December 17, 2019

The IRS has many options for collecting unpaid taxes, but a limited budget means that the agency must prioritize its enforcement and collection efforts. For most taxpayers who are in arrears, penalties and interest accrue as the IRS sends notices by mail. Eventually, the IRS might place liens on a taxpayer’s property, and then execute a levy. This can be costly and time-consuming, and the agency would rather obtain unpaid taxes by other means. It recently announced that IRS revenue officers will be conducting in-person visits with delinquent taxpayers in several states. While this will not affect California taxpayers right away, that could change in the future. If you are behind in filing and/or paying taxes, you may want to speak with a California tax advisor about your situation.

IRS Debt Collection

Federal law gives the agency two main options for pursuing tax debt that has remained on the books for some time. These may apply to both individual taxpayers and businesses. The Taxpayer’s Bill of Rights (TBOR) applies in all cases.

Revenue Officers

The IRS describes revenue officers (ROs) as “civil enforcement employees” assigned to cases involving unpaid taxes or missing tax returns. A RO’s involvement in a case typically begins with another written notice sent by mail. The RO’s job, according to the IRS, is to help bring taxpayers into compliance, “not to make threats or demand some unusual form of payment for a nonexistent liability.”

As the resources available to the IRS have declined in recent years, the number of ROs has decreased. A new federal budget has allotted more resources to the IRS, and it is now hiring more ROs.

Private Debt Collectors

The Internal Revenue Code requires the IRS to use private debt collectors for “inactive tax receivables.” An “inactive tax receivable” is one where the IRS has been unable to locate the taxpayer, the taxpayer has insufficient resources to pay the debt quickly, one-third or more of the statute of limitations for collection has passed, or the account has remained inactive for one year or longer.

Private debt collectors must abide by the TBOR. They are also bound by the Fair Debt Collections Practices Act.

Your Rights During a Compliance Visit

The IRS recently announced plans to have ROs conduct face-to-face meetings with taxpayers in Wisconsin, Arkansas, and Texas. It chose these states based on a limited number of available ROs in recent years. Unpaid payroll taxes will likely be a top priority for these visits, but they will cover other tax debts as well. The IRS views this effort as a supplement to its Private Debt Collection program.

The in-person RO visits must follow the rules established in the TBOR, including taxpayers’ right to full and accurate information about their cases, and about the procedures used by the IRS or debt collectors. It also guarantees the right to have a representative, such as a lawyer or accountant, in all of their dealings with the IRS.

Protecting Yourself from Scammers

In-person RO visits will most likely not be announced in advance. Taxpayers should be aware of the risk of fraud by scammers posing as IRS agents. The IRS itself has published guidelines to help taxpayers know when a visit is legitimate, including the types of credentials carried by ROs.

If you have questions about federal or state tax resolution matters in California, the Enterprise Consultants Group’s tax advisors are available to discuss your rights and options. Please contact us online or at (800) 575-9284 today to see how we can help you.