The IRS…………..friend or foe?

The IRS just sent out another round of collection letters. Their computer spits these letters out every 30 days. The letters come with varying degrees of venom. Generally, when you get the letter that threatens to place liens on your bank accounts and other properties, it is time for you (the taxpayer) to take some form of positive action. Don’t shred this letter.

The Internal Revenue Service is the collection branch of the United States government. The IRS does not make tax law. Your elected Congressmen make the laws. If you do not like the tax laws, the collection laws or any other law, call your Congressman.

So when you call your CPA and vent about the IRS and the unfairness of tax laws, fines, penalties, interest and collection procedures, you are complaining to the wrong person about the wrong group. Call your Congressman.

ON THE OTHER HAND, if you want to complain about the quality of service provided by the IRS, call the IRS. We need to let IRS management know that they have issues. I have been a practicing CPA for 27 years. In the “good ole days” you could take your client’s power of attorney, go to the local IRS office and work out every problem in a face to face meeting. The process was simple and effective. You can’t do that any longer.

Today virtually all issues are handled by IRS telephone call centers and correspondence. Your ability to resolve an issue often rests with the “luck of the draw”. If you get a well trained, experienced agent on the phone, you may get your issues resolved quickly. Please be aware that the call centers are staffed by the lower level, less experienced agents, so there is a very good chance that your issue will not be resolved.

In the meantime, the IRS computer is sending out collection letters every 30 days. It is not at all uncommon for an issue to be resolved or in the process of being resolver via the phone agent only to have an IRS collection letter generated via computer.

Here is an actual case on this point. We filed an amended income tax return for a client. The amended return reduced the client’s liability substantially. A week or so ago, the client received a letter stating that due to the unpaid taxes, the IRS was going to attach liens on their bank account and their home. Needless to say our client was hot. We called the IRS. Their response to our call was that amended returns take 6 to 9 months to process. They showed receipt of the amended return but we could not give a date for processing. Their solution was to put a 30 day hold on the account. Yes, a 30 day hold on an issue, that by their own admission may take as much as 9 months. So we, the taxpayer, have to call the IRS every 30 days to get them to extend the “hold” every 30 days until the issue is resolved.

I am sure that the practitioners that you use can regale with similar stories. Here is my point. The number of returns being processed by the IRS is growing at a ridiculous rate. Congress has not mandated the adequate funds to increase staff and equipment to keep up with the filing growth. The problem is only going to get worse. So don’t shoot the messenger!