After applying formulas to value the taxpayer's assets and projected future income, the IRS will determine the reasonable collection potential of the account. The reasonable collection potential is the amount ultimately required to settle, or compromise, the tax debt.
IRS Taxpayer Advocate Doesn’t, and Congress Should Find Out Why
As the Senate hearings on Internal Revenue Service (IRS) abuses begin, Congress and the nation again focus on how to balance the government’s need for revenue, with the ideals of individual liberty and freedom from government oppression.

Many would be surprised to learn that there is a system in place that, if administered properly, would help to alleviate the hardships being brought to light in this week’s hearings.

An application for assistance is submitted on Form 911, apparently suggesting that the authorities answering the call will provide help analogous to that provided by the police or fire department.

As a tax attorney and former IRS revenue officer it is incomprehensible to me that there were only five instances nationwide in which it was necessary to reign in an overzealous IRS agent. In his 1996 Report to Congress, Lee Monks, the chief taxpayer advocate, states that 14,862 applications were resolved voluntarily.

Unfortunately, emergency help is often what is needed to prevent a family from being evicted from its home, or to put food on the table of a worker. But these calls for help from the American taxpayer are going unanswered. The numbers speak for themselves. In fiscal 1996, 32,150 applications for assistance were received nationwide. Incredibly, only five assistance orders were issued (the Taxpayer Advocate’s Annual Report to Congress, Dec. 1996)

Presumably, voluntarily means that some sort of agreement was reached with the division creating the hardship. In my experience, these negotiated settlements are nothing more than token gestures of relief and fall far short of what is required to truly relieve a hardship.

I challenge Congress to investigate the abysmal record of the Office of the Taxpayer Advocate and to take the necessary steps to protect American taxpayers from the hardships inherent to our system of taxation

If the current system cannot be repaired, Congress should consider establishing an independent review board composed of non-IRS employees that would be ready, willing and able to help taxpayers in need of assistance.

The Office of the Taxpayer Advocate, a division of the IRS, is empowered by law to order IRS enforcement employees to take certain actions to ease undue “hardships” The definition of “hardship” is narrow, as it should be, and does not include expenses such as country club dues, Porsche Boxster deposits or vacation home time shares. An order for assistance will, for example, result in IRS releasing a wage garnishment to enable a taxpayer pay rent, purchase food or meet other necessary living

by Gerald W. Kelly
The Washington Times, September 24, 1997
(Reprinted with permission)

expenses. In the case of businesses, an order for assistance will direct collection officers to release a checking account levy (often called a seizure) so that the employees will not go home without a paycheck.
Gerald W. Kelly, Esq.