As you put the final touches on your tax return, remember that today’s IRS is nastier than ever when it comes to dealing with people they believe have not paid their fair share.
Don’t be fooled by the press releases from the IRS claiming that they are kinder and gentler. Those of us who fight the IRS every day know this is not true. In fact, if you have a tax problem, you can expect there to be more heat, not less, because of these three new policy changes. That’s because the US Treasury is desperate for cash and the IRS has been given marching orders to get tougher when it comes to collecting old debts.
The IRS has three new and severe methods they can now use to collect debts:
New Revenue Officers
The IRS has hired many new and forceful Revenue Officers. These are the field agents who come to people’s home, businesses or maybe even to a Rotary Club meeting to find delinquent tax payers and their money. The IRS has been authorized to hire hundreds more across the country. These new Revenue Officers are being assigned to smaller cases. The newbies to the IRS Collections Process tends to become overly aggressive because they think that this will impress their superiors and get them promotions quicker.
Seizures of Personal Residences
For the first time, taxpayers’ primary residences are up for grabs by the IRS. In a previously unheard move, the IRS is now willing to seize a taxpayer’s primary residence if they feel there is enough equity in the house to satisfy the tax obligation. Taxpayers facing this situation need to know, though, that the IRS can be convinced to back off if they can offer a reasonable collection alternative.
Seizures of Retirement Accounts
In the past, the IRS would not seize retirement accounts, but that too has changed. The IRS is getting bolder. IRAs are no longer off-limits. They can and will happily wipe out a taxpayer’s entire retirement savings if they feel they can collect enough money. In that case, to add insult to injury, the taxpayer will also then be responsible for taxes on the money the IRS seizes, although they will not have to pay early withdrawal penalties.
The moral here is that anyone owing money to the IRS needs to be proactive and not wait for the IRS to come to them. We’ve had clients who came to us after the IRS has pursued them and it makes helping them a lot harder. If someone comes to us early in the game, there are many more options open. We have time to structure the best deal. We have time to plan. The best piece of advice I can give is this: Don’t ignore the IRS’ attempts to reach you. Open all mail from them as soon as you get it. Ignoring them won’t make the matter go away.
The IRS actually has to send you a certified letter before they levy or seize your property, but oftentimes, people refuse to pick up those letters. And when the IRS takes aggressive action against them — such as wiping out a bank account or levying their wages – they were surprised.
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