Sam Brotman, JD, LLM, MBA July 2, 2020 27 min read

IRS Revenue Officers and Strategies for Dealing With Them

IRS Revenue Officers

IRS Revenue Officers and Strategies for Dealing With Them: Part One

Introduction: About IRS Revenue Officers

IRS revenue officers are the most senior collections agents in the IRS.[1] IRS revenue officers handle those delinquent accounts that the IRS places the highest priority on, so much so that the government has assigned a local agent to specifically work the case in order to collect what is owed to the IRS. 

Generally, these individuals are highly trained and will incorporate an arsenal of tools and tactics in order to resolve the account in the favor of the IRS. They can retrieve third-party records through summons, contact your employer, show up at your home or work, and seize a variety of assets (wages, accounts receivable, bank accounts, brokerage accounts, merchant accounts, etc.) in order to satisfy your tax liability. 

Having a revenue officer assigned to your collection account is a serious matter and it is important to take that person and their collection efforts seriously. Failure to do so may land you on the bad side of the revenue officer and may make your life extremely difficult.

Dealing With IRS Revenue Officers

Many revenue officers are nice people and there some I would consider professional friends. However, I am under no illusions when I have to deal with a revenue officer. They usually have the upper hand when negotiating a resolution with the taxpayer and some take advantage of it. Some will use the threat of harsh collection tactics to intimidate the taxpayer into paying more per month than they may feel comfortable doing. Others can be deceptive. 

I do not mean to cast revenue officers in a negative light, as many of them are hard- working people who are just trying to do their job. However, there have been multiple instances of revenue officer abuse documented throughout the years and it is best to be vigilant when dealing with them.[2] 

If a revenue officer has been assigned to your case, it means that you are considered a high-priority collection case within the IRS (they usually do not send revenue officers after people with small balances or those who are low priority). As such, revenue officer cases can be more time-consuming and much more difficult to resolve. 

Generally, I recommend that taxpayers seek out the help of professional representation to deal with a revenue officer matter. However, I also realize professional representation is not an option for some people. As such, I wanted to take the opportunity to share some of the strategies that I have used throughout the years.

IRS Revenue Officers and Strategies for Dealing With Them: Part Two

IRS Revenue Officers Tip No. 1 – Be Aggressive in Getting Everything Ready Before the Revenue Officer Gets Involved

There are two things that an IRS revenue officer judges themselves on when it comes to their own job performance: how much money they can collect toward the satisfaction of the liability and how fast they can close a case out. 

From the taxpayer’s standpoint, the most important objective other than a successful resolution to your account. is to get them out of your life as soon as possible. No one likes the IRS looking over their shoulder and the longer that they linger, the more opportunity exists for them to make your life miserable. So do not let them.

If I call IRS Automated Collection Systems and find out that the account is being transferred into the field, then I work diligently with my taxpayer to make sure all our T’s are crossed and our I’s are dotted before the revenue officer even gets on the scene. This may involve getting any and all delinquent returns prepared ahead of time (or at least getting a jump on the process and having an update for the revenue officer when they arrive on the scene). 

This may also involve having a financial statement (433-A) drafted ahead of time and updated on a monthly basis for a few months until it is time to speak with the revenue officer. Trust me, I know it is a lot to deal with right up front, but it pays dividends in the end.

IRS Revenue Officers Tip No. 2 – Set The Tone During The First Call

Here is how I deal with IRS revenue officers. 

  1. I assess the taxpayer’s full situation including any and all contact with the revenue officer. 
  2. I get a game plan together in conjunction with my taxpayer’s goals.
  3. I devise a strategy for executing that game plan (all outstanding tax returns submitted and a financial statement completed within ___ weeks). 
  4. I call the revenue officer, introduce myself, and lay out the plan of how things are going to go. 

By taking control of the situation, I leave less room for the revenue officer to interject himself or herself into the game plan. If I leave things to the revenue officer, they may set an unreasonable or unworkable deadline or go on a fishing expedition for documents (more on this below).

I also appear proactive and already put myself in a good position with the revenue officer by letting them know that I am going to manage their case for them. They may add additional requests or let you know that your timetable is unreasonable, but at least I have made the opening offer and now have a platform to negotiate off of. This really helps.

IRS Revenue Officers Tip No. 3 – Get on the Revenue Officer’s Good Side by Making Life Easy For Them

Whatever your occupation, there are just some people who we encounter over the course of our chosen professions that make life difficult for us. They may turn in things that are substandard and require a lot of your time to make right. They may require constant follow up in order to get the things that you have asked for or miss appointments or deadlines without notifying you in advance. 

You may be one of these people to someone else, but absolutely do not be that person to your revenue officer. Getting on the revenue officer’s bad side is never a good thing. They will be generally less inclined to give you the resolution you are seeking and will make interactions with them more stressful and more difficult for you.

