New Bipartisan Taxpayer Rights Bills: What Los Angeles Taxpayers Need to Know

If you’ve been following tax news lately, you might have heard about two significant bills that just passed the House of Representatives. But what do they actually mean for you as a taxpayer? And more importantly, how can they help if you’re facing IRS penalties or disputes?

As a Los Angeles-based Enrolled Agent who has represented many taxpayers through IRS audits, penalty disputes, and appeals at all administrative levels, I’m excited to break down these new developments. The FAIR Act and the Tax Court Improvement Act represent some of the most significant taxpayer protections we’ve seen in years, and they could dramatically change how the IRS handles penalty assessments and how taxpayers resolve disputes.

Let me walk you through everything you need to know about these bills, answer your most pressing questions, and explain how my firm can help you navigate these new protections—especially at the IRS administrative level where most tax disputes are actually resolved.

What Are These New Tax Bills Everyone’s Talking About?

On December 1st, the House of Representatives passed two bipartisan bills with overwhelming support: the Fair and Accountable IRS Reviews (FAIR) Act and the Tax Court Improvement Act. These aren’t just technical adjustments—they’re fundamental changes designed to level the playing field between taxpayers and the IRS.

Both bills received unanimous support from the House Ways and Means Committee back in September, which tells you something important: protecting taxpayer rights isn’t a partisan issue. Democrats and Republicans alike recognize that our tax system needs better safeguards for everyday Americans.

The FAIR Act: Why Does IRS Penalty Approval Matter?

What exactly does the FAIR Act do?

The FAIR Act addresses a problem that has frustrated tax professionals and taxpayers for years: the lack of clear rules about who can approve IRS penalties.

Here’s the issue: For decades, federal law required that before the IRS could impose penalties on a taxpayer, an IRS agent had to receive written approval from their immediate supervisor. This makes sense, right? It’s a basic check-and-balance system to prevent arbitrary or excessive penalties.

However, regulatory interpretations over the years muddied these waters. The IRS began allowing agents to seek approval from a much wider range of individuals within the agency—not just their direct supervisor. This meant an agent could essentially “shop around” for approval, undermining the entire purpose of the supervisory requirement.

The FAIR Act restores clarity by requiring that IRS employees obtain written approval from their immediate supervisor—the person they directly report to—before sending any written communication to a taxpayer about proposed penalties. It’s that simple, and that important.

Why should Los Angeles taxpayers care about supervisory approval?

Think about it from a practical standpoint. When you’re running a business in Los Angeles—whether it’s a restaurant in Koreatown, a retail shop on Melrose, a tech startup in Silicon Beach, or a professional practice in Century City—you’re juggling a million things. Tax compliance is crucial, but mistakes happen.

When the IRS proposes penalties, you need to know that decision went through proper oversight. The supervisory approval requirement isn’t just bureaucratic red tape—it’s a safeguard against excessive or inappropriate penalties.

Without proper oversight, you might face penalties that are:

Disproportionate to the actual violation
Based on incomplete information
Applied inconsistently compared to similar cases
The result of an agent’s misunderstanding of the facts

How has Mike Habib, EA helped clients with penalty disputes?

Over my years of practice, I’ve represented numerous Los Angeles taxpayers facing IRS penalties at the examination, collection, and appeals levels. I’ve seen cases where penalties were proposed hastily, without adequate consideration of the taxpayer’s circumstances. I’ve also seen penalties that were clearly excessive or that didn’t account for reasonable cause defenses.

When the FAIR Act becomes law, it will strengthen arguments we can make on behalf of clients during the administrative process. If an IRS agent didn’t follow proper procedures in obtaining supervisory approval, that becomes grounds for challenging the penalty—whether we’re dealing with the examiner, their manager, or at the IRS Appeals level.

My firm specializes in penalty abatement representation at all IRS administrative levels. We know how to:

Review the procedural requirements for penalty assessments
Identify defects in the IRS’s penalty approval process
Build reasonable cause defenses
Negotiate penalty reductions or eliminations
Represent you in IRS Appeals if penalties are improperly imposed
Navigate Collection Due Process hearings when penalties lead to collection actions

The FAIR Act gives us another powerful tool in our arsenal to protect your rights and your wallet at every administrative stage.

The Tax Court Improvement Act: Better Options for Dispute Resolution

What changes does the Tax Court Improvement Act make?

While my practice focuses on representation at the IRS administrative level rather than Tax Court litigation, these reforms are still important for Los Angeles taxpayers to understand. The Tax Court Improvement Act introduces four major reforms that modernize how Tax Court operates, and understanding these changes can help you make better decisions about how to resolve your tax disputes.

Extended Filing Deadlines When Equity Warrants

The bill grants Tax Court judges discretion to extend filing deadlines in situations where fairness demands it—such as during courthouse closures, natural disasters, or other extraordinary circumstances.

