Since our main office is located in Connecticut we have a fairly good pulse of what is happening in the local IRS Connecticut Collection offices. This article will discuss what is going on with the IRS collections update, and what any taxpayer that has a tax problem should do about it, as most other states are facing similar circumstances.
IRS Collections update overview
As soon as you or your business owes the IRS money, an account with the IRS is opened up by Automatic Collections Services (ACS). ACS will send you notices of your bill. With the IRS collections update, depending on what type of tax and the amount you owe, your case may be referred to a local IRS Collections field office and your case will be given to an IRS Revenue Officer to collect on. Historically if you owe back payroll taxes or owe over $100,000 in personal taxes, you are a prime candidate to have a Revenue Officer assigned to you because of this IRS collections update. In Connecticut, the IRS has Field Collections offices in Bridgeport, Norwalk, New Haven, Waterbury, Wethersfield and New London. All of them are under incredible strain to close out cases. This strain will only increase with this IRS collections update.
IRS Revenue Officer numbers way below proper number
For the past 5 years, every Field Office has been operating below capacity. The office hit the hardest by attrition and retirement, we believe, is Wethersfield which is operating at about 1/2 capacity. Quite simply, the IRS just isn't hiring new Revenue Officers and the old ones are leaving through retirement or promotions to other areas. In a lot of these IRS field offices, a Revenue Officer with 4 years of experience is still considered the new guy. As for Revenue Officers, their job is going from bad to worse due to the IRS collections update. Due to budget constraints, these already understaffed local collections offices will be downsizing. As a result, no new collections cases will be put into the pipeline (what the IRS calls the "queue").
The new cases a Revenue Officer receives this week will likely be the last one that will be assigned in a while because of the IRS collections update. Also, many Revenue Officers in the northeast (Connecticut, New York, New Jersey) are receiving back their cases that went into hold because of Hurricane Sandy. Because of the IRS collections update it's not just Revenue Officers, but also local Collections support staff such as group secretaries and the like, are also facing major cuts.
What does a downsized IRS field collections mean?
This means a few things in the short term: First, in those cases where we are waiting for a Revenue Officer to get assigned, it's going to take a while. Second, the Revenue Officers that are left are going to be very busy picking up cases from the ones that are leaving.
So is downsized IRS collections a good thing?
We think not. First of all, the IRS hasn't gone away. IRS problems haven't gone away. They will just now be serviced by national IRS collection centers — ACS. The job requirements to work at ACS aren't as high. The training is not nearly as extensive. The level of ignorance, if I can be so blunt, can be rather significant. The managerial oversight is not as robust. Basically, ACS can be very painful to deal with, and you will never speak with the same person twice.
Compare this with a local revenue officer. One person is assigned to the case, and because of this, they tend to be more accountable to taxpayers. Second, one of the things that get people to finally take action and solve their tax problem is when a Revenue Officer makes first contact by visiting a taxpayer at their home or place of business. If an IRS Revenue Officer came to your house, it is a very alarming action that compels people to finally do something about their tax problem. When ACS keeps all these cases no one will ever visit you in person so it is very easy for many taxpayers to continue to ignore the problem, letting it get bigger and bigger.
Third, ACS is not as highly trained or in tune with the facts on the ground. In Connecticut, the Revenue officers are well-aware of how bad the economy is, especially for the self-employed. Many Revenue Officers are aware of how costly it is to do anything in the State of Connecticut. The IRS collections update will affect other states as well. For instance, if reports are true, Texas is experiencing an economic boom, and Connecticut is mired in depression. These are extremely different collection circumstances that warrant different techniques.
Is there a good side to a low-staff IRS collection office?
Yes. Because of the intense pressures IRS Revenue Officers are under in order to close out cases and move their "inventory" along, we find that well-presented, reasonable negotiations are accepted. There is not a better time than right now to make an IRS debt settlement offer.