One of the very biggest mistakes that people in collections with the IRS make every day is to simply accept what a lower-level IRS Collection employee tells them. This often means accepting an unfavorable, or even disastrous, outcome that could severely impact the ability of an individual or business to make ends meet. If you have a tax liability that needs to be resolved, you are flying blind unless you know how to navigate the massive bureaucracy known as the Internal Revenue Service. The good news is that this is not rocket science. I’ll explain the basics below.
It is not uncommon, while I advocate for my clients, to get into heated discussions with IRS employees. It should come as no surprise that IRS collection employees don’t always do what I want them to do. But if they give me an outcome I don’t like, does that mean the game is over? The answer is very often a resounding “NO.”
To give you an example, I was recently sparring with an IRS Settlement Officer (SO) in the IRS Appeals division. The subject was an Offer in Compromise (Tax Settlement Proposal) I had filed on a client’s behalf. The “SO” in this case was refusing to approve our Offer because they noticed that my client had been late with a few tax payments during the time the Offer was being considered. Naturally, I wanted to see the Offer through to acceptance. That, and I can’t stand losing. Between preparing the Offer itself and litigating for its acceptance at multiple levels of the IRS bureaucracy, my client and I had spent more than 14 months on this project. There was simply no way that I was ready to throw in the towel.
Ultimately, the Settlement Officer cared little for any of my arguments. I then did something that, judging by her reaction, people don’t do to her very often: I asked for her supervisor, known as the Appeals Team Manager. After speaking with the Appeals Team Manager (who had a similar opinion of my argument), I asked for another supervisor: the Area Director. The reaction of the Appeals Team Manager when I asked for her Area Director was that of an even more stammered reply than her subordinate. Clearly, these people were not used to being questioned in such a way.
The truth is that resolving your tax problem with the IRS can be as much about dogged determination as it is about smarts and craft. Any salesperson would tell you that they would starve if they halted their pitch at the first “no.” Similarly, you’re not likely to get the best result for yourself if you let the first negative response from the IRS be the last—which is exactly what most people, and even a staggering number of tax professionals, do.
Most of the time, when people hear the word “bureaucracy”, they think about inefficiency, or the “deep state,” or ministerial evildoers hellbent on making life worse for individuals and businesses. The truth is that a bureaucracy can be very beneficial when you are looking for relief for a complex tax problem…if you know how to work the bureaucracy. There is a veritable family tree of IRS employees who exist to monitor employees further down the tree. Sometimes, to get results, you have to climb the ladder. In this article, I will discuss the ways you can make a taxing bureaucracy work for you.
Most taxpayers and, I would venture to say, many tax professionals think that the words on any IRS notice or the response from any IRS employee are gospel. Often, you can get a very different (and more favorable) response if your gripe has merit, and you get the right person to hear it.
The IRS Automated Collections System consists of “Collections Representatives” who are the first line of defense for (and often against) taxpayers who hope to resolve their tax problems. All of these people are the first humans you speak to after calling one of the IRS’s toll-free ACS phone lines. And all of these people have a supervisor. However, if the need arises, it can often be difficult to speak to the supervisor because they’re responsible for a number of employees, and they are often already dealing with someone else’s issue at the time of your request.
If you tell a Collections Representative that you want to speak to a supervisor, the CR will promise a “24-hour call back” which, as it implies, means the manager will call you back within 24 hours. I’ve found that a flip of the coin will tell you the likelihood of this call happening. (You may be able to get some relief from this uncertainty by using the Taxpayer Advocate, which I will discuss further, below).
In lieu of waiting for a supervisor’s phone call, you could hang up, call back, and ask another operator for assistance. This IRS employee roulette can pay dividends, as the attitude or mood of an IRS employee can be the difference between a good outcome, and a bad one.
Many taxpayers (mostly businesses with employment tax debt or individuals who owe substantial amounts to the IRS) are assigned to field Revenue Officers (ROs). For better or for worse, taxpayers working with an RO will get to know this person very well. An RO tends to be more experienced and better trained than the Collections Representative, but they are still more or less at the front line of the Collections apparatus. This person will take a hands-on approach, often insisting on an in-person tour of your business site (less so during the COVID pandemic), and engaging you in multiple personal interviews to determine who is/was responsible for the company’s delinquent tax debt, and how that debt will be paid.
While the RO may seem to be the alpha and omega of your tax world, they are not. Above the RO you will find a Group Manager (GM), responsible for overseeing a number of ROs. Among their duties include reviewing Installment Agreement proposals, supervising the actions of their Revenue Officers, and helping to resolve disputes between taxpayers and ROs. Particularly in the case where a Revenue Officer is being abusive, rude, or is violating a taxpayer’s rights, the GM can be your best friend.
