Can you Sue the IRS

[JoshDom1898]

What is the name of your state (only U.S. law)? Montana

My sister claims that the IRS froze her checking account because of back taxes owed. They debited the money that they claim she owed them, they both signed a release, but the IRS won't unfreeze her account. They now say they've found out she owes more than they thought and want to reneg on the release and demand more money. Can they do that after they signed the release that she satisfied her back taxes? If not, how can we get them to unfreeze her account?

I'm having to pay for all her living expenses because she has no money because of this.

Help please.

[j991]

No, you can't sue the government. You need to contact the highest supervisor in the IRS that you can and explain the situation. Present them with a copy of the agreement and state that you are not going to pay more than the original agreed upon amount. Next you need to contact your state elected officials, specifically senators and congressman. Get them involved. Get the media involved if you can. Contact your local newspaper and television statement. Many have a "news on your side" style segment where you can air greivances. Show them a copy of the agreement, documentation that the account is still frozen, etc. Basically, the only way that I know of (there may be others worth following if someone else has some advice, but this is based on my experience dealing the government agencies) is to attack back by alerting the public, representitives, and media. Put the pressure on them to justify their actions.

[Zigner]

If the person owes more taxes, the person will pay more taxes.

[JoshDom1898]

Zigner:

So you're saying that the IRS can breach a contract even though they released her just because they're the government? That wouldn't fly in civil litigation.

[Zigner]

Originally Posted by JoshDom1898

Zigner:

So you're saying that the IRS can breach a contract even though they released her just because they're the government? That wouldn't fly in civil litigation.

This isn't civil litigation.
And, the "release" didn't apply to ALL taxes, just the specific ones you were negotiating.

[JoshDom1898]

well in a settlement agreement i had an attorney do for me in a different issue, we had a "notwithstanding subsequent discovery of different facts clause"...as the attorney explained to me, this means that whatever they discover after the settlement agreement was executed (i.e. I owed them more money than they thought), it doesn't matter, they essentially are releasing those moneys.

If there was a clause like that in her agreement, would he change your opinion on the matter?

[Zigner]

Originally Posted by JoshDom1898

well in a settlement agreement i had an attorney do for me in a different issue, we had a "notwithstanding subsequent discovery of different facts clause"...as the attorney explained to me, this means that whatever they discover after the settlement agreement was executed (i.e. I owed them more money than they thought), it doesn't matter, they essentially are releasing those moneys.

If there was a clause like that in her agreement, would he change your opinion on the matter?

It's possible.
Let's say that the IRS feels you owe taxes for '03 and '04. They write up the settlement (including the clause) and you both sign it.
Then, the IRS discovers you ALSO owe taxes from '05 & '06. The settlement didn't address those tax years, so YES, they'll collect on those too.

[Some Random Guy]

The IRS calculates your taxes based on information that you report to them. If they subsequently find that there was additional income that your sister did not report to them, I don't see why they should not be able to collect rightfully owed taxes.

It all depends on the wording of the agreement, the tax years involved for the new and old taxes and the reason they think she owes more taxes.

[irsos]

Originally Posted by JoshDom1898

What is the name of your state (only U.S. law)? Montana

My sister claims that the IRS froze her checking account because of back taxes owed. They debited the money that they claim she owed them, they both signed a release, but the IRS won't unfreeze her account. They now say they've found out she owes more than they thought and want to reneg on the release and demand more money. Can they do that after they signed the release that she satisfied her back taxes? If not, how can we get them to unfreeze her account?

I'm having to pay for all her living expenses because she has no money because of this.

Help please.

First, to correct one mistatement of fact, you can in fact sue the IRS and receive as much as $1,000,000 in damages. However, it is very expensive and difficult. What is the nature of the "release" you speak of. What is the document number or wording of it.

[JoshDom1898]

i don't know and I'm waiting to see what it is.

[davew128]

Originally Posted by j991

No, you can't sue the government.

Sure you can. Ever seen Tax Court cases with the names of Taxpayer vs. Commissioner?

[davew128]

So much BS and inccorect statements here, its not even funny.

OP, you're providing second hand information that to anyone who works in IRS collections isn't likely to understand. I'm GUESSING they levied the bank account and had a levy in place for some time.

Rather than dealing with the IRS directly she SHOULD have hired someone to work with them when she started getting nasty letters. IRS collections personnel are debt collectors first and foremost but they WILL work with you if you're on the level with them.

I am also skeptical that they just found out she owes more taxes than they thought. No, they don't just find out unless she was recently audited. A levy can get released even if you owe money but if its not, then its because she has ignored prior efforts to collect or communicate.

It also sounds to me that there is no offer in compromise that has been accepted here. It sounds more like a simple lien and a bank levy for amounts owed. Which by the way doesn't mean the lien and levy are valid for new tax periods monry is owed for.

Bottom line: Get her to an IRS collections specialist yesterday and stop dicking around.

[JoshDom1898]

davew128:

She swears up and down that her bank account was not frozen before. (Long story is our parents died and part of her inheritance was about $200k), she says when that money hit her account the IRS froze it.

She says she hired an attorney already and he has been talking to the IRS. I think the attorney is a tool who says that he's doing it on contingency and he's sucking her for money (she gave him a statement from her bank verifying the money is in her account).

[tranquility]

To collect in this type of situation, you must prove the government recklessly or intentionally disregarded a provision or regulation with regards to the collection.

There is a $1 million dollar limitation (plus the costs of the action).

However, the taxpayer has a duty to exhaust all administrative remedies and to mitigate damages. The OPs sister hasn't even begun on that part yet.

[LdiJ]

Originally Posted by davew128

So much BS and inccorect statements here, its not even funny.

OP, you're providing second hand information that to anyone who works in IRS collections isn't likely to understand. I'm GUESSING they levied the bank account and had a levy in place for some time.

Rather than dealing with the IRS directly she SHOULD have hired someone to work with them when she started getting nasty letters. IRS collections personnel are debt collectors first and foremost but they WILL work with you if you're on the level with them.

I am also skeptical that they just found out she owes more taxes than they thought. No, they don't just find out unless she was recently audited. A levy can get released even if you owe money but if its not, then its because she has ignored prior efforts to collect or communicate.

It also sounds to me that there is no offer in compromise that has been accepted here. It sounds more like a simple lien and a bank levy for amounts owed. Which by the way doesn't mean the lien and levy are valid for new tax periods monry is owed for.

Bottom line: Get her to an IRS collections specialist yesterday and stop dicking around.

I agree with you. It really doesn't work the way that the OP described. However, it is also quite unusual for them to agree to release a lien, and then renige on that.

Therefore, absolutely she needs to get herself to a tax professional who is experienced in dealing with the IRS and collections.