Living in Los Angeles, we’re all too familiar with extraordinary circumstances. Wildfires, earthquakes, floods, or even the unexpected courthouse closures we experienced during the pandemic—these situations shouldn’t result in you losing your day in court because you missed a deadline through no fault of your own.

Expanded Role for Special Trial Judges

The Act allows special trial judges to hear more types of cases with the taxpayer’s consent and grants them limited contempt authority. This expansion can help reduce case backlogs and get taxpayers faster resolutions.

Recusal Standards Aligned with Other Federal Courts

Tax Court judges will now be held to the same recusal standards as other federal judges. This ensures that if a judge has a conflict of interest or bias, they must step aside—just like in any other federal court.

Pre-Hearing Subpoena Authority

Tax Court judges can now require documents before hearings through subpoena authority. This can facilitate faster settlements and reduce costs for taxpayers by ensuring all relevant documents are available earlier in the process.

Why should I care about Tax Court improvements if you don’t practice there?

Great question! Here’s why these reforms matter even if we’re working to resolve your case administratively:

Leverage in Negotiations: When the IRS knows that taxpayers have a more accessible and fair Tax Court option, it can strengthen our negotiating position at the administrative level. IRS Appeals Officers and Revenue Officers often consider the likely outcome if a case goes to Tax Court.

Better Referrals: While my practice focuses on administrative representation, there are times when Tax Court is the best option for a client. When that happens, these reforms mean I can refer you to Tax Court practitioners knowing you’ll have better procedural protections and potentially faster resolution.

Informed Decision-Making: Understanding all your options—including Tax Court—helps us make strategic decisions together about whether to continue pursuing administrative remedies or whether litigation might be more appropriate.

What’s so important about Tax Court anyway?

As Representative Jason Smith noted during the House debate, Tax Court is “the only venue where taxpayers can dispute a tax estimate without first paying that tax.”

This is critical to understand. If the IRS says you owe $50,000, $100,000, or more, you have two basic paths:

Pay the tax first, then sue for refund in federal district court or the Court of Federal Claims
Petition Tax Court without paying first

For most individuals and businesses, paying a disputed tax liability first simply isn’t financially feasible. This is why Tax Court exists and why these reforms to make it more efficient and fair are so valuable.

However, here’s what many taxpayers don’t realize: the vast majority of tax disputes never make it to Tax Court. Most are resolved through the IRS administrative process—through audit reconsideration, appeals, Collection Due Process hearings, or settlement negotiations. That’s where my expertise comes in.

How Does Mike Habib, EA’s Firm Help at the IRS Administrative Level?

What does “all IRS administrative levels” actually mean?

When I say I represent taxpayers at all IRS administrative levels, here’s what that includes:

Examination (Audit) Level: This is your first interaction with the IRS when you’re being audited. Whether it’s a correspondence audit, office audit, or field audit, I represent you directly with the examining agent.

Examination Manager Level: If we can’t reach a satisfactory resolution with the auditor, we can request a meeting with their manager to discuss the issues before the case closes.

Appeals Level: IRS Appeals is an independent office within the IRS designed to resolve disputes without litigation. Appeals Officers have more flexibility than examiners and can consider “hazards of litigation”—essentially, what might happen if the case went to court.

Collection Level: When you owe taxes, the Collection division handles payment arrangements, offers in compromise, and collection actions. This includes working with Revenue Officers and the Automated Collection System (ACS).

Collection Due Process (CDP) Hearings: When the IRS proposes to levy or has filed a Notice of Federal Tax Lien, you have the right to a CDP hearing with IRS Appeals. This is often the last administrative opportunity to resolve collection issues.

Taxpayer Advocate Service: When normal IRS channels aren’t working or you’re experiencing significant hardship, the Taxpayer Advocate Service can help. I work with TAS on behalf of clients when appropriate.

Why is administrative resolution often better than going to court?

Most tax professionals will tell you the same thing I tell my clients: if we can resolve your case administratively, that’s almost always preferable to litigation. Here’s why:

Cost: Administrative representation is significantly less expensive than litigation. Court cases involve filing fees, extensive discovery, expert witnesses, and the time required for trial preparation.

Speed: Administrative cases typically resolve much faster than court cases. An Appeals case might take 6-12 months, while Tax Court cases can take years.

Flexibility: IRS Appeals Officers have discretion to settle cases based on the relative strengths and weaknesses of both sides’ positions. Courts don’t have that flexibility—they apply the law to the facts.

Privacy: Administrative proceedings are private. Court cases become public record.

Less Adversarial: While we’re certainly advocating strongly for your position, administrative proceedings tend to be less adversarial than formal litigation.

Practical Solutions: At the administrative level, we can often craft creative solutions that address your real-world situation. For example, we might resolve a dispute over several tax years as a package deal, or negotiate payment terms as part of settling the underlying liability.

