IRS collection procedures – File Old Tax Returns

Revenue Agents vs. Officers

One item that taxpayers always get a little confused on is the difference between and IRS Revenue Agent and a Revenue Officer. The two are quite distinct despite the similarities in title. If you are dealing with tax debt, your case may be assigned to a Revenue Officer (RO) at some point. This post will help you understand the difference between the two positions.

Job Description & Duties
Revenue Agents primarily work for the Examination Division. Their job is to conduct tax audits of individuals and businesses as well as trusts and non-profit organizations. Revenue Agents generally conduct tax audits of the most complicated tax returns ranging from small “Schedule C” businesses to the largest multi-national corporations. They are also assigned to the IRS’ Offshore Voluntary Compliance Program to determine whether the failure to file a Form TDF 9-22.1, Foreign Bank Account Report (FBAR) and will be subject to FBAR penalties.

ROs on the other hand work for the Collection Division. Their job is to collect money, or more precisely, collect all that is available. In this post, we go into great depth about the entire collection process and where the RO fits into it. ROs are assigned to the most difficult IRS tax debt cases. Those individuals or business whom the IRS has been unable to collect from through letters, phone calls and tax levies and garnishments generated by IRS computers are generally assigned to a RO after a period of time.

Qualifications
Revenue Agents have a college degree and are highly trained in all aspects of auditing, tax law, research, and report writing. The minimum requirement for the job generally includes having a bachelor’s degree or higher in accounting from an accredited college or university that included at least 30 semester hours in accounting. While Revenue Agents are not required to be CPAs, a few of them are.

ROs also must have a have a college degree, but the requirements are different. A RO can have a bachelor of Fine Arts and be qualified for the job. This is why ROs initially engage in months of training and then weeks of training on an on-going basis. It’s no surprise that when it comes to the best ROs, the IRS has a lot of money and time invested in them.

Interested in a job in either role? Check out this additional info from the Bureau of Labor Statistics.

Interesting Facts About Revenue Officers

A RO doesn’t carry a badge. If someone flashes a gold badge and says they are from the IRS, that’s not a RO. That is an agent form the IRS Criminal Investigation Division (CID). This means that you are being investigated for a criminal matter and you need to reach out to an attorney! These cases may include tax evasion, fraudulent tax returns, large failure-to-file cases, money laundering, and false documents or statements submitted to the IRS under the penalties of perjury.
A RO cannot arrest you. If any CPA, attorney or enrolled agent tells you they can stop a RO from arresting you, find a new professional! ROs have no arresting authority. All a RO can do is make a “referral” to the CID. This means they lay out the facts why they think you should be arrested. Referrals are made when they align with the types of cases mentioned above and the CID only accepts a fraction of them.
A RO isn’t graded on how much money they collect. A RO does not get promoted for bringing in the most money. But rather, how many cases they successfully remove from their “inventory” of collections matters. A RO would rather you enter into a resolution option like an offer in compromise today, than be sandbagged for 2 years, even though you wind up paying in full.
A RO MUST attempt initial contact in person. Everyone thinks their RO is a total jerk for showing up, unannounced, to make first contact with a taxpayer. But little do most taxpayers know that Internal Revenue Manual Section 5.1.10.3 (Initial Contact) requires that they make first contact with a taxpayer in person. You may not have been home the first time they showed up, so if you are wondering why someone from the IRS left a card for you at your home or on your car, don’t ignore it. There will be further contact!
Many ROs are friendly and reasonable. Most employees working for the IRS are normal, hard working folks like you and I. They go to work, attempt to do a good job and then head home to relax just like we do. Thus, understand that they want to close your case and they need your help to do so. They will not “go away” if you ignore them and neither will your problem (it will just get shifted to another part of the process).

Needless to say, if you are uncomfortable dealing with an RO or simply don’t want to talk to them, then give us a call. We’d be happy to talk to them on your behalf and help you (and them) make your tax matter a thing of the past!

The U.S. Internal Revenue Service is the single largest collections agency in the world. According to the most recent statistics available, in 2013 the IRS spent $11.6 billion and employed just under 87,000 to collect more than $2.8 trillion in tax revenue. Of those 87,000 personnel, over 19,000 are directly involved in enforced collections against taxpayers that owe back taxes.

While the IRS is one bill collector that can have a serious impact on your life, it’s important to understand just how they work. So the first thing to realize is that the IRS is a slow moving bureaucracy. It is highly driven by forms, written procedures and is resistant to change. Their playbook is public record and they are required to follow it. While this may not bode well for you resolving your tax matters expeditiously, it does give you some comfort in that you can figure out what is coming next. Below we break the IRS collections process down into the 1040 notice sequence and the collections system.

1040 Notice Sequence
The IRS doesn’t start collections against you simply because you file a return with a balance due. The process actually begins when they issue a letter called a Statutory Notice of Deficiency or SNOD. This letter informs you of the IRS’ intent to assess a tax deficiency and informs you of your rights to dispute the proposed adjustment. From here, the notice sequence progresses like this if you fail to respond at each stage:

Request For Payment
Form 668 – Notice of Federal Tax Lien Filing (for balances over $10,000)
CP501 – Reminder Notice
CP503 – Immediate Action Required
CP504 – Notice of Intent to Levy
Letter 1058 – Finial Notice of Intent to Levy

The CP503 typically comes about 4-5 weeks after the first notice. The remaining notices will each come around 30 days after one another so it can take about 4 months from the initial letter until it culminates with a Letter 1058. While the CP504 language sounds nasty, one may choose to ignore it. However, there are two things to note about the Letter 1058:

It is the first opportunity you have to file an appeal
Thirty days after the letter, the IRS can levy you.

Does this mean that the IRS will levy you? Not necessarily; especially if they don’t know where your assets are. However, it would be wise to pick up the phone at this point and call the IRS as well as file Form 12153, Request for Collection Due Process Hearing (i.e. appeal).

Collections System
Now you may ask why understanding the “system” is even important to this discussion. Well, it’s because some of the notices you get aren’t being generated by humans. They are done on an automated schedule. Thus, until your case winds up with a dedicated “human” at some point (i.e. a Revenue Officer) it can be hard/frustrating trying to get the notices to stop. Thus, collections enter into the following levels of the system at varying stages:

Collection efforts on each account begin with computer notices from a Regional Compliance Center.
If the efforts of the Compliance Center don’t yield payment, the account is then assigned to the Automated Collection System (ACS). ACS attempts to collect the tax liability by initiating telephone calls to the taxpayer and others. Unless your case has special circumstances, you will usually stay assigned to ACS even if you accumulate 2-3 years worth of tax debt as an individual or 3-4 quarters of payroll liability as a business. But once you reach these levels or you simply fail to respond…
The account is eventually assigned to a Revenue Officer for a field investigation.

When you are assigned to a Revenue Officer, the course of your tax case can take a sudden shift. Having an experienced, trained human being looking at your tax case, and passing judgment on you based on what’s in a file and thereby determining how they are going to handle your tax case, means a lot. Unfortunately, due to current economic times, the waiting line for assignment to an RO is many areas of the country is growing longer and longer.

Similar to above, having a trained representative on your side working the case with the IRS can mean a world of difference. If you are interested in assistance or just want to discuss your situation, we’d be happy to speak with you. Simply shoot us an email or give us a call.

Until next time…