Often, the GM works in the same office as the Revenue Officer, and a request to speak to this person must be honored. Sometimes, they rotate among offices, or work in a different city, so you may need to wait a day or two. In the meantime. If I am insisting on a conference with a GM, I make it a practice to ensure that the RO will not take enforcement action (bank levies, receivable levies, seizure of assets, etc.) while I am awaiting a call back from a GM.
As you might have guessed by now, the GM is not at the top of the bureaucracy in the local IRS Collections office either. Above the Group Manager you will find a Territory Manager, a person responsible for a relatively hefty swath of geography filled with multiple GMs, and dozens of ROs handling thousands of IRS Collections cases.
By the time one gets to this level of the bureaucracy, however, it is wise to choose your battles carefully. It usually takes quite strong facts, a favorable legal position, and a well-argued case to sway the Territory Manager into overruling the GM and the RO. Moreover, the TM will thoroughly review the case history before speaking with you.
This case history is written entirely from the perspective of the Revenue Officer, so you have quite a burden of skepticism to overcome when you’re claiming misconduct, or that a Revenue Officer is in the wrong legally. It’s always handy to have independent proof that your side of the story should be given more credit. In my practice, thorough notes, including the time, date, and subject of all phone discussions with the RO or GM are critical when attempting to convince a TM that the RO and GM are in the wrong.
Those are the bureaucratic levels within the IRS Collections apparatus. Outside of that bureaucracy is an independent division, called the National Taxpayer Advocate (NTA). This is an independent organization that exists to assist taxpayers who’ve been unsuccessful in getting results while working directly with the IRS. The NTA, created in the mid-1990s, is meant to assist taxpayers who are experiencing serious hardships, financial or otherwise, that they have not been able to resolve by working with the IRS Collections apparatus.
Unfortunately, the NTA is often not very helpful. Their power to overrule an IRS collections employee is virtually nonexistent. In practice, the NTA exists to facilitate better communication. If the NTA agrees with your side of the story, the influence that the NTA exerts on the collections employee could be enough to change the outcome of your case.
One of the more obvious alternatives to working with the plain old Collections folks is requesting consideration from the Office of Appeals. Much like a court of law, the Office of Appeals is only available to review certain specific issues that give rise to appeal rights. For example, if the IRS is proposing to “levy” your bank accounts, wages, receivables, or other assets, you are offered Appeal rights that you can exercise in response to either a verbal or written threat of such enforcement.
While an Appeal is always nice to have at your disposal, you still have to convince Appeals to take a different course than the Collections level, which was bound and determined to collect from you forcibly.
As indicated in the first paragraph of this article, the Appeals section has a bureaucracy all its own. The Settlement Officer is generally the opening act. The Appeals Team Manager – much like the GM – signs off on all Offers, Installment Agreements, or other resolutions that the Settlement Officer brings to her for approval.
Finally, the Area Director oversees numerous Appeals offices, including many Appeals Team Mangers and still more Settlement Officers. As with soliciting help from a Territory Manager, you should have all your ducks in a row prior to speaking with an Area Director. In fact, often the Area Director will assign a subordinate – called the Technical Adviser – who will screen your case to see if it is a problem that can be solved easily. Such is the degree of workload facing an Area Director. Proceed with caution.
Back to my Offer in Compromise that I mentioned earlier, and the epic battle with Appeals: The Area Director, after speaking with me and both subordinates, saw merit to my argument, and overruled both the Appeals Team Manager and the Settlement Officer. As a result, I saved my client over $100,000 and 14 months of additional hard work. This wasn’t necessarily a case of fancy legal loopholes. It was just about not giving up. If you avoid giving up when you think you may be right, it could pay off.
If you are attempting to resolve your tax liability without professional assistance, you’ve got little to lose aside from your time by barking up the chain of command if the lower levels of the bureaucracy are unwilling to give you what you need. The downside is that very few lay people have a strong enough grasp on the collection laws and procedures to know when they have a situation that merits barking up the chain.
Without that grasp, chances are good that you will waste a bunch of time to reach the same outcome. Although the big victory I just described resulted primarily from dogged determination rather than fancy lawyering, the bottom line is that I knew that my position had enough merit to warrant pushing my client’s case up to the highest level. Aside from getting a law degree and practicing tax relief for many years, chances are you won’t have any idea when the right time for picking such a battle is before you. Consequently, you would be well advised to consult with an experienced tax relief professional, especially if you have a serious tax liability.
Fortress Tax Relief has caring and knowledgeable professionals on staff who would be happy to evaluate your tax scenario over the phone and outline a solution tailored to your specific needs and circumstances. We offer nationwide tax relief services. The call is free, so pick up the phone and give us a call today.