You do not have to be in the dark about internal IRS collection and audit procedures.
The IRS makes its playbook, the Internal Revenue Manual, available to the public. In fact, all you really wanted to know about the IRS can be found online in the IRM at the IRS’ website.
Sometimes, though, the IRS may not follow its own playbook, or even be aware of its own rules. This is rarely with bad intent; the Internal Revenue Manual contains a vast amount of procedures to follow – an IRS agent may realistically not know every one, or maybe details get lost in the everyday workflow.
To get the best results in IRS negotiations, it can be necessary at times to remind the IRS of their own overlooked or forgotten Internal Revenue Manual guidelines.
Deep in the Internal Revenue Manual are provisions that can put the brakes on the IRS, including getting a wage or bank levy released, or getting the IRS allow all of your living expenses when negotiating a payment agreement. The IRM details how the IRS values and investigates an offer in compromise, and the IRS’ views on seizing assets like retirement accounts and personal residences. How about knowing when the IRS Taxpayer Advocate help you? What about filing bankruptcy on the IRS? What are the IRS tax return examination techniques?
All can be found in the Internal Revenue Manual.
Knowing the IRS’ own guidelines can make all the difference in resolving your IRS problem.
The IRM is broken down into multiple chapters, including sections on IRS audits, IRS collections, IRS appeals and criminal investigations.
Let’s focus on three IRS collection issues that the Internal Revenue Manual can help you solve – limitations on the the IRS’ power to levy, lowering the value of your offer in compromise, and preventing an IRS levy on an retirement account.
First, what limitations does the Internal Revenue Manual place on the IRS’ ability to place a levy on your wages and bank accounts or seize your personal property?
The IRS can’t just do what it wants, when it wants. There are limitations on the IRS’ power to levy – and this is recognized in the Internal Revenue Manual.
When considering enforcement action, IRS collection agents should abide by Internal Revenue Manual Section 5.10.1, Pre-Seizure Considerations. This limits the IRS in the following ways:
1. The IRS cannot levy you when you are in an installment agreement, including the time the payment plan is pending, and during any appeal of a rejected or terminated installment agreement.
2. If you do not have any equity in your property, the IRS cannot take it. For example, the IRS can’t take your house if it’s worth $150,000 and you owe $150,000 on it – there is no equity. Same for your car worth $15,000 secured by a $15,000 loan.
3. If you have filed an Offer in Compromise, the IRS cannot levy or seize your assets while it is pending, and during any appeal of an OIC rejection.