OVERVIEW
Former insiders, tax experts and regular taxpayers say the IRS gets a bad rap for just doing what it was set up to do: collect taxes.
Just a bad rap
You may think you know all there is to know about the Internal Revenue Service. Maybe you have some strong opinions about the agency that told you the amount of taxes withheld from your wages was insufficient, and you now have to pay more.
Former insiders, tax experts and regular taxpayers say the IRS gets a bad rap for just doing what it was set up to do: collect taxes.
While the purpose of the IRS is to ensure a flow of revenue to the U.S. government, taking a look at a few sometimes overlooked details about the agency might help you see it in a new light.
They are people, too
Before becoming a partner in Los Angeles-based Advocate Tax Group LLC, which specializes in tax debt resolution, business consulting, financial analysis and cash flow management, Martha De la Chaussee worked for 25 years as a collection revenue officer for the IRS and says one of the first things you need to know is that you don't have to deal with just one IRS agent. There are plenty of IRS employees who may help resolve your issues.
“For example, if you call the telephone number on a letter or notice and do not get the results you want, all you have to do is ask for the supervisor, group manager or even the person above them,” De la Chaussee said, adding, "IRS employees are human. They are not robots that just want to take your money."
“They are doing a job and must follow the guidelines established in dealing with taxpayers,” De la Chaussee said. “Thus, if any IRS employee attempts to threaten you without cause, or (takes) any other verbal or non-verbal actions that you feel are abusive, contact their immediate supervisor.”
If taxpayers don’t get results at that level, they can contact their territory manager or report the individual to the inspector general of the U.S. Department of the Treasury, according to De la Chaussee.
They understand
“Government employees are there to assist you with your tax issues,” De la Chaussee said. “Employees should provide you with potential consequences and cures to tax problems. Don’t be afraid of these employees. They are there to help you, as well as do their jobs.”
No one knows that better than Scott Mitchell, who managed to work his way out of debt with the IRS by paying attention to information provided by its employees.
Mitchell now writes an advice blog called “Debt Kid.”
“I had to meet with an IRS agent in 2007 to settle a back tax issue for my business,” Mitchell said. “At the time I was about $200,000 in debt and about to file bankruptcy, so I wasn’t exactly flush and had creditors down my back 24/7.”
Mitchell says the IRS ended up being his favorite creditor. The agency allowed him to set up a payment plan for his debt and was very understanding of his dire financial situation.
“I was just 100 percent open and honest with them,” he said. “Meet them in person if you can. It brings a human element to their job that I think the agent appreciates, and will actually be better for you than just dealing with them over the phone or mail.”
De la Chaussee said that even when your assets are under levy, garnishment or seizure, options are available to help you.
“I cannot give you the answers for every type of situation," De la Chaussee said. "That is a question for a tax attorney, CPA or enrolled agent. But there are processes, procedures and legal means to redeem seized assets. (And) no, it is not bankruptcy filing.”
They know you're not perfect
Everyone makes mistakes. If you’re an entrepreneur who must juggle personal and business income tax reports, those mistakes can be very costly. But Matt Gouaux of the San Francisco-based law firm, Tucker Guss, says the IRS has a program designed to help employers fix problems related to retirement plans. It’s called the Employee Plans Compliance Resolution System.
“It is not uncommon for an employer to unintentionally violate one of the many requirements to keep a retirement plan ‘qualified’ under IRC 401(a),” Gouaux said. “For example, an employer might not inform an employee that they are eligible to participate in the employer’s retirement plan. An error such as this one can put a retirement plan at risk of losing its qualified status if the error is discovered by the IRS during an audit.”
Through the EPCRS program, Gouaux says, the IRS permits employers to voluntarily correct common missteps related to retirement plans, sometimes without IRS approval.
“The EPCRS program also allows employers to correct problems discovered during an audit,” he said.
The agency's quarterly newsletter, “Employee Plans News," keeps employers and employee benefits professionals informed of new developments, he explained. It also offers practical guidance on how to keep retirement plans in compliance with laws and regulations.
“The IRS also frequently holds free ‘phone forums,’ which are teleconferences on various tax topics,” he said.
The exception
While audits are rare, if you find yourself faced with one, asking for help from the IRS may not be your best move, says De la Chaussee.
"Make sure you research, ask questions and only hire professionals who are knowledgeable with audits or tax collection matters," De la Chaussee said.
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