What’s your approach to IRS Appeals representation?

IRS Appeals is where I’ve seen some of the most significant wins for clients. Appeals Officers are experienced IRS employees who are independent from the examination or collection functions. They’re specifically tasked with resolving disputes fairly.

My approach to Appeals includes:

Thorough Case Analysis: Before we ever request an Appeals conference, I analyze the case from every angle. What are the legal and factual strengths of your position? What are the weaknesses? What would likely happen if this case went to Tax Court?

Comprehensive Written Protests: When requesting Appeals, we submit detailed written protests that lay out your factual situation, the legal authorities supporting your position, and why the IRS’s determination should be changed.

Strategic Settlement Positioning: Appeals Officers can consider “hazards of litigation”—the risk that the IRS might lose if the case went to court. I present cases in a way that highlights these risks to the IRS.

Professional Relationships: After years of practice, I’ve developed professional relationships with Appeals Officers throughout California and nationwide. While every case is decided on its merits, these relationships facilitate productive conversations.

Creative Problem-Solving: Sometimes the best resolution isn’t all-or-nothing. Appeals is where we can often negotiate partial abatements, agree to specific tax treatments for particular items, or find middle-ground solutions.

Can you really handle cases at all these different IRS levels?

Absolutely. One of the advantages of working with an Enrolled Agent is that we have unlimited practice rights before the IRS. This means I can represent you at any administrative level, anywhere in the country.

Whether you’re dealing with:

An auditor at the IRS office in Laguna Niguel
A Revenue Officer in downtown Los Angeles
An Appeals Officer in the Western Region
The Automated Collection System calling about unpaid taxes
An Offer in Compromise specialist reviewing your settlement proposal

I can represent you directly. You don’t have to talk to the IRS—I handle all communication on your behalf.

Common IRS Problems We Help Los Angeles Taxpayers Resolve

What types of tax problems does your firm handle?

My practice focuses on comprehensive tax problem resolution at the administrative level, including:

IRS Audit Representation: Whether you’re facing a correspondence audit, office audit, or field audit, we represent you at every stage. We communicate directly with the IRS on your behalf, gather supporting documentation, present your case, and negotiate the best possible outcome. If the audit doesn’t go well, we take your case to Appeals.

State Agency Audits: California taxpayers also deal with the Franchise Tax Board (FTB), Employment Development Department (EDD), and California Department of Tax and Fee Administration (CDTFA). We represent clients before all these agencies at the administrative level, just as we do with the IRS.

Penalty Abatement: IRS penalties can quickly balloon your tax debt. We help clients qualify for penalty relief based on reasonable cause, first-time penalty abatement, or procedural defects (like the supervisory approval issues the FAIR Act addresses). We fight penalties at the examination level, collection level, and Appeals level.

IRS Appeals Representation: When you disagree with an IRS determination, Appeals is often your best opportunity for resolution without going to court. We represent clients in Appeals conferences for audit disputes, penalty disputes, collection matters, and offer in compromise rejections.

Offer in Compromise: Can’t pay your full tax debt? An Offer in Compromise allows you to settle for less than you owe. We prepare compelling offers that demonstrate your inability to pay while meeting the IRS’s strict requirements. If your offer is rejected, we can appeal that decision.

Installment Agreements: We negotiate payment plans that fit your budget, including partial payment installment agreements for taxpayers who can’t pay their full liability within the collection statute.

Collection Due Process Hearings: Facing wage garnishment, bank levy, or federal tax lien? Collection Due Process hearings give you the right to challenge these actions and negotiate alternative solutions. This is a critical right that many taxpayers don’t know they have.

Currently Not Collectible Status: If you’re experiencing genuine financial hardship, we can request that the IRS temporarily suspend collection activities while you get back on your feet.

Innocent Spouse Relief: If your spouse or ex-spouse created tax problems, you might qualify for relief from joint tax liability. This is a specialized area where having experienced representation makes a huge difference.

Trust Fund Recovery Penalty Defense: Business owners can be held personally liable for unpaid payroll taxes. We defend against these penalties and negotiate resolution when they’re assessed.

Lien Withdrawal and Subordination: Federal tax liens can destroy your credit and make it impossible to refinance or sell property. We work to get liens withdrawn, subordinated, or discharged when appropriate.

How do you approach IRS and state tax audits?

Audits are stressful, but they don’t have to be overwhelming. When you hire my firm for audit representation, you don’t have to meet with the auditor or answer their questions directly—we handle all communication.

