How frequently can the IRS ask you for a collection information financial statement?
To resolve most IRS collection cases, the IRS requires a disclosure of your finances. If you think about it, that’s fair. You owe the IRS money, and they want to know how – and if – they can get paid. The IRS uses what is known as a collection information statement to find out what you make, how much you spend, what you own and who you owe.
The collection information statement is important – it actually leads to resolution with the IRS. Whether you are seeking an offer in compromise, a monthly payment agreement, or financial hardship, a properly completed financial statement is almost always necessary to IRS resolution. (The collection information statements are also known as IRS Form 433A, Form 433B and Form 433F.)
But what if you recently provided the IRS with collection information statement, and then they ask again for a new one?
Completing an IRS financial statement takes time. It is not something you want to do twice.
Here are three examples where the IRS could make repeat requests for financial statements:
1. You submitted an offer in compromise, and six months have passed since it was submitted, and your offer is just starting to be investigated (not unusual in the IRS world). The financial statement you provided with the offer is now six months old, and the offer investigator sends you a letter requesting updated information – new paystubs, new bank statements, a new profit and loss statement from your business.
You worked hard to provide that information six months ago. Should you have to do it again?
2. Or you are working with an IRS Revenue Officer, and you have not heard back from the RO in months. Maybe the Revenue Officer has higher priority cases, maybe he has been on leave, or maybe a new Revenue Officer is assigned to your case – whatever the reason, your case has been sitting. When the Revenue Officer gets back to working the case, he wants the collection information statement updated. But you gave it to him five months ago. That’s double work for you, and for the IRS.
3. Maybe you had a payment plan with the IRS, and you defaulted on the agreement. IRS wants a new collection information statement to give you a new payment plan – but you gave them one within the last 12 months when the installment agreement was set-up.
But IRS procedures make the information on a collection information statements valid for 12 months. If you have provided the IRS a financial statement within the past 12 months, you should not have to do it again.
Here’s the support (sorry this is going to be a little long-winded, but I am going to quote directly from the Internal Revenue Manual, which is the IRS internal guidebook):
Internal Revenue Manual 220.127.116.11(4) states:
“Collection issues that have been previously addressed during a balance due investigation by field personnel in the preceding 12 months will not be re-examined unless there is convincing evidence that such reinvestigation is absolutely necessary…If the previous revenue officer has completed a full CIS analysis within the last 12 months including verification of assets, income, and expenses and has made a determination of the Fair Market Value of assets, equity in assets and monthly ability to pay, the information should not be reinvestigated unless there is reason to believe the taxpayer’s situation has significantly changed.”
Another section of the Internal Revenue Manual (IRM 18.104.22.168) reiterates this, stating that in regard to collection information statements that “if during the investigation of the case, the information becomes older than 12 months, update the information…If there is reason to believe that the taxpayer’s situation may have significantly changed, secure a new CIS.”
To sum this up, the IRS’s internal guidebook protects repeat financial disclosures and verification over a period of 12 months provided there is no reason to believe that your situation has significantly changed.
And bear in mind that the IRS offer investigator or Revenue Officer has no ill will in requesting this information – they are doing their job. You always want to be very respectful in requesting the IRS to reconsider a request for information. But in the situation of repeat financial disclosures within 12 months, there needs to be a compelling reason for the IRS to reinvestigate your financial situation.