Government

IRS Collection Staff Will Stop Its Practice Of Surprise Taxpayer Visits

The two main reasons for this are safety and to prevent scams.

By  
on

tax lawFor those who owe (or may one day owe) large tax debts, they may fear that one day the tax collector will come knocking at their door. But the IRS has recently changed its policy on how their collection staff interacts with taxpayers.

I can understand the awkwardness of the unannounced encounter. One of my first clients, who lived somewhere in the southern United States, owed an insane amount in back taxes. As a result, his case was assigned to a local IRS collection specialist known as a revenue officer (RO). ROs generally try to work with delinquent taxpayers to resolve their tax liabilities. But they also have draconian collection powers including bank levies, wage garnishments, and payment interceptions which can financially cripple a taxpayer.

One day, as my client and I were talking on the phone about resolving this matter, I heard someone yelling on the other end. The RO unexpectedly came to his office and loudly and angrily demanded all sorts of financial information. I told him to leave my client alone and that his supervisor would be hearing from me. But since I lived in a different time zone, there was little else I could do at the time.

After talking to two levels of supervisors and contacting the IRS Taxpayer Advocate, we eventually resolved the situation.

I must point out that this case was an extreme anomaly and not systemic at the IRS. Almost every RO I have dealt with has been very professional and reasonable so long as we provided reciprocal courtesy. And in retrospect, it is possible that my client may have done something to anger them prior to retaining me. But I always keep in mind that an RO may one day show up unannounced and make all kinds of demands and put my client in a compromising position. Until now.

A few days ago, the IRS announced that ROs will no longer show up to taxpayers’ homes or places of business without notice. The two main reasons for this are safety and to prevent scams.

The IRS does not allow ROs to carry deadly weapons. While this prevents an RO from using excessive force (and likely generate excessive media publicity), it could also put the RO in danger as people with large debts may be in a depressed or dangerous state of mind. One wrong encounter with the wrong taxpayer at the wrong time can have catastrophic and tragic consequences for everyone.

Sponsored

They also note that there have been instances of scam artists appearing at taxpayers’ homes posing as IRS agents, which creates confusion for both taxpayers and local law enforcement.

Instead, taxpayers and ROs will be able to schedule a time and place for face-to-face meetings. It is encouraged that all parties bring all required documents and information to reach a resolution and eliminate the need for future meetings.

The IRS notes there will still be extremely limited situations where unannounced visits will occur. In addition to the serving of summonses and subpoenas, these rare instances include cases involving seizure of assets, especially those at risk of being placed beyond the reach of the government.

There are some things that are not said on this announcement. While ROs will not make unannounced visits, they could still observe a taxpayer’s home or business. This can be problematic for those who love to show off in their expensive sports cars. Yes, the car could be leased, or it may belong to a parent. But it is bad optics for a taxpayer claiming they are in a financial hardship.

Also, this rule does not apply to IRS auditors, commonly known as revenue agents or tax compliance officers. Although they may follow the ROs’ lead and coordinate a meeting with a taxpayer.

Sponsored

So is it a good idea to schedule a meeting with a RO? There are a number of factors to consider, including the RO’s general demeanor, his or her demands, and whether the taxpayer can take his case to an appeals officer. Also, the taxpayers’ concerns, such as their lifestyle, must be taken into consideration. The taxpayer may not want a tax lien as they may want a loan or their job depends on being lien-free. Or they can only afford to pay a certain amount per month.

And sometimes you might have no choice.

It is important to note that ROs are human beings. If the taxpayer lives a very poor lifestyle, it may be a good idea to show this to the RO through a meeting at the taxpayer’s home.

All stakeholders seem to agree that stopping unannounced taxpayer visits is a sensible change on the part of the IRS. Setting up a mutual time and place for ROs and taxpayers to meet would increase the chances of reaching a favorable resolution.

Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at stevenchungatl@gmail.com. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.

Topics

, , ,