According to the IRS, it had about 77,000 employees in 2017. (See IRS Budget and Workforce Online Report) But for the vast majority of taxpayers with large tax debt problems, the only IRS employee they may ever meet in person is the IRS Revenue Officer.
The IRS Revenue officer is the best-trained and most experienced employee in the IRS' collection unit. They usually work on situations where the debt is high, and/or the taxpayer hasn't been filing, withholding employment tax, or is a business.
The reason the Revenue Officer is the only person the average taxpayer with large tax debt meets is because the revenue officer is local and if you haven't taken care of business…the officer will just come to you.
Yes…there are officers right here in Arizona and they're required to work the “field” by getting out of the office and to your home or business.
They will often introduce themselves by coming to your home or business unannounced and if you aren't there, they'll leave a card stuck in the door asking for a call back.
If you ignore the officer, a summons demanding your appearance might arrive and a lack of cooperation will result in bank levy, wage garnishment, and possibly the seizure of retirement funds, accounts receivable, equity in cars, business equipment, and even homes.
They don't carry a gun or a badge (different IRS employees do that) but they do carry a large proverbial “punch”.
We've worked with Revenue Officers for many years and find that they usually just want the case resolved….missing returns filed, and a payment plan or non-collectible status arranged. They don't mind if you file an offer in compromise or collection due process appeal request either… and will as a general rule, stop collection efforts and forward the offer to the unit that reviews those.
So, if you have a large tax debt and Revenue Officer is involved or will be, it may help to review these additional 8 items to better prepare yourself for the experience:
YOU CAN'T IGNORE THE REVENUE OFFICER
As mentioned above…if you just ignore the officer, things can go bad. An ignored Officer will make sure any missing returns are done using income histories, and use the debt already in existence to levy, garnish, seize, and lien.
THE OFFICER IS FOLLOWING A SET OF RULES
The officer is trying to follow a set of rules that require you to file your returns and that determine how you deal with the debt.
These rules…especially in regard to how the debt is dealt with, aren't necessarily friendly…but it's not as if the Officer is just making the stuff up.
He or she has to answer to someone who is trying to make sure the rules are being followed.
UNDERSTANDING THE RULES IS KEY TO GETTING THE BEST RESULT FOR YOUR SITUATION
You don't get to pay or settle the IRS debt based on what you would like to pay. There are rules that determine how much you can pay. There are rules that determine whether you can discuss your case with appeals and not the Revenue Officer. There are rules that determine whether bankruptcy can be used to remove the case from the IRS entirely. Dealing with the Revenue Officer isn't a random, informal process, and getting the best result isn't either.
BEING ABLE TO USE THE RULES TO YOUR ADVANTAGE DEPENDS ON KNOWING ALL OF THE FACTS
The biggest issue we have in our office is obtaining facts from clients. We need facts in order to complete tax returns correctly, complete financial statements correctly, and to know what is going to be happening in the client's life financially.
The less information we have, the weaker our ability is to determine how to use the rules in our client's favor. The less information we have, the harder it is to deal with the Revenue Officer and to make sure the Officer is following the rules as well.
Sometimes the rules can really play to your advantage, at least in the long term.
But rules are almost worthless without facts…and most facts, especially facts about your budget and assets are with you. They need to be shared with your attorney.
THERE ARE 3 COMMON WAYS TO REMOVE THE REVENUE OFFICER FROM THE SITUATION
Perhaps the Revenue Officer is being unreasonable and difficult to work with….it happens.
An Offer in Compromise that has a chance of real success, a properly planned and filed bankruptcy case, and an IRS Collection Due Process Appeal if available and sensible..will remove the case from the Revenue Officer.
Whether it makes sense to use any of the three…depend on the facts surrounding your situation.
IT MAKES SENSE TO REMAIN PROFESSIONAL
If you are going to be dealing with the Revenue Officer, don't allow emotions to control the relationship. Provide documents by the deadline, stay in contact if you can't, cross all the T's and dot all the I's. When providing financial statements, don't leave anything out.
Be as polite as possible, getting angry will make the situation worse.
MAKE SURE YOUR DUCKS ARE IN A ROW
Doing some or all of the following will make your life easier when the time comes for the Revenue Officer to arrive. (If you have high tax debt…the officer will arrive eventually)
Get some advice about which missing returns need to be done and get them done…right now.
Keep copies of all your bills, statements, bank accounts, pay-stubs, profit and loss statements etc.
Create a detailed list of your business and household average budgets.
If you don't have health insurance or term life insurance get coverage.
If you have other debt problems and IRS Debt, talk to someone about bankruptcy and how it works.
Determine whether the IRS has ever filed a “final notice of intent to levy”
Create a first draft 433-A financial statement for yourself and a first draft 433-B financial statement for your business.
If in business, make sure you are withholding enough monthly or quarterly to ensure no debt at the end of the current year.
If in business, quit using your business bank accounts to pay your personal expenses. Figure out how you should be paying yourself from the business and move money into your personal account before spending on personal bills and personal items.
Make sure the business has filed all 941 and 940 returns that are required to be filed… and that the business has paid all of it's employment taxes.
You don't know what you don't know.
You can read all you want on the internet about your “rights” and how everything works. But there isn't a substitute for speaking with someone who has lots of experience applying facts to law and rules. That experience provides needed perspective.