IRS Law Blog

You just received a batch of IRS collection letters stating that your tax problem is “Urgent,” that the IRS might levy your wages, and, finally, that you should call the IRS immediately.

You consider doing what the IRS asked – picking up the phone and calling the IRS Automated Collection System (commonly known as “ACS”).  The day of reckoning cannot be put off any longer.

But the call to the IRS is not always that simple.

First, know that when you call, the IRS ACS agent on the other end is trained to immediately ask you a script of questions.

Here are the first questions you should expect to be asked when you call the IRS Automated Collection System:

1.     Your current address.

2.     Your telephone number.

3.     Where you bank.

4.     The name of your employer.

That’s right, before you can even get started in conversation, the IRS account representative is trained to extract financial information from you, including where you bank and work.

The purpose is to update the IRS’s database with bank levy and wage garnishment sources.

You are five minutes into the call, have disclosed valuable information, and received nothing back.  And the IRS is not done with its requests for information.

Expect the IRS account representative to next request that you provide a financial statement, which will include the amount of your income, a list of your monthly living expenses, the car you drive and what it’s worth, and the value of your house.  The IRS has specific forms for you to use for completing the financial statement disclosures, known as Form 433F (short form) or 433A (longer form).

The IRS will give you a deadline to call back and fax the completed Form 433F or 433A to them or to send it in by mail.  In my experience, expect the IRS to allow you between two and four weeks to get the financial statement in, although the time allotted varies and is often dependent on the personality of the IRS account representative.

Here’s the catch you now could be in:  If you do not provide the financial statement by the deadline, the IRS may want to levy your bank account or wages, using the very information you provided them at the outset of your first call.

And know that when you call back with the financial statement, you will not speak with the same person who handled your earlier call.  In fact, you will never speak to the same person twice when you call the IRS Automated Collection System.  That very nice and helpful person you spoke with during the first call could be replaced by a more aggressive agent taking your next call.

My recommendation is to be prepared to have the case resolved with your first call, and to have the IRS financial statement already completed and ready to go as your negotiation tool. The IRS may also ask for some supporting documents to verify the information on the financial statements, such as your last three months’ bank statements and statements verifying your auto and home loans.  This should also be ready when you make that first call.

With the financial statement, the IRS account representative will be able to negotiate a payment plan right then.  If you cannot afford monthly payments, the IRS has a financial hardship program, known as currently uncollectible status, where they treat your debt as uncollectible and do not require any payments.

If you owe under $50,000 and can repay it within 72 months, bear in mind that you may qualify for an IRS streamlined installment agreement, and the only information you should be required to provide is a bank account to permit the IRS to debit the monthly payment.

Every effort should be made to resolve your case with one phone call – that can be done if you know what to expect, have the information the IRS wants in advance, and are ready to negotiate.  Preparation and being ready in advance lowers the risk of IRS enforcement on your wages and bank accounts and increases your chances of a successful negotiation.  And make no mistake about it, the IRS appreciates you making their job easier. That’s a win for both sides.