I got plenty of training on this when I was an RO, but I never had to actually follow through and file a nominee or alter ego NFTL.
I made it up to grade 11 RO. I think these happen more in grade 12 and grade 13 (higher dollar, more complexity) cases.
Has anyone ever had a time you had to go to battle over a nominee or alter ego lien, and what you had to do to come out on top? I guess you would have to demonstrate that there was a legitimate business (or other) purpose for the taxpayer to place the asset in some other entity/person’s name?
Josh, my experience with the alter-ego/nominee liens is where you need to show either there was a legitimate purpose for the transfer, or it was not transferred for the purpose the IRS says (usually to avoid collection). For instance, it was transferred several years before the first liability arose. It is really fact specific though. Do you have one now, and do you believe that it was filed improperly? Unfortunately to challenge these it usually requires the taxpayer to go to federal district court in a “quiet title” action, which gets very expensive.
Ok thanks, Eric. Great info.
No, I am just starting out, and I have not even had my first client yet! Just trying to anticipate future issues. Is this something you find out up front with the client (i.e. by asking “Did you have any assets that you transferred out of your name in the past three years?” during the initial consultation? Or would you not find out about this until you had already filled out the 433 A/B ? I guess this overlaps with the subject of dissipated assets.