If you owe money to the IRS, it is important to understand how the IRS is organized and the steps the IRS may take to collect the debt.
The Internal Revenue Service is the world’s largest collection agency whose mission is to assess and collect Federal Taxes, by increasing voluntary taxpayer compliance and tax requirements. In fiscal year 2007, the IRS processed over 173 million tax returns and collected nearly $2.7 trillion dollars.
The IRS’s strategy of tax collection is to motivate taxpayers into voluntarily paying their taxes. To accomplish this, the IRS, employs 106,000 people (2010). To put this in perspective, Exxon Mobil (a multinational corporation) employs slightly over 83,000.
The primary offices of the IRS are the District Offices. The primary contact points of the IRS are the Regional Service Centers. Most contact with the IRS is done electronically via telephone, fax and the electronic filing of tax returns. Although rare, in some circumstances it’s necessary to meet with the IRS in person.
The IRS is organized into 3 primary operating divisions:
- Examination Division– Encourage voluntary taxpayer compliance with tax requirements by examining and auditing selected tax returns. This work is carried out by Revenue Agents who are responsible for taxpayer compliance, examination (audits) of tax returns and accessing taxes. Revenue Agents are highly trained accountants and auditors.
- Collections Division– Collect taxes, penalties, and interest. Normally, the Collection Division does not assess additional taxes. Revenue Officers are assigned to the Collections Division and are responsible for monitoring delinquent tax returns, enforcing the collection of taxes, penalties, and interest, and referring cases to the Criminal Investigations Division. Revenue Officers may also be assigned to locate taxpayers by contacting friends and relatives or visiting the taxpayer’s home or place of business. Revenue Officers are full time collectors and have a great deal of power and discretion in dealing with taxpayers.
- Criminal Investigations Division (CID) – Investigate and file criminal charges against taxpayers for alleged violations of Federal Tax Law. The Collections and Examination Divisions as well as other federal agencies refer cases to the CID for possible criminal prosecution. The Special Agents assigned to the CID also execute search warrants and perform raids and seizures. The CID may also work in conjunction with other federal agencies like the FBI, DEA, ATF, Postal Inspectors and others. If you have been contacted by a Special Agent, this is a very serious matter and means that the IRS is investigating you for possible criminal prosecution.
IRS Collection Process Explained
When you file your tax return, you are responsible to pay any balance due on the return. If you fail to pay the tax by April 15th (following the year in which the income was earned) you will have a balance due to the IRS. Another way you could end up owing the IRS is after you file your return (or if you don’t) , the IRS accesses a tax and sends you a bill for the newly accessed tax. In any case, if you owe the IRS money you enter the IRS Collection Process.
The process starts with a letter notifying you that a balance is due and gives you 15 days to pay. If you fail to pay the bill, you will receive a second letter reminding you that you have a balance due and again asking you to pay. If you again fail to pay, you will receive a third letter requesting you pay the amount due and stressing the importance paying and asking you to contact the IRS. Ignoring this letter will lead to the final letter (and bill) which states that the IRS may:
- Contact you by telephone.
- Assign a Revenue Officer to resolve your account. The Revenue Officer may contact you in person and/or take enforced collection actions against you.
Enforced Collection Actions
Enforced Collection Actions are a serious matter and include:
- Assigning a Revenue Officer to your case. By law, Revenue Officers may contact you in person by coming to your home or place of business. They may speak to third parties including, friends, relatives, neighbors, your employer, employees, co-workers, business associates and colleagues for the purpose of locating you and collecting your tax debt.
- File a Notice of Federal Tax Lien against your property. A Federal Tax Lien is a legal claim to your property as security for the payment of your tax debt.
- Serve a Levy on your property or salary. A Levy allows the IRS to legally seize your property to satisfy a tax debt.
- Serve a Summons to secure information, records or testimony.
- Access a Trust Fund Recovery Penalty (businesses) for the failure to pay withheld employment taxes or collected excise taxes.
These actions are the methods used by the IRS to enforce a Notice of Tax Due and Demand for payment
If you owe the IRS back taxes and do nothing, the IRS will almost certainly take enforced collection actions aginst you.
Why You Need A Professional
One constant problem with the IRS are the inconsistencies throughout the tax assessment and collection process. Revenue Officers have a great deal of power and discretion in dealing with taxpayers. Due to these inconsistencies and the vast collection powers of the IRS, most people prefer to have professional representation before the IRS.
Our team is experienced in working with the IRS. With over 17 years experience as a practicing attorney and a Master’s Degree in Tax Law, Craig Zimmerman is who you want fighting for you against the IRS. Our Tax Relief Department is spearheaded by a Former IRS Agent. He knows the ins and outs of the IRS and how to get the IRS off your back.and will hold them accountable to protect your rights and ensure you are treated fairly while taking advantage of every e advantage of every legal deduction.
In most cases, once we notify the IRS of our representation, the IRS will temporarily halt collection efforts. Once our work is complete, the IRS will permanently halt additional collection efforts so long as you are in compliance.
Given the power of the IRS, if you have problem, you need experienced and professional representation to guide you through the process and get the IRS off your back once and for all.
