PART I I I – IRS COLLECTIONS
This article is the third in a three-part series. It discusses the
IRS Collections process and strategies. The Collections process
begins after the audit, appeal, any other adversarial proceeding,
and the tax has been assessed. The client now owes money and
the IRS is attempting to collect what is owed.
- Current Taxes Are Paid First. Current taxes get paid first,
period. You will not be successful in resolving your client’s
tax obligations if the client does not remain current. Long
term solutions, including installment agreements and offers
in compromise, require the taxpayer to remain current
on their taxes. If self-employed individuals have difficulty
staying current on their taxes because of the large quarterly
estimated tax payments they should use www.eftps.gov to
make estimated tax payments monthly or weekly. Often
clients will say they simply cannot meet their tax obligations
while also paying the mortgage, auto loan, college payments,
and other expenses. It is critical that you remain firm with
the client. The client must understand that a lifestyle change
may be necessary. Taxes are not a discretionary budget item. - Carefully Read All IRS Correspondence. Many
communications from the IRS contain deadlines that if
missed are detrimental to your client’s case. I always carefully
read the correspondence to determine if I need to respond
by a certain date and then calendar the deadline and include
reminders. If the correspondence contains a deadline you
must respond appropriately to protect your client’s rights
and interests. All correspondence sent to the IRS should
be delivered by certified mail return receipt requested. You
should retain a copy for your records. This provides evidence
of the mailing date, delivery date, and documents mailed. - Preserve Your Client’s Appeal Rights. Always preserve
your client’s appeal rights regardless of the positive steps
you are achieving with the revenue officer. If you miss a
deadline to file an appeal your client’s case will be negatively
impacted. I have become involved in numerous cases where
the representative failed to file an appeal, talks deteriorated
with the revenue officer, and the revenue officer issued a levy against the client’s assets. This can be catastrophic for the client because the client’s bank accounts may be seized along with other assets necessary to live. - Collection Due Process Hearing. One of the biggest
mistakes representatives make is failing to file an appeal
from the letter — “Final Notice of Intent to Levy and
Your Right to a Hearing”. This hearing is referred to as a
Collection Due Process Hearing. An appeal must be taken
within 30 days from the date of the notice. During this
time the IRS is generally precluded from taking collection
action including issuing levies and filing liens. This is
your opportunity for a hearing before a settlement officer.
Settlement officers are required to consider all collection
alternatives including offers in compromise, installment
agreements, penalty abatements and innocent spouse relief. - Always Ask for Contact Information. Whenever you call
the IRS, always ask for the employee’s full name and ID
number at the beginning of the conversation. Generally,
the employee will say this is Mr. or Mrs. Smith, ID number
I am always prepared with pen and paper to write
down this information. This allows you to work back to the
employee if necessary as well as serving as a record of your
communications.
If you have questions about the IRS audit, appeals, or
collections process, please contact the Tax Department at
Fletcher Tilton PC.