An Overview of the IRS Tax Collections Process for Non-Tax Lawyers
11. What Happens When the IRS Cannot Collect on a Taxpayer
ACS will try to collect an account for a period of time. If ACS is unsuccessful in collecting the account, it generally does one of two things:
Number one is ACS will refer the matter out to the field for further investigation. They will send it to a Revenue Officer, who I will explain in a minute.
When ACS gets frustrated or when the balance reached a certain dollar amount, they’ll kick it out to a Revenue Officer to, perhaps, pursue some more localized tactics for collections.
The other thing ACS can do is ACS can deem the account non-collectible. There’s two ways principally that ACS deems account non-collectible:
Number one is if the taxpayer who writes financials showing they can’t pay the IRS any money, if they cash in and cash out every month, then there’s no money left over for the IRS after their basic living expenses and the IRS will put them into a non-collectible status.
The second way that ACS will assign account as non-collectible is if they can’t find the taxpayer. If they’re doing an asset investigation and they try and pull sources from the taxpayer based on their last home address, then they may not be able to find the taxpayer.
That’s important to realize because if you have a taxpayer that has been off the grid for a period of time, then ACS will probably have put the account in non-collectible if they’ve got no document and sources of income on file or any other information that would point the IRS to them.
Understand that ACS has limited resources. Once they conducted a limited investigation, if they don’t find any information, then they’re going to move on to the next account.