In addition, missing deadlines with the revenue officer can lead to harsh consequences. They can place a lien or levy you pretty quickly if you start to get out of line. Understand that they sometimes walk into these matters with a bias against you because of any past lack of diligence to take care of your non-compliance in the first place. 

Therefore, it is important that you do what you can to please the revenue officer. Make sure all your document submissions are well-organized and clearly labeled. Do not just throw things in an envelope and ship them to your revenue officer. Avoid faxing them things that are voluminous, which they are going to have to spend time organizing for their file (they hate that).

Generally, just make your dealings pleasant with them as IRS revenue officers usually have many harsh interactions with taxpayers and their representatives day-in and day-out. You will be glad you did.

IRS Revenue Officers Tip No. 4 – Follow up

IRS revenue officers generally have a lot going on. They have roughly 40 cases or so to sift through. Many of their cases, particularly non-filers, consume a lot of their time as they are left to chase assets, go out in the field to try and track these people down, and deal with many of the administrative headaches of working for the IRS. They may be just as busy as you are. 

Sometimes, even with as much organization and diligence as you put toward your matter, revenue officers drop the ball. They do not always return calls or are notoriously difficult to get a hold of or take an extremely long time to review documents. I sometimes get frustrated when a revenue officer places a tight deadline on me to get something done and then take their sweet time getting back to me. It is really aggravating and my clients tend to get agitated when these matters take a long time to resolve.

However, instead of taking frustration out on the revenue officer, I just politely and diligently follow up with them every few days or so. After several messages, they will eventually give me a call back and apologize for the delay. Whatever their reason, I just dismiss their non-responsiveness and am sympathetic toward them, which they appreciate. In addition, it puts them in a position of feeling bad for letting things drag, which has given me an occasional advantage in our future dealings.

The important lesson here is, despite any non-responsiveness; always continually follow up with your revenue officer to make sure they have everything and just to check on the status of your case. Be sure to document the date of each call in case you need it later (see below for Getting Tough), but be exceeding pleasant in each interaction. This will avoid any miscommunications and will also continually put the ball in their court to work toward a resolution. 

IRS Revenue Officers Tip No. 5 – Manage Your Expectations

One of my favorite IRS revenue officer sayings is that “the IRS is not a bank.” I find this slightly humorous in light of how many people have outstanding tax liabilities, but it also is a key takeaway about the mindset from which revenue officers approach their cases. 

IRS revenue officers are tasked with achieving the best possible resolution for the government, which means having the taxpayer satisfy their liability as soon as possible and/or squeezing as much money out of the taxpayer over the long run as they can without putting the taxpayer in financial hardship. 

Do not think for a second that they are going to sway from this purpose. In addition, revenue officers have a manager look over and approve all resolutions before they become final. If they slack in their job, they will hear about it from their managers.

The IRS has what they call “allowable living expenses”.[1] This is the standard of living that the IRS considers appropriate and fair for everyone to sustain their basic quality of life. Expenses that fall outside this standard, unless justified as necessary during the course of an investigation, are considered a luxury by the IRS. Vacations, gym memberships, investment properties, dining out expenses, and many other expenses that we may consider normal are not considered above the IRS’s priority as a creditor. This is a very hard fact for many taxpayers to come to terms with.

For example, one of the most important and difficult questions that I get from families with IRS problems is whether or not they are going to be able to keep their kids in their private schools or pay their college tuition while on an IRS payment plan. This is a difficult thing to hear, but the short answer is that the IRS does not consider these things to be necessary expenses. 

Much of the time they will give you a time period (approximately a year) to rid yourself of these expenses, but most IRS revenue officers are not going to budge from their position on these issues. There are ways around this (usually people need professional help to get there), but IRS tax resolution sometimes involves difficult choices on the part of the taxpayer.

The main thing that I want to communicate to you is that you need to manage your expectations going into the process of what the end result is going to be. Anything over what is absolutely necessary for you and your family to survive (based on these IRS standards), your revenue officer is going to want justification for. 

That said, tax resolution is a negotiation and a qualified representative can help guide you through some of these tougher issues (and give you a fair opinion of your chances for getting exactly what you want). However, for those handling their IRS revenue officer matters alone, I would advise them just to be prepared to make some tough sacrifices in order to satisfy the IRS.

IRS Revenue Officers Tip No. 6 – Knowing When to Get Tough

This is one of the most difficult things for me to advise you on how to do properly and effectively. Experience and knowledge of tax procedure have seasoned me throughout the years on when is an appropriate time to get tough with your revenue officer. 

