An Overview of the IRS Tax Collections Process for Non-Tax Lawyers
2. Who is Afraid of the Big Bad Wolf? – About the IRS
So now I want to talk a little bit about the IRS itself. The IRS itself, what I commonly say about the IRS is, “Who is afraid of the big bad wolf?” It’s the IRS has mystique about them. They are viewed as this big albatross of a government agency with unlimited power and they have the ability to put people in jail or take their houses away or any number of really negative nasty connotations.
This culture of fear surrounding the IRS has been perpetuated number one, by the tax resolution industry which tries to use fear marketing to target clients and then the other really by the IRS itself.
In actuality, the IRS is a small organization that has very limited resources and relies on putting fear in the people to motivate them to action. The IRS is trying to solve the problem about $85 billion tax gap. And that tax gap is a result of people either not filing returns or not paying what they owe.
In order to help close the tax gap, the IRS has built a little bit of fear surrounding audits and surrounding collection activities, trying to motivate people to take action to solve their tax problems. Or in terms of the IRS, to pay the government more money which is an important thing for them, obviously.
To the IRS, like most large organizations, it relies on systems and policies and procedures and has an order of operations. And one of the things that we do as tax attorneys is we master the order of operations. We know not only who the person is that we’re dealing with but also that person’s manager and their manager. And we kind of help our clients navigate through tax procedure and navigate through the IRS system as effectively as possible.
Because the IRS is a rule-based organization, they have different frameworks in place. Some of them are statutory. A lot of them can be found in the internal revenue manual which is the governing document for IRS collection officers and examination personnel. That is a very useful tool, although very technical. You will find a couple of references in this presentation to that and then also, with some guidance that’s been given by the treasury which has probably adds to the scope of non-tax person but is still necessarily important to the IRS.
Mostly what I want to dispel is the fear surrounding the IRS. There’s no reason to be afraid of the IRS. Problems, especially tax problems can be dealt in a very orderly and logical manner depending on the steps you take and there’s always a quick resolution.
There is always a resolution. It may not be the quickest resolution but there’s always light in the end of the tunnel with the IRS problem. No problem isn’t solvable. In fact, the way the system is setup is it’s setup to help people solve their problems. Although it can be difficult at time to get the right solution, it is very easily navigable if you have some sense of what you’re doing.