, prompt attention to the issue before the situation degrades to that level can significantly cut representation costs. It can avoid career-ending, complicating disclosures to either a private or public-sector employer. Contact us for assistance with these issues.

Great Outcomes

J.P. Oltmann is proud to provide tax representation for individuals and small businesses across Maine.

Helping Clients Achieve Their Personal,
Professional, and Financial Goals in the
Wake of a Tax Controversy

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