The fact of the matter is that some revenue officers will try to take advantage of your weakened position and, if you let them, they will walk all over you. Some will go on a fishing expedition by requesting a ridiculous amount of documentation to substantiate the positions on your financial statement or for them to conduct their investigation.

Some will take a hard line position by insisting on good faith payment amounts or monthly installment payment amounts that are too difficult for the taxpayer to meet without them suffering financial hardship.

As I mentioned, it is always better to be nice to the revenue officer and maintain an amicable relationship. However, sometimes this is not always possible and some people just need to be put into check. First, think long and hard about what the revenue officer is asking and why it is unreasonable. Being able to articulate this and advocate for your position is the only way you are going to win this battle, so you want to make sure you have a clear leg to stand on. 

Do some basic research on tax procedure if you can (if you can cite a code section or the IRM then it is possible that they might back off). If the revenue officer does not seem to be backing down or you are truly at an impasse, then do not be afraid to get the revenue officer’s manager involved. The manager will tell you like it is and good ones will put their less experienced revenue officers in check. 

Use this tactic sparingly though. No one likes to get in trouble with their boss and you may strain further relations with your revenue officer by resorting to this tactic. Sometimes, however, they will respect you more and you will start getting better results because of it. Weigh the gamble and do not be afraid to get tough.

Professional Advice Goes a Long Way

My goal here was to assist you in achieving better results and to minimize the stress that an IRS collection matter can put on your life. No one particularly likes dealing with a revenue officer, but you can significantly reduce the headache involved by working quickly and effectively and by following some of the guidelines that I have shared. 

As I stated earlier, revenue officer matters can sometimes be particularly difficult to deal with and I would encourage you to contact me or your local tax professional if you get into trouble. Sometimes even a brief chat with an expert can greatly aid in finding a solution.

 

Negotiating Directly With the IRS

IRS revenue officers are notoriously difficult to deal with. Number one, IRS revenue officers only get involved in cases that the IRS feels are particularly serious. For individual liabilities, usually that has to be $250,000 or more. For payroll tax liabilities, the amount can be much smaller. If the business is continuing to accrue payroll tax liabilities, the revenue officers will step in much sooner.

Revenue officers are not like other collection agents. Collections is centralized into what is called ACS (Automated Collection Systems). It is like a big call center and agents work out of there and are initiating collections, taking collection actions, getting taxpayers on installment agreements and so forth.

Revenue officers are charged with locating taxpayers, locating assets, and getting as much money as they can in satisfaction of those liabilities. Revenue officers are usually very senior. They are usually trained, some of them have accounting backgrounds, and they are particularly good at finding taxpayers, locating their assets, and then taking them from taxpayers.

There are a variety of revenue officers. Some are revenue officers that work with criminal cases, some are revenue officers that work with principals of businesses or who work with difficult cases and so on. 

When you are dealing with a revenue officer, always know that you are going to deal with somebody who has a very superior knowledge base when it comes to collections.

Each revenue officer has 40, 50, sometimes more cases. They are dealing with collections issues all day, every day, just dealing with delinquent taxpayers over and over and over again. Not only do they understand a lot about tax, but they understand a lot about how this process goes. They have usually dealt with a variety of representatives and a variety of taxpayers, so they are very knowledgeable.

The trick to negotiating with a revenue officer is understanding what result you want to get at the beginning, so you start with a goal. For example, say I have a client who wants to pay $500 a month on their IRS liability. I know that I am working towards that end goal with the revenue officer. 

The first thing you do in a revenue officer case is to contact the revenue officer and tell them that you think you can agree to a solution and tell them what the solution is. You want to get a number in their mind

Right there, what you are doing is setting a target and you are setting an expectation with the revenue officer that this is the amount that you are going to resolve the case for. Depending on what the amount is, the revenue officer may not immediately agree, but at least you have created the expectation in their mind. 

The second thing you should do is gather all the things the revenue officer is going to request. The revenue officer may send you a short list or a laundry list, but in working towards the financials and in developing your financial statement, you know what your target is. 

Revenue officers are people. You get good revenue officers, you get bad revenue officers, but you will have more success than not by taking this negotiation tactic. What you are doing is creating a goal and then you are leading the revenue officer along towards satisfaction with the goal.

If negotiations totally fail with the revenue officer, you want to exit in the best way possible. You can go to appeals to negotiate an installment agreement or another collections resolution. You can submit an offer in compromise. You can talk to the revenue officer's manager, but the goal is that you are trying to maintain a good and fluid relationship with them. 

You are trying to get on their good side and make their life as easy as possible. That will lead to the biggest avenue of success when you are dealing with revenue officers.

 

 

[1] http://www.irs.gov/irm/part20/irm_20-001-001r.html#d0e1042

[2] http://www.irs.gov/irm/part20/irm_20-001-001r.html 

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Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law

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