Our audit representation process includes:

Initial Consultation: We review the audit notice and your tax situation to understand what the IRS is examining and why. We discuss the issues, your documentation, and potential outcomes.
Power of Attorney: We file Form 2848 with the IRS, which authorizes us to represent you and gives us the right to receive all IRS correspondence and communicate directly with them on your behalf.
Documentation Strategy: We help you organize the records the IRS is requesting, identifying what you have and what might be missing. Sometimes we can reconstruct records using bank statements, credit card statements, or third-party documentation.
Representation: We meet with the auditor (either in person, by phone, or through correspondence, depending on the audit type), present your documentation, and make legal arguments supporting your position.
Negotiation: If the auditor proposes changes, we negotiate to minimize additional tax, penalties, and interest. Sometimes this means compromising on certain issues to win on others.
Appeals: If we can’t reach a satisfactory resolution at the examination level, we can take your case to IRS Appeals. Appeals provides a fresh look at your case by an independent officer who has settlement authority.

What makes your penalty abatement services effective?

The FAIR Act is going to make penalty abatement even more important—and more achievable—for taxpayers. Here’s how we approach penalty relief:

Reasonable Cause Analysis: The most common basis for penalty abatement is “reasonable cause”—you had a good reason for non-compliance. We gather evidence of circumstances like serious illness, death in the family, natural disaster, reliance on incorrect professional advice, or other factors beyond your control.

First-Time Penalty Abatement (FTA): If you have a clean compliance history for the past three years, you may qualify for automatic penalty relief under the FTA program. Many taxpayers and even some tax professionals don’t know about this program.

Procedural Defects: This is where the FAIR Act becomes crucial. If the IRS didn’t follow proper procedures in assessing penalties—including getting proper supervisory approval—that’s grounds for abatement. We scrutinize the IRS’s procedures to identify any defects.

Statutory Exceptions: Some penalties have specific statutory exceptions. For example, the accuracy-related penalty doesn’t apply if you have substantial authority for your tax position or if you adequately disclosed an uncertain position.

Proportionality Arguments: Sometimes penalties are simply disproportionate to the actual violation. While this isn’t a statutory defense, Appeals Officers can consider this in settlement discussions.

Litigation Hazards: At the Appeals level, we can present arguments about what would likely happen if the case went to court. If the IRS has a weak case for penalties, that strengthens our negotiating position.

We’ve successfully abated millions of dollars in penalties for clients through these various approaches. The key is knowing which approach to use and how to present it effectively.

What’s involved in an Offer in Compromise?

An Offer in Compromise (OIC) allows you to settle your tax debt for less than you owe, but it’s not easy to qualify. The IRS accepts only about 40% of offers submitted, which is why professional preparation is so important.

The IRS accepts offers on three bases:

Doubt as to Collectibility: You can’t afford to pay your full tax liability within the collection statute (generally 10 years from assessment). This is the most common basis for offers.

Doubt as to Liability: There’s genuine doubt about whether you actually owe the tax. This is relatively rare and usually involves situations where you disagree with the IRS’s determination but missed the deadline for appealing.

Effective Tax Administration: You technically could pay, but doing so would create economic hardship or would be unfair due to exceptional circumstances.

Our OIC preparation process includes:

Qualification Analysis: Before spending time and money on an offer, we determine whether you’re likely to qualify based on your income, expenses, assets, and the amount you owe.
Financial Documentation: We gather extensive financial information including bank statements, pay stubs, tax returns, asset valuations, and expense documentation.
Offer Calculation: We calculate the maximum amount the IRS could collect from you through enforced collection, then determine an appropriate offer amount.
Compelling Presentation: We prepare a detailed offer package that tells your story, explains why you can’t pay the full amount, and demonstrates that the offer represents the most the IRS can expect to collect.
Negotiation: If the IRS proposes a different settlement amount, we negotiate on your behalf.
Appeal: If your offer is rejected, we can appeal that decision to IRS Appeals, where we often achieve better results.

How do Collection Due Process hearings work?

Collection Due Process (CDP) hearings are one of the most important taxpayer rights, yet many people don’t know they exist. Here’s what you need to know:

When the IRS intends to levy your wages or bank accounts, or when they file a Notice of Federal Tax Lien, they must send you a notice giving you the right to a CDP hearing with IRS Appeals. You have only 30 days from the date of the notice to request the hearing.

At a CDP hearing, you can:

Challenge whether you actually owe the tax
Challenge whether the IRS followed proper procedures
Propose alternative collection methods (installment agreement, OIC, currently not collectible status)
Raise innocent spouse or other defenses
Address collection alternatives

I represent clients in CDP hearings regularly. These hearings provide a critical opportunity to stop collection actions and negotiate a resolution with IRS Appeals. The key is requesting the hearing timely and presenting a compelling case for why the IRS should accept an alternative to levying or should withdraw a lien.

What Should Los Angeles Taxpayers Do Now?

How do these new bills affect pending cases?

If you currently have a pending IRS penalty dispute or are in the process of appealing an IRS determination, these bills could impact your situation—once they become law. The FAIR Act’s clarification of supervisory approval requirements might provide grounds to challenge penalties that were approved improperly. The Tax Court Improvement Act’s procedural reforms mean that if your case ultimately does go to Tax Court, you’ll have better protections.

