If you owe the IRS money and are dealing with an IRS Revenue Officer, or even IRS Automated Collection Service, expect deadlines. Deadlines to provide financial information, deadlines to provide unfiled returns, and deadlines for a plan for account resolution.
These deadlines are serious – failure to timely comply is usually reason enough for the IRS to send a levy to your employer, your bank, or your customers.
But what if you run into trouble meeting an IRS collections deadline?
Fear not – here are seven solutions to an impending deadline with IRS collections that you may not be able to meet:
1. Good communication is essential. An IRS Revenue Officer wants to hear from you. Do not let a deadline pass without a call in advance to ask for more time. Briefly explain the effort you have made to comply, and that you would like a little more time. Most Revenue Officers will be reasonable and readily provide more time if you they believe you are making effort. Remember, the Revenue Officer is doing a job – show him that you respect it.
2. If the Revenue Officer gives you a deadline that you know you will not be able to meet, let him know then that you anticipate not being able to meet it on the front end, but you will call him on set dates to give your progress. When you call, let him know what steps you have taken, and your progress, and set a follow-up date. Don’t expect months between calls; this may be an every 7-10 day process. Continue staying in contact and providing information and updates.
3. Provide part of the information requested, what you do have available. If you have six years of unfiled returns, and you cannot possibly get them all done within the timeframe provided, start with one year, and provide at least that as evidence of good faith. If financial information is requested, provide what you can – if listing assets is simple, but you are self-employed and do not yet have an accurate picture of your income (profit and loss), give the Revenue Officer your assets. Knowing what your assets are – where you bank, the value of your house, etc. – should evidence your good faith and, in a sense, give the Revenue Officer collateral for more time for you to prepare an accurate profit and loss statement.
4. If the Revenue Officer is being unreasonable and won’t give you more time, ask to speak with his Group Manager. Sometimes the manager will back up her employee; sometimes she will be able to work out a solution. Either way, call the manager. (Your plea for time to a Group Manager is better made when you have already been in good communication and have already taken Steps 1-3, above.)
5. Call the IRS Taxpayer Advocate and request that they open a case file. You will need to show to the IRS Taxpayer Advocate that the Revenue Officer time limitations will result in some degree of hardship to you. It will help your case if you can show the Taxpayer Advocate that the need for time is based on a systemic problem in the IRS – for example, the IRS has the information you need to prepare a tax return and you have not received it yet. If the Taxpayer Advocate accepts your case, they will contact the IRS Revenue Officer and lobby on your behalf. Understand, however, that the IRS Taxpayer Advocate does not have an unfettered ability to force the IRS to do something – they, too, must rely on the power of persuasion.
6. Know your rights. A Group Manager’s decision to stand by her Revenue Officer and not provide you more time can be appealed and reviewed by the IRS Office of Appeals. While the appeal is pending, the IRS cannot take any collection action against your bank accounts, wages, etc. Your case will be sent to an independent IRS appeals officer, where you will have another opportunity to make your case for time. (And while the appeal is pending, you have a little more time to pull together the information requested.)
7. Know what the IRS can (or cannot) do if the deadline is not met. Understand what noncompliance means in your situation. Sometimes, not meeting an IRS deadline will not result in a levy on your property. This is because the IRS is required by law to give you notice before they levy. This notice is called a Final Notice of Intent to Levy. If the IRS has not sent this to you, or only sent it to you within the last 30 days, the Revenue Officer cannot enforce the deadline by levy.ing against you. (And make sure you file an appeal of the Final Notice – it puts a longer-term hold on IRS levy action – as much as 6-9 months – while you gather your records.) If you are unsure if a Final Notice of Intent to Levy has been sent, the IRS can be contacted and account transcripts obtained to verify.
IRS negotiations are fraught with deadlines – it is an essential part of how the IRS manages their case inventory. Handling and complying with IRS deadlines – reasonable ones and those that seem unfair – is important to not only good results, but protection of your property from IRS levys.