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

Collections

Strategies for the IRS Automated Collection System – Part One

by

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.

Read more

How IRS Collections Works – Part Five

by

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.

Read more

How IRS Collections Works – Part Four

by

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.

Read more

How IRS Collections Works – Part Three

by

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.

Read more

How IRS Collections Works – Part Two

by

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.

Read more

How IRS Collections Works – Part One

by

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.

Read more

Beat the Clock: Address Tax Problems Early

by

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.

Read more

IRS Transcripts – Part Two – W&I and Return Transcripts

by
AdobeStock 557932533

IRS Transcripts – Wage and Income Transcripts

These types of IRS transcripts are a record of all of the wage and income data provided to the IRS by 3rd party providers including your employer, banks, financial institutions, brokerage houses, other government agencies, corporations, casinos, and a few others. All W2s, W2-Gs, 1099s, 1098s, 5498s, K1s, and other records of income on file for your social security number will be listed. Wage and income transcripts are most beneficial when preparing past returns because they are a quick and easy listing of income that you may have earned for that tax year. However, wage and income IRS transcripts should be checked for potential errors and compared with the information that you have in your records. 3rd parties can and frequently do make mistakes. Also, equally important, is to check your wage and income transcript for instances of identity theft. Wage and income transcripts are also an excellent provide insight into what information the IRS has on file for you. Although hopefully you will be able to prevent adverse collection activity before it occurs after reading this book, wage and income transcripts can give some idea of what they may come after (and how quickly they will be able to find it) if collection activity does occur.

Key Takeaways

  • It is also important to note that wage and income IRS transcripts are not always complete for the current year, as the IRS is still receiving and processing information from 3rd parties.
  • Return transcripts are itemized line by line records of your individual income tax return (Form 1040, 1040a, 1040ez) as it was filed and processed by the IRS. When the IRS receives a tax return, it breaks it down into bits of data that it can more easily use.

Read more

IRS Transcripts – Part One – IRS Account Transcripts

by
Shutterstock 728385910

To assist taxpayers and practitioners, the IRS will provide taxpayers with transcripts of the information that the IRS has on file. There are three main types of IRS transcripts that taxpayers should be aware of before checking their account. These are IRS account transcripts, IRS return transcripts, and IRS wage and income transcripts.

Key Takeaways

  • To assist taxpayers and practitioners, the IRS will provide taxpayers with transcripts of the information that the IRS has on file. There are three main types of IRS transcripts that taxpayers should be aware of before checking their account.
  • The most important transcript for checking activity on your account for any given year.
  • IRS account transcripts should be reviewed thoroughly to ensure that all information is correct on your account. The first thing that you should check for is to make sure that your return appears on this transcript as being filed.

Read more

What if I Cannot Pay an IRS Balance Due?

by
AdobeStock 372420920

In the tax world, to quote Benjamin Franklin, an ounce of prevention is worth a pound of cure. Almost all taxpayers can engage in some level of tax planning to their benefit prior to a return being filed. As a practitioner, I like to perform a mid-year check with my clients to review their current tax situations and to make sure they are on track with where we have identified they need to be. Although particularly helpful with self-employed individuals and those with small businesses, to ensure that they are making proper tax deposits, it can also be helpful for W2 employees who want to adjust their withholdings during the course of the year. In addition, I would recommend checking in with a tax professional to understand the tax consequences of any major life events. Getting married, having a child, changing jobs, getting a raise, buying a house, moving, caring for another individual, and a variety of other changes can all impact your future tax situation. It is always better to be able to be aware that you may have a balance due at the earliest possible juncture in order to try and minimize your liability.

Key Takeaways

  • In the tax world, to quote Benjamin Franklin, an ounce of prevention is worth a pound of cure. Almost all taxpayers can engage in some level of tax planning to their benefit prior to a return being filed.
  • If tax planning cannot mitigate the liability, usually it is best to file the return as soon as you can.
  • Although filing a return may put the IRS on notice of the liability sooner, filing the return has two principal advantages.

Read more

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