By H.T. Astrov, JD, CPA (inactive), LLM
IRS enforcement has and will continue to become more visible to taxpayers and practitioners.
Even before the COVID-19 pandemic, many individuals were surprised to find out that the IRS operates in the field. And now, after a more than two-year hiatus prompted by the pandemic, at the end of June 2022, IRS Revenue Officers resumed field visits to individual taxpayer’s homes and to business taxpayer’s offices to collect delinquent tax and secure delinquent returns. Thus, for taxpayers with significant overdue tax liabilities and multiple unfiled tax returns, there is a real likelihood of an unexpected visit from the IRS.
Naturally, for taxpayers facing such a surprise, receiving this knock on the door will result in considerable stress. Nonetheless, to paraphrase the Stoic philosopher Epictetus, the imagined anxiety may be worse than the real tax problem. Even if the role of the Revenue Officer is to collect the tax, interacting with a specific IRS employee familiar with the taxpayer’s matter provides the taxpayer with the opportunity to understand their options and begin the path towards putting their tax problems behind them.
During this initial visit, the IRS Revenue Officer will identify themselves and show the taxpayer their credentials (called the pocket commission) as well as their HSPD-12 Federal ID card. Taxpayers should call the IRS Field Employee Verification Center at 1-844-809-4566 to verify the Revenue Officer’s identity.
The Revenue Officer will ask for immediate (or part) payment of all delinquent accounts. The IRS will never ask for payment by prepaid debit cards, gift cards or wire transfers. If tax returns are delinquent, the IRS will request their immediate filing. Since most taxpayers visited in person are unlikely to be able to make a full payment, the goal of the Revenue Officer is to secure a financial statement and discuss other collection alternatives. At a minimum, the Revenue Officer will attempt to secure information about the taxpayer’s bank accounts assets, other levy sources, employment status and salary. If the taxpayer does not wish to—or is unable to speak at the time—the Revenue Officer will leave their contact information and ask the taxpayer to respond within two business days. It is important that the taxpayer responds. Otherwise, enforcement action will begin.
Taxpayers need to recognize that Revenue Officers wield a vast array of resolution alternatives which span the gamut from voluntary but manageable (e.g., installment agreements) to involuntary and consequential (e.g., wage garnishments and asset seizures). Although the situation is inherently stressful, taxpayers should strive to be cordial and respectful to the Revenue Officer because this initial encounter will likely establish the tone of future interactions.
Part 2 next week will cover observations and the next steps.
Hear more from H.T. at the MEGA Tax Conference on December 13-14. Register here.