However, these are still bills, not yet law. They need to pass the Senate and be signed by the President. That said, the overwhelming bipartisan support in the House is a positive sign.

What if I’m already facing IRS penalties?

Don’t wait. Even before these bills become law, you have rights and options. The IRS has only a limited time to assess and collect penalties, and there are numerous grounds for penalty abatement or reduction at the administrative level.

Common defenses to IRS penalties include:

Reasonable Cause: You had a good reason for non-compliance, such as serious illness, natural disaster, or reliance on incorrect professional advice
First-Time Penalty Abatement: If you have a clean compliance history, you might qualify for automatic penalty relief
Procedural Defects: The IRS didn’t follow proper procedures in assessing the penalty (like the supervisory approval issues the FAIR Act addresses)
Incorrect Application: The penalty doesn’t actually apply to your situation under the law
Statutory Exceptions: Specific exceptions that apply to your circumstances

The important thing is to act quickly. Once penalties are assessed and collection begins, your options become more limited and the penalties continue to accrue interest.

Should I handle IRS matters myself or hire a professional?

This is a question I’m often asked, and my answer is always honest: it depends on your situation.

For simple matters—like responding to a basic correspondence audit where you have all the documentation and the issue is straightforward—you might be fine handling it yourself. The IRS provides information about your rights and the process.

However, for complex issues involving penalties, substantial tax liabilities, business audits, or collection actions, professional representation is almost always worthwhile. Here’s why:

Tax Professionals Know What the IRS Doesn’t Tell You: The IRS isn’t required to tell you about all your options. An Enrolled Agent knows the full range of solutions available at every administrative level and can identify opportunities you might miss.

Representation Rights: When you hire an Enrolled Agent, attorney, or CPA, they can represent you before the IRS at all administrative levels—meaning you don’t have to attend meetings, answer phone calls, or respond to IRS inquiries directly.

Emotional Distance: Tax problems are stressful. Having a professional handle the matter gives you emotional distance and reduces the risk of saying something that hurts your case. I’ve seen taxpayers inadvertently make their situation worse by providing information the IRS didn’t ask for or by agreeing to things they didn’t understand.

Better Outcomes: Studies consistently show that taxpayers who have professional representation achieve better outcomes in audits, appeals, and collection matters. The difference can be tens of thousands of dollars or more.

Strategic Thinking: Tax professionals know when to compromise and when to fight. We understand the IRS’s priorities, policies, and likely positions. This strategic insight is invaluable in negotiations.

Time Savings: Dealing with the IRS takes time—time away from your business, your job, and your family. Professional representation frees you to focus on what you do best while we handle the IRS.

What credentials should I look for in a tax professional?

When choosing someone to represent you before the IRS at the administrative level, credentials matter. Here are the key credentials to look for:

Enrolled Agent (EA): An Enrolled Agent is a federally licensed tax practitioner who can represent taxpayers before the IRS at all administrative levels. To become an EA, you must either pass a comprehensive three-part exam covering all aspects of the tax code or have five years of experience working for the IRS. EAs must also complete 72 hours of continuing education every three years to maintain their license.

I’m proud to hold the EA credential, which represents the highest level of federal tax expertise for non-attorney tax practitioners. The EA credential is issued directly by the IRS and authorizes unlimited practice rights before the IRS.

Experience with Your Type of Case: Tax law is complex and specialized. Make sure your representative has specific experience with your type of tax problem. Someone who primarily prepares returns may not have extensive experience with audits, appeals, or collection matters.

Experience at Multiple IRS Levels: If your representative has only worked at the examination level, they may not be familiar with how Appeals works or how to navigate Collection Due Process hearings. You want someone who knows all the administrative levels and how to move cases between them strategically.

Professional Reputation: Check reviews, ask for references, and verify credentials. The IRS maintains a directory of enrolled agents, and professional organizations like the National Association of Enrolled Agents maintain standards for their members.

Frequently Asked Questions About the New Taxpayer Rights Bills

When will these bills become law?

Both bills have passed the House of Representatives with strong bipartisan support. They now move to the Senate for consideration. If the Senate passes them and the President signs them into law, they’ll take effect on the dates specified in the legislation (or immediately if no effective date is specified).

Given the overwhelming support in the House—both bills passed with broad bipartisan backing, and they had previously received unanimous support from the House Ways and Means Committee—prospects for Senate passage look promising. However, nothing is certain in politics.

Will these bills affect my past tax years?

The FAIR Act’s requirements about supervisory approval could potentially be applied to pending penalty disputes, even for past tax years. If you’re currently challenging penalties at the examination level, with a manager, at Appeals, or in a Collection Due Process hearing, the new standards could strengthen your arguments.

