rs-irs-audits

More about Automated Collections Systems

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As a result of that, there are some things that you should note about ACS. Number one is that most of their collections agents do not handle the same case twice. Because they don’t handle the same case twice, you’re often relying on the ACS agent to take very detailed notes about the call, discuss time tables and actions. Unfortunately, sometimes they don’t keep the best notes. It’s really important as a practitioner to keep notes and records every time you all ACS so that you can best document your case, so that you have an understanding of what was said. That way, if there’s any dispute later, if the IRS levies your client or if there’s any other negative action taken, you’ve got the name of the ACS agent, you’ve got their ID number, you got the date and time of your call. And by having those pieces of information when dealing with their supervisor saying, “Hey, so and so told me that we weren’t going to levy and they went ahead and levied.”

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Revenue Officers

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Now I’d like to talk a little bit about Revenue Officers. A revenue officer is a local IRS agent. One of the local field officers in the IRS, there has quite a few across the country. We have two here in San Diego. A revenue officer is an individual collection agent. Most offices have anywhere between 10 and 50 revenue agents. Some have more. Some of the bigger IRS offices in California. Or some of the other ones who have more agents. Some will have less. An IRS revenue officer is a specially-trained collection agent. We’ve pull the IRS’s job description for revenue agents: They conduct face-to-face interviews with taxpayers. They analyze financial information. They collect moneys. They seize assets and property. They try to resolve tax issues. They garnish bank accounts and they educate taxpayers as to their filing and paying obligations. Those are the principal jobs of a revenue officer. As a practical manner, a revenue officer is assigned about 40 collection cases and gives each one of those cases special attention. Special attention when it comes to the IRS is not a good thing. Revenue officers – by their job description – are mandated to try and make personal field contact with the taxpayers.

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Collection Action a Revenue Officer Can Take

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Let’s talk a little bit briefly about IRS revenue officers’ specific collection actions. All collection agents within the IRS can either lien or levy. They can seize assets. They can garnish wages. But revenue officers have a couple of things that they can do that are particularly unique to their style or classes. The first thing I mentioned was field visits. IRS personnel can visit your client or they can investigate third-party sources. They can go knock on neighbor’s doors. They can knock on employer’s doors. They can track down former employer. If the taxpayer on a business, they can go after your customers. The IRS revenue officers have broad latitude in contacting third parties for information on tax payers. No, they do not have to provide you with notice before they make those calls. When dealing with a revenue officer, if you’ve got a client who is particularly concerned about their business or their privacy, it is important to make contact with that revenue officer and dissuade those face-to-face visits as soon as possible. The second thing that revenue officers tend to do is enforce things called IRS administrative summons. The IRS will issue a summons for records, oftentimes to banks or to taxpayers or to other parties requesting information or face-to-face interviews.

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Differences Between the Federal Tax System and the California State Tax System

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Briefly I want to talk to you about differences between the federal tax system and the state tax system. As I mentioned, due to limited resources state are usually more aggressive in their collection tactics and their examination tactics than the federal government and the principal reason for this is because taxation for the states is the principal source of revenue racing. A lot of times when there is a budget shortfall the state will lean on their self tax and the federal tax bureau will lean on the income tax to help mandate collections priorities and help raise revenues either through collecting past due liabilities or examining returns and finding new ones. In general, the states because of their limited resources will rely more on in voluntary collections actions than field representatives so there’s much greater reliance at the state level for collections processes that are instituted from a remote location so for example in California the main center of operation for the FTV which is the Franchise Tax for the State of California income tax bureau is in Sacramento. Most FTV actions are initiated from the Sacramento office whether they are levis, phone calls, contacts with tax payers, or any sort of collection actions. The states have limited resources at the local level.

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California State Specific Tax Issues

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So now I’d like to talk to you about some issues with regarding that the states have specifically. In California, we have a number of challenges in dealing with the state taxis that are either less of an issue or non-existent at federal level. The first as I’ve kind of touched down earlier is overside. There is usually less overside on cases than there is at the federal level. And I mean by that, is the auditor or the collection agent is given a lot more latitude in most cases to handle the cases as they see fit as long as it falls within the administrative guidelines. This particularly has an impact on the examinations process so a lot of the times the auditors are kind of given free rein to define the scope of what the audit is in sales tax or in particular they can do a really detail investigation and go through a number steps that you may not find in the federal process. As a result of this and as a result of the states having fewer resources, there is often times administrative delay when dealing with the state cases. For example, the time frame in California right now is if I were to represent a client in a sales tax audit and me and the auditor just agreed on the result and I filed and appeal, it would take anywhere from 8 to 12 months under the current structure to hear that appeal.

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