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Strategies for the IRS Automated Collection System – Part Two

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IRS Automated Collection System Strategy #3 – Do not be afraid to play the IRS Automated Collection System lottery

I can often tell from the first minute of the call with the Automated Collection System representative how things are going to go during the call. If the representative is rude or short with me during that first minute, often times I will hang up and call back to get another Automated Collection System representative (what I call affectionately the ACS lottery). There is zero point to spending an entire phone call arguing with someone, which will only frustrate you and is unlikely to lead to the result you are seeking. Why put yourself through such misery? Instead, if your representative if nasty or you get a bad feeling during the call, just bail. You may waste an hour waiting on hold in order to call them back, but you will be glad that you did when you get the result that you wanted.

Key Takeaways

  • I can often tell from the first minute of the call with the Automated Collection System representative how things are going to go during the call.
  • Payment plans are based on a simple formula. Generally, if you owe fifty thousand dollars or less, your Automated Collection System representative will want you to pay your balance completely in a maximum of seventy-two months (five years).
  • I believe that at this point I have likely negotiated hundreds and hundreds of resolutions for taxpayers through automated collection systems. Most of these have gone off without a hitch, my client is pleased, and everyone moves on with their life as it was.

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Strategies for the IRS Automated Collection System – Part One

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Many taxpayers get frustrated when dealing with the IRS Automated Collection System (ACS). After what can be some long wait times, taxpayers are sometimes presented with seemingly inflexible options for resolving their balance due to the IRS. After reaching an impasse with ACS, they often resort to hiring professional help to resolve their tax problems. While I do appreciate the business from prospective clients, I am sympathetic to their financial difficulties and encourage them to at least try to resolve their own tax issues before turning to professional assistance. In the spirit of trying to encourage this, I have put together a short list of some of my best strategies for dealing with ACS.

Key Takeaways

  • Many taxpayers get frustrated when dealing with the IRS Automated Collection System (ACS). After what can be some long wait times, taxpayers are sometimes presented with seemingly inflexible options for resolving their balance due to the IRS.
  • One of my favorite sayings is that you win more flies with honey than with vinegar. No truer is that statement than in my experience dealing with the IRS Automated Collection System.
  • So the first thing to do when you get on the phone with the IRS Automated Collection System representative is to disarm any hostility. I thank them for taking my call if I have been waiting on hold for a really long time.

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How IRS Collections Works – Part Five

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IRS Collections Step Seven and Eight – Adverse Actions Against the Taxpayer

Finally, we turn to the most serious of actions by IRS collections: Property seizures (including levies) and lawsuits filed against the taxpayer.

Key Takeaways

  • Finally, we turn to the most serious of actions by IRS collections: Property seizures (including levies) and lawsuits filed against the taxpayer.
  • After the Notice of Intent to Levy is sent out notifying the taxpayer of the government’s intent to seize property; any and all taxpayer property is subject to seizure (barring a few specially exempted items).
  • The levy is also usually continuous until the liability is 1) paid in full by the taxpayer or 2) a suitable alternative is agreed to by the government.

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How IRS Collections Works – Part Four

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IRS Collections Step Six – Your Case is Assigned to the Field to be Handled by a Revenue Officer

When telephonic contact fails and the efforts of ACS are not fruitful and if your case meets a certain collection priority (usually based on the amount due or estimated due by the IRS), then you will be referred by ACS to the field where a local IRS office will assign you to a revenue officer. Revenue officer assignments are based geographically on the IRS office that is closest to the taxpayer. These offices contain collection personnel, who handle collection efforts at the local level.

Key Takeaways

  • Revenue officers are highly skilled collection agents within the IRS that resolve accounts the IRS feels are a collection priority. Most revenue officers have some sort of financial background or previous collections experience.
  • In addition, revenue officers have the power to issue summons to the taxpayer and third parties, such as banks or other financial institutions. They can demand that the taxpayer show up to their office at a designated time with records in hand.
  • If your account has gotten to the point where a revenue officer is involved, then you are at the highest level within the IRS for collections until district counsel gets involved and initiates legal action against you and/or your property.

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How IRS Collections Works – Part Three

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IRS Collections Step Five – Your Case is Assigned to IRS Automated Collection Systems (ACS)

At a certain point (usually after sixteen weeks), the service center makes the determination that its collection efforts have not yielded sufficient results and the taxpayer’s account is transferred to one of two places: Automated Collection Systems (ACS) or to the Collection field function (i.e. a revenue officer at a local IRS office). Most collection accounts will start in ACS though. ACS is a system of twenty-three computerized telephonic collection centers spread across the United States.[1] ACS essentially has three functions[2].

Key Takeaways

  • If you do not contact ACS directly, rest assured that they will make the effort to get in touch with you. ACS has several different avenues for getting ahold of taxpayers.
  • The best time to call ACS is either early in the morning or late at night. As with most telephone response systems, ACS hits high call volume during mid-day. ACS’s hours also stagger based on the area of the country you are calling from.