The key is that the penalty assessment process must follow proper procedures. If the IRS didn’t follow the supervisory approval requirements that the FAIR Act clarifies, that’s a procedural defect that can be grounds for abatement—regardless of when the penalty was initially proposed.

The Tax Court Improvement Act’s procedural reforms will benefit cases filed after the law takes effect, though they won’t retroactively change cases already in progress.

Do these bills change my tax rates or deductions?

No. These bills don’t change the substantive tax law—they don’t alter tax rates, deductions, credits, or how income is calculated. Instead, they change the procedures the IRS and Tax Court must follow. They’re about fairness and due process, not about how much tax you owe.

This is actually good news. Procedural protections benefit all taxpayers regardless of their tax situation or political views. Whether you’re liberal or conservative, wealthy or middle-class, running a business or working as an employee, you benefit from clear rules and fair procedures.

Can state tax agencies like the FTB or EDD impose penalties without supervisory approval?

The FAIR Act applies specifically to the IRS, not state agencies. However, state agencies have their own rules and procedures for penalty assessment. In California, the Franchise Tax Board, Employment Development Department, and California Department of Tax and Fee Administration each have their own penalty procedures.

That said, successful challenges to IRS penalties can sometimes be used as persuasive arguments with state agencies, especially when the facts are similar. If you have reasonable cause for non-compliance with federal tax obligations, you likely have reasonable cause for non-compliance with state obligations too.

My firm represents clients before California state tax agencies at all administrative levels, just as we do with the IRS. We can help you challenge state penalties and navigate state audit and appeals processes.

How much does IRS representation cost?

This varies significantly based on the complexity of your case and the level of representation needed. A simple penalty abatement request might be relatively inexpensive, while representing you through a complex audit and subsequent appeal could require more extensive work.

At our firm, we offer transparent fee structures and provide written engagement agreements that clearly explain costs. We offer several fee arrangements:

Hourly Billing: For cases where the scope is uncertain, we bill by the hour and provide regular updates about time spent and costs incurred.

Flat Fees: For defined services like preparing an Offer in Compromise, requesting First-Time Penalty Abatement, or handling a specific Collection Due Process hearing, we often quote flat fees.

Retainer Arrangements: For ongoing representation through multiple stages (examination through appeals, for example), we may establish a retainer arrangement.

We’re always upfront about costs because we believe you deserve to make informed decisions. More importantly, professional representation often saves you far more than it costs. Successfully reducing a $50,000 tax deficiency to $10,000, eliminating $25,000 in penalties, or negotiating an Offer in Compromise that settles $200,000 in tax debt for $30,000 easily justifies the cost of professional representation.

What if I can’t afford to pay my tax debt?

Many taxpayers assume that if they can’t pay their full tax liability, they’re out of options. That’s absolutely not true. The IRS offers several programs for taxpayers who can’t afford to pay, and my firm helps clients qualify for these programs every day:

Installment Agreements: Monthly payment plans that can extend over years. The IRS will accept installment agreements that pay the full liability before the collection statute expires (generally 10 years from assessment). For balances under $50,000, streamlined installment agreements are available with minimal financial disclosure.

Partial Payment Installment Agreements: For taxpayers who can’t pay the full amount within the collection statute, the IRS may accept a partial payment arrangement where you make monthly payments but won’t pay off the full balance before the statute expires.

Offer in Compromise: Settle for less than you owe. This requires demonstrating that you can’t afford to pay the full amount through installment payments.

Currently Not Collectible Status: If you’re experiencing genuine financial hardship, we can request that the IRS temporarily suspend collection activities while you get back on your feet. The IRS will periodically review your financial situation, and if things improve, they’ll resume collection.

Penalty Abatement: Reducing or eliminating penalties can significantly lower your total debt. We’ve helped clients reduce their total liability by 30-40% through penalty abatement alone.

Innocent Spouse Relief: If your tax debt arose from your spouse or ex-spouse’s actions, you might qualify for relief from the joint liability.

The key is addressing the problem proactively rather than ignoring IRS notices. Once the IRS begins enforced collection (levying bank accounts or wages), your options become more limited and the process becomes more difficult.

How quickly should I respond to IRS notices?

Most IRS notices have strict deadlines—often 30 days or less. Missing these deadlines can forfeit your rights to dispute the IRS’s position or can result in automatic collection actions.

Some critical deadlines include:

30 days to request Appeals after receiving an examination report
30 days to request a Collection Due Process hearing after receiving a levy or lien notice
30 days to respond to many types of IRS correspondence
90 days to petition Tax Court after receiving a Notice of Deficiency (though this isn’t something my firm handles, it’s important to know)

My advice: Contact a tax professional immediately upon receiving any IRS notice, especially notices proposing additional tax, penalties, or collection actions. Even if you can’t hire representation immediately, a brief consultation can help you understand your deadlines and options.

