Page 9 - January February 24 Report

Demystifying the
Collection Process
By Griffin Levy
The IRS has made it clear that the $80 billion in funding from the Inflation Reduction Act of 2022 is being put to work. With the money, the IRS has not missed a beat and has begun beefing up its civil collection enforcement division. Local collection agents, known as revenue officers, are being hired and trained, with a heightened focus on high-income taxpayers and unpaid payroll taxes.
were living in the days of the Wild West. There was no due process; the IRS was not required to give any notice to taxpayers before seizing property and appeal rights were after-the-fact. Taxpayers may have known they owed money to the IRS, but they didn’t know the IRS was coming. Congressional hearings on IRS collec- tion abuses made front-page news and resulted in the passage of
Revenue officers are the most well-trained IRS collec- tion agents. With proper notice, they have the power to seize a taxpayer’s wages, bank accounts, retirement accounts, and house. Revenue officers can also seize a business and force it to close.
“With the IRS putting the money received from Congress to work in collecting taxes, taxpayers should be well-advised on how to protect their property.”
the IRS Restructuring and Reform Act of 1998, giving taxpayers due process rights to slow down the IRS collec- tion machine.
To demonstrate the importance of collection due process rights in the defense of taxpayers, in 1998, the IRS sent more
In addition to expanding revenue officer enforcement, expect the IRS to jump-start sending collection letters from the comput- er-driven Automated Collection System (ACS). The ACS simplifies the IRS collection process, using artificial intelligence (AI) to utilize information in the IRS’s database, such as where a taxpayer works and banks. The IRS compiles data about a taxpayer from financial documentation it has received, such as a taxpayer’s W-2 (wages) or Form 1099 (interest). After giving notice, the ACS can match a taxpayer that owes money to the IRS providing informa- tion on where they work and bank.
The IRS’s power to levy is predicated on sending a taxpayer a Final Notice of Intent to Levy with Collection Due Process Rights. The IRS Final Notice of Intent to Levy with Collection Due Process Rights is the offspring of an uproar over old IRS collection tactics. Until 1998, the IRS collected unpaid taxes like taxpayers
than 2.5 million garnishments on liquid assets (e.g., wages and bank accounts) and made more than 2,200 seizures of real and personal property. By comparison, in 2018, with due process laws firmly on the books, the IRS made only 639,000 garnishments and 275 property seizures. The data also gives us a window into the mind of the IRS, easing taxpayers’ anxieties that the IRS is laser-focused on seizing their homes.
In reality, taking a taxpayer’s house is hard. It requires collec- tion due process, followed by high-level approval within the IRS, and then referral to the Department of Justice for a foreclosure suit. It’s more legend than reality. The truth of IRS collections is that they are primarily after “easier” revenue sources. For example, garnishment of wages and bank accounts. A noncom- pliant taxpayer can be brought to their knees quickly from the loss of wages, leaving them without any money to pay bills.
THE REPORT | January/February 2024 | CincyBar.org 9