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How IRS Collections Works – Part Two

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IRS Collections Step Three – You Receive a Notice of Intent to Levy (CP 504)

After this sixteen week time period, the taxpayer’s account has entered into IRS collections status. As such, they will receive a threatening letter notifying them of the government’s intent to seize their property if they do not pay their outstanding balance in full or they do not enter into a suitable payment arrangement. This letter will be sent by certified mail to the last known address of the taxpayer. However, in some instances where the taxpayer has a large balance due to the IRS, the IRS may skip the prior Notices of Balance due and jump straight to the Notice of Intent to Levy. This is done to compel action on the part of the taxpayer to resolve the account.

Key Takeaways

  • After this sixteen week time period, the taxpayer’s account has entered into IRS collections status.
  • This Notice of Intent to Levy is an important step because it satisfies the initial requirement of the government to notify the taxpayer before it begins to seize their assets.
  • Steps four, five, and six are generally interchangeable. After a Notice of Intent to Levy has gone out, your account will likely be sent to Automated Collection Systems.

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How IRS Collections Works – Part One

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There is alot of confusion among many of my clients about the IRS collections process and what actions the IRS is able to legally take against the taxpayer. People who owe balance dues see a series of increasingly threatening letters and I often get panicked phone calls from taxpayers who think that the IRS is going to take their house because of the five thousand dollar balance they have accumulated. As such, I wanted to trace the lifecycle of a balance due to the IRS in order to better educate people on exactly how the IRS collections process works. I hope this serves as a helpful resource and alleviates some of the stress associated with owing money to the government.

Key Takeaways

  • There is alot of confusion among many of my clients about the IRS collections process and what actions the IRS is able to legally take against the taxpayer.
  • After your return has been processed, if your return indicates a balance due or the IRS makes a change to the return and additional tax is assessed, then you will start to receive notices from the IRS.

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Beat the Clock: Address Tax Problems Early

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One of the most common problems that I see in my practice is a failure of taxpayers to properly address their tax problems in a timely manner. Many taxpayers feel wait for the problem to grow to a point where serious action must be taken in order to be resolved where the problem could have rather been addressed by simple preventative action at the beginning of the problem. Specifically, this happens often in the arena of collections problems and where taxpayers owe a sum of money to the IRS. While I do want to remind taxpayers that it is never too late to properly resolve a tax issue, I did want to discuss some of the added benefits to solving your tax problems early.

Key Takeaways

  • One of the most common problems that I see in my practice is a failure of taxpayers to properly address their tax problems in a timely manner.
  • One of the biggest advantages of solving tax problems before they start is the ability of taxpayers to significantly reduce the amount of penalties and interest that they may owe to the IRS.
  • Too often, I counsel clients who have made their tax problems way worst than necessary by letting them fester. Clients either leave stacks of unopened mail just sitting there or fail to pick up certified letters when they become due.

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IRS Innocent Spouse Relief

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IRS Innocent Spouse Relief

This is the most commonly known form of relief, which can absolves a taxpayer from liability if their spouse or former spouse either did not report income, made an error in the calculation of income, or misapplied any deductions or credits that they were not entitled to. Innocent Spouse Relief relieves a person of any tax, interest, and penalties associated with the account based on the preceding errors. However, the taxpayers are still held jointly and severally liable for any amounts that are not granted innocent spouse relief. The following requirements must be met in order for IRS innocent spouse relief to be granted.

Key Takeaways

  • 2. There is an understated tax on your return, i.e. the IRS determines that your total tax should be more than the amount that was actually shown on your return.
  • 4. You can show that when you signed the joint return you did not know, and had no reason to know, that the understated tax existed (or the extent to which the understated tax existed (Absence of “Actual Knowledge” or “Reason to Know”).
  • 5. Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understated tax. (“Unfairness”).

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The CAN-SPAM Act and Compliance Challenges for Startups

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Overview Of Irs Audits Banner

As our techno-centric culture increasing depends on email as a form of communication, an increasing amount of regulatory attention has been devoted to policing unsolicited bulk electronic communication, much of it unwanted, also known as “SPAM.” Although bulk mail has been in existence for decades, mass electronic messages are extremely inexpensive to produce and distributed, especially when programmers use cookies[1] or other “trolling” features to obtain them. While direct email marketing (along with search engine marketing) is widely considered as the next evolution for early-stage companies looking to raise awareness of their product/service, SPAM is viewed as a considerable annoyance by the general public. Users are often inundated with unsolicited messages and have to waste a lot of precious time sorting through a sea of junk mail, often risking the possibility that legitimate or important email messages will be lost while deleting unwanted mail messages from their inboxes.[2] In addition, a vast majority of the messages received are for products of suspect legality, scams, chain letters, and often pornographic material.[3]

Key Takeaways

  • As our techno-centric culture increasing depends on email as a form of communication, an increasing amount of regulatory attention has been devoted to policing unsolicited bulk electronic communication, much of it unwanted, also known as “SPAM.
  • In response to increasing public outrage, in December of 2003, Congress enacted the “Controlling the Assault of Non-Solicited Pornography and Marketing Act,” otherwise known as CAN-SPAM.
  • Enforcement action may be brought by citizens in federal court and also may be initiated by the Federal Trade Commission on a civil or criminal scale, depending on the provision violated.

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Brotman Law Featured in Inc. Magazine - Fastest Growing Law Firm in California