Category: Taxpayer Representation

When a taxpayer owes money to the IRS, they enter the IRS Collections system. The IRS has a very detailed process that they are required by law to follow when it comes to collecting tax debts. Knowing a little bit about how this system works and how IRS collections personnel are required to act can be very beneficial to you.

There are two distinct collections units within the IRS. The first is the Automated Collection System (ACS), which consists of computerized lien filings, automated send out of bills and notices on set intervals, and the call center agents that perform basic collections functions. It is important to understand that the people you’re talking to on the phone at ACS have limited authority, and may not be able to assist you with every tax matter without elevating to a supervisor or other personnel.

The other distinct collection unit within the IRS is the Collection Field Function. Field agents, called Revenue Officers, are located in cities and towns across the country. Rural Revenue Officers may work from home and have a field territory covering hundreds of miles, while thousands of agents in big cities have extremely small territories and may hardly ever leave their Federal Building.

Revenue Officers are required to do many things in order to “resolve” a tax liability placed under their control. They are required, by law and regulation, to collection certain information, verify things through whatever means available, and close out cases. Over the course of the past year and a half or so, I have personally noticed a significantly reduced emphasis on simply reducing the number of open cases, and instead increasing cash collections through whatever means necessary.

In order to demonstrate to IRS management that they are doing their jobs properly, here are some of the biggest actions that Revenue Officers are required to perform (and document in their files):

• Make sure you’ve filed every past tax return you should have (and if not, make you do so)
• Verify that you are making payments on time and in full for any new taxes you have come up, such as employment taxes or estimated tax payments (and if you’re not, making sure that you do)
• Collect detailed financial information from you concerning your income, expenses, assets, and other debts
• Based on that financial information, determine sources of money from which the government can collect on the tax debt (this can include forcing

Back in October, the largest tax resolution company in America, JK Harris, filed for bankruptcy under Chapter 11, which would have allowed them to continue operating and restructure their debts under a payment plan.

However, their largest creditor, which appears to have had a claim against the company exceeding $11 million, has decided not to allow them to restructure the debt, and has instead seized all the companies cash and assets in a liquidation of the company.

This means that, within the past 15 months or so, the 3 largest tax resolution firms in the United States have gone out of business, either by bankruptcy or government action. A little over a year ago, American Tax Relief in Los Angeles was shut down by the FTC, and the owners are facing numerous criminal charges. In early 2011, Roni Deutch was shut down by the California Attorney General, and Roni herself was forced to turn in her law licensed and faced state perjury charges.

JK Harris has been the target of several class action lawsuits regarding their sales practices and poor customer service. They have also been investigated by the Attorneys General for several states.

If the closing of JK Harris has left you in a bad place regarding your tax matters, please contact a local taxpayer representation firm from our directory.… Continue reading

When it comes to something as important as resolving your tax liabilities, it is important to conduct research on the tax resolution firm(s) you are considering before agreeing to purchase their services.

What sort of things should somebody do as part of conducting their “due diligence”?

First of all, visit the Better Business Bureau at www.bbb.com and look for any complaints or outstanding issues that they have with clients.

Second, you may actually want to turn to an unlikely source for information on certain companies: Your IRS Revenue Officer. Revenue Officers will not provide an unbiased opinion, of course, and many of them will even tell you not to secure representation (which is a violation of IRS policies for them to say, but they still do it). However, your RO has probably worked with most of the large, national tax resolution firms and can give you their personal opinion on the firm if you ask.

Third, before signing a contract for taxpayer representation, be sure to confirm that the firm that will provide your representation will assign your case to a licensed representative. You should be guaranteed that your representative is a licensed attorney, licensed Certified Public Accountant, or a licensed Enrolled Agent, before you sign any contract. The IRS will not allow non-licensed representatives to negotiate for a taxpayer, but you would be surprised at how often large firms have unlicensed assistants doing the actual IRS negotiation.

Fourth, be sure to ask if the individual selling you the tax resolution service if they have ever been involved in actual IRS or state tax negotiations. Many times you will get a delayed answer because that answer is “no.” Be weary of salespersons that will base how they can help you from a sales script. Any case-experienced salesperson should be able to walk you through the case proceedings from start to finish.

Understand that hiring a representative to negotiate on your behalf is not a guarantee that your case will be resolved. You will need to work closely with your representative to ensure that your best
interests are always held in high regard. Although your representative should do nearly all of the interaction with the taxing authorities, your participation with your representative is vital to the resolution process.

You will want to confirm that the fee you are paying for the service you are purchasing is a flat fee. If you cannot get this guarantee in … Continue reading