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Negotiating With The IRS Collection Division

2021-12-21 10:23

Dave Rosa

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Negotiating With The IRS Collection Division

Once the IRS makes an assessment against a taxpayer, the taxpayer will receive several notices before the IRS takes enforced collection action.





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Once the IRS makes an assessment against a taxpayer, the taxpayer will receive several notices before the IRS takes enforced collection action.


Notice of Intent to Levy


This is the notice that is required before the IRS can levy and seize a taxpayer’s assets. The Notice of Intent to Levy needs to be sent only once to be in effect. The taxpayer doesn't need to be received, only sent.


Some form of response should be made with respect to an Intent to Levy notice. Should you decide to "Do It Yourself," your response, along with a copy of the notice, should be sent by certified mail, return receipt requested, using the envelope provided by the IRS.


The purpose of sending a response is so that it will show that the taxpayer is concerned about the tax debt and is not ignoring them. This should buy you a little time while you decide on a concrete tax relief solution.

You Do Not Want To Deal With An IRS Revenue Officer (R.O.).

IRS Revenue Officers have enormous power and can make your life a "living hell." An R.O. is highly trained, very experienced, and "have heard and seen it all."  


Revenue Officers usually will visit your home or business on a Friday. They will leave their card on your door. By coming on Friday, you will then have the entire weekend to worry about what may happen to you. Failure to communicate with the Revenue Officer will only result in enforced collection action as the R.O. may feel very disrespected. Every agreement made with the Revenue Officer should be confirmed in writing. The purpose of this is to document the file of the IRS in case the file is transferred to another Revenue Officer who does not know the agreement. 


The R.O. has one goal and that is to close the file. Closing a file could be due to:

1. Payment in Full.

2. Installment Agreement.

3. Placing the taxpayer in IRS Hardship.

4. An Offer of Compromise has been submitted. 


A taxpayer has two purposes in dealing with the Revenue Officer:

1, Stop enforced collection activity by the IRS.

2. Obtain a payout agreement or some other arrangement for payment of the taxes.

Negotiating with the Revenue Officer can be extremely difficult in some situations. 


The following represents alternatives that should be considered when negotiating with a Revenue Officer:

a. Installment Agreement – The IRS gives the taxpayer the right to pay taxes in installments contrary to what some Revenue Officers will tell you.  Insist on such an agreement for your client.

b. Hardship on Taxpayer – An IRS hardship exists if levy action prevents the taxpayer from meeting necessary living expenses.  The IRS should not undertake collection action if hardship is present.  The hardship must be impressed upon the Revenue Officer during negotiations. 

c. Currently not Collectible – If a taxpayer cannot pay taxes owed without placing himself in financial hardship (unable to pay necessary living expenses), then the IRS will defer collection by classifying the case as “currently not collectible.”  If this is done, enforcement will be deferred until some time in the future, and the taxpayer will not have to deal with the Revenue Officer. Currently not Collectible status usually lasts 12 to 18 months before it needs to be renewed. The Statute of Limitations will continue to run out. 

d. IRS Offer in Compromise – The Internal Revenue Code permits the IRS to accept an amount less than the full amount if there is doubt as to collectability, and/or doubt as to liability.  Submission of an Offer in Compromise (OIC) will extend the statute of limitations on collection. As a practical matter, the right situation must be present for the IRS to accept an OIC, and one should only be submitted if there is a strong possibility that it will be accepted.




e. Abatement of Penalties – In almost all cases an abatement of penalties should be sought.  It is easy to request that penalties be abated, but somewhat difficult to get approved if you do not know what you are doing. You only get one opportunity.

f. Taxpayer Advocate – The Advocate will help with almost everything except negotiating a payout with the Revenue Officer.

g. Possibility of Amended Returns – Original tax returns should be reviewed to determine if amended returns will reduce tax liability.  If so, they should be prepared and filed. If you have un-filed tax returns and the IRS is collecting on their "Substitute for Return," these can be challenged and replaced with real tax returns. Doing so should dramatically reduce your tax debt.

h. Has the IRS Made a Valid Assessment?  Check the statute of limitations.  Generally, an assessment must be made within three years from the date the return was filed, plus any extension executed by the taxpayer. In addition, the IRS has six years after the taxes are assessed to collect the taxes. If the IRS has not followed the proper procedure, the assessment may not be valid, and the taxes cannot be collected.


At all levels of IRS enforcement, the taxpayer has certain rights, and the taxpayer should take full advantage of these rights.  If a taxpayer owes taxes, the taxpayer should seek professional advice in helping to resolve the matter.




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