Many taxpayers make the mistake of putting IRS notices aside because they’re scary or confusing. Don’t do that. The problem won’t go away, and delay only makes your options more limited.

Can you help if I haven’t filed tax returns for several years?

Absolutely. Non-filing is one of the most common tax problems we handle. Many taxpayers fall behind on filing for various reasons—financial hardship, personal crisis, business challenges, or simply feeling overwhelmed by the process.

The key is getting compliant before the IRS forces compliance or begins collection. When we help clients with back tax returns, we:

Determine which years need to be filed: The IRS generally requires six years of back returns to be considered compliant.
Gather income information: Often from IRS wage and income transcripts if you don’t have records. The IRS receives copies of all W-2s, 1099s, and other information returns, so we can often reconstruct your income.
Identify all available deductions and credits: Just because you’re filing late doesn’t mean you should overpay. We make sure you claim all deductions and credits you’re entitled to.
Prepare accurate returns that minimize tax liability: Using all available legal strategies to reduce your tax burden.
File all returns simultaneously: This demonstrates good faith and shows the IRS you’re serious about compliance.
Negotiate payment arrangements or other resolution options: Once you’re compliant, we can work on resolving any tax debt through the various options available.

Getting compliant is the first step toward resolving your tax problems and getting peace of mind. Many clients are amazed at how much better they feel once those back returns are finally filed.

What’s the difference between IRS examination, appeals, and collection?

Understanding the different IRS functions helps you understand how we can represent you:

Examination (Audit): This is where the IRS reviews your tax return to verify that you reported income correctly and claimed only deductions you’re entitled to. Examination includes correspondence audits (conducted by mail), office audits (you go to an IRS office), and field audits (an agent comes to your location).

Appeals: This is an independent office within the IRS that reviews disputes. If you disagree with an examination result, a collection determination, or certain other IRS decisions, you can request review by Appeals. Appeals Officers have more flexibility than examiners and can consider settlement based on the relative strengths and weaknesses of both sides’ positions.

Collection: Once you owe taxes (whether from an audit, unfiled returns, or returns you filed but didn’t pay), the Collection division handles getting payment. This includes sending notices, negotiating installment agreements and offers in compromise, and taking enforced collection actions like levies and liens.

My firm represents clients at all these levels. We move cases between levels strategically—for example, if we can’t resolve an audit satisfactorily, we take it to Appeals. If you’re facing collection action, we might resolve it through a Collection Due Process hearing with Appeals.

How do I know if I should appeal an IRS decision?

This is a strategic decision that depends on several factors:

Strength of Your Position: Do you have good legal and factual support for your position? Appeals Officers are experienced and won’t overturn an examination determination unless you have substantial support.

Amount in Dispute: Appeals representation requires time and cost. For small amounts, it might not be worth appealing. For larger amounts, it almost always is.

Likelihood of Success: Based on my experience with similar cases, what’s the realistic likelihood of success at Appeals?

Downside Risk: Appeals Officers generally won’t make your situation worse—they can only sustain or reduce the IRS’s determination, not increase it (with rare exceptions).

Time Value: How quickly do you need resolution? Appeals cases typically take 6-12 months. If you need quick resolution, that might affect the decision.

During our consultation, we discuss these factors and make a recommendation about whether appealing makes sense for your situation. I won’t recommend appealing unless I believe it’s in your best interest.

What happens if I ignore IRS notices?

Nothing good, I can tell you that. Ignoring IRS notices is one of the worst things you can do. Here’s what typically happens:

Forfeiture of Rights: Many IRS notices include rights that expire if you don’t exercise them timely—like the right to appeal an examination or the right to a Collection Due Process hearing.
Assessment of Tax: If you don’t respond to a proposed tax deficiency, the IRS will assess the tax and it becomes legally owed.
Penalties and Interest: These continue to accrue, often adding 25-40% to your total liability over time.
Collection Actions: The IRS will eventually take enforced collection actions—levying your bank accounts, garnishing your wages, or filing tax liens.
Limited Options: Once you’re in enforced collection, your options for resolution become more limited and the process becomes more difficult.

The IRS is one creditor you absolutely cannot ignore. They have collection powers that no other creditor has—they can seize assets and garnish wages without going to court first.

If you’ve been ignoring IRS notices, contact my office today. It’s never too late to fix the situation, but the sooner you act, the more options you have.

Why Choose Mike Habib, EA for Your Tax Representation Needs?

What makes your Los Angeles tax firm different?

Several factors set our firm apart:

Specialized Expertise in IRS Administrative Representation: We don’t just prepare tax returns and occasionally help with an audit. Tax problem resolution and IRS representation at all administrative levels is what we do, day in and day out. This specialized focus means we’re up to date on the latest IRS procedures, Internal Revenue Manual guidelines, and resolution strategies.

Federally Licensed Enrolled Agent: As an Enrolled Agent, I’m federally licensed to represent taxpayers before the IRS at all administrative levels. This is the highest credential awarded by the IRS itself for tax practitioners. The EA credential specifically authorizes me to represent taxpayers in examinations, appeals, and collection matters.

Experience at All Administrative Levels: I don’t just work at one level of the IRS. I’ve represented clients before revenue agents, revenue officers, Appeals Officers, managers, and settlement officers. I know how each level operates, what authority they have, and how to move cases strategically between levels.

Nationwide Representation: While we’re based in Los Angeles, we represent taxpayers across the country and Americans living overseas. IRS administrative representation doesn’t require being in a specific location—I can represent you before the IRS regardless of where you live or where your case is being handled.

California State Agency Expertise: Los Angeles taxpayers often face issues with both the IRS and California agencies (FTB, EDD, CDTFA). We handle both federal and state tax representation, giving you a single point of contact for all your tax problems.

Comprehensive Services: From audit representation to appeals, from penalty abatement to offers in compromise, from Collection Due Process hearings to innocent spouse relief—we handle the full spectrum of tax problems at the administrative level.

Personalized Attention: You’re not just a case number. We take time to understand your unique situation, your financial circumstances, and your goals. Every taxpayer’s situation is different, and cookie-cutter solutions don’t work.

Transparent Communication: We believe in keeping clients informed. You’ll always know what’s happening with your case, what your options are, and what we recommend. We return phone calls promptly and provide regular updates.

Proven Track Record: We’ve successfully resolved thousands of tax cases, saving clients millions in taxes, penalties, and interest. We’ve taken hundreds of cases to IRS Appeals with positive results.

Focus on Administrative Resolution: While some firms try to be all things to all people, we focus on what we do best: resolving tax problems at the IRS administrative level. If your case requires Tax Court litigation, we’ll refer you to qualified tax attorneys—but the vast majority of cases can and should be resolved administratively.

How do I get started?

Getting started is simple. Contact our office to schedule a consultation. During this initial meeting, we’ll:

Review your tax situation and the IRS notices you’ve received
Explain your rights and options at each available administrative level
Discuss our recommended strategy
Answer all your questions
Provide a clear explanation of our fees and engagement terms

There’s no pressure and no obligation. Our goal is to help you understand your situation and make an informed decision about how to proceed.

What should I bring to the consultation?

To make the most of your consultation, bring:

All IRS notices and correspondence you’ve received
Copies of relevant tax returns
Any documentation related to the tax issue (receipts, bank statements, etc.)
Information about your current financial situation if you’re dealing with collection issues
A list of questions you want answered

If you don’t have all this information, that’s okay—we can still meet and discuss your situation. We can obtain IRS transcripts and other information on your behalf once you hire us.

Do you offer free consultations?

We offer initial consultations where we discuss your situation, answer your questions, and explain how we can help. The consultation gives you the information you need to make an informed decision. Contact our office to discuss scheduling and any consultation fees.

The Bottom Line: Your Rights Matter

The passage of the FAIR Act and Tax Court Improvement Act represents an important victory for taxpayer rights. These bills recognize that the tax system should be fair, transparent, and accountable—not stacked against ordinary Americans trying to do the right thing.

But here’s the reality: having rights on paper doesn’t help if you don’t know how to exercise them at the administrative level where most tax disputes are actually resolved. That’s where experienced representation comes in.

Whether you’re facing IRS penalties, dealing with an audit, fighting a tax deficiency at Appeals, or struggling with overwhelming tax debt, you don’t have to face the IRS alone. Professional representation at all administrative levels can make the difference between a favorable outcome and a financial disaster.

At Mike Habib, EA, we’re committed to protecting Los Angeles taxpayers—and taxpayers nationwide—from unfair IRS actions at every administrative level. We combine technical tax expertise, strategic thinking, procedural knowledge, and aggressive advocacy to achieve the best possible outcomes for our clients without the need for costly litigation.

If you’re dealing with any tax problem, don’t wait. The sooner you address the issue, the more options you have at the administrative level. Contact our office today to schedule a consultation and take the first step toward resolving your tax problems.

Remember: the IRS is powerful, but you have rights. And with the right representation at the examination, appeals, and collection levels, you can protect those rights and achieve a fair resolution to your tax dispute—often without ever setting foot in a courtroom.

Mike Habib, EA

Los Angeles-Based Enrolled Agent
Specializing in IRS Representation at All Administrative Levels
Audit Defense • IRS Appeals • Penalty Abatement • Collection Resolution
Serving Taxpayers in Los Angeles, Throughout California, Nationwide, and Americans Living Overseas

Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Every taxpayer’s situation is unique, and outcomes depend on specific facts and circumstances. For advice about your particular situation, please consult with a qualified tax professional.