Five Common IRS Debt Collection Forms

Posted 6/1/2009 12:56:18 PM

1. Form 911 – Request for Taxpayer Advocate Service (TASTAS) Assistance

The Taxpayer Advocate Service (TAS) is an independent organization whose function is to provide assistance to taxpayers when the normal methods of resolution within the IRS fail. Form 911 is the form that is used to summon the help of the TAS. Form 911 requires basic contact information of both the TAS and the representative (if any), a description of the problem the taxpayer is experiencing, and a description of the IRS tax relief sought.

The TAS also requires that one of the following criteria be met before they will agree to take the case (taxpayer is supposed to check the box on Form 911 that applies):

• Taxpayer experiencing (or about to experience) economic harm
• Taxpayer facing an immediate threat of adverse action
• Taxpayer will incur significant costs if relief is not granted
• Taxpayer will suffer irreparable injury or long-term adverse impact if relief is not granted
• Taxpayer has experienced a delay of more than 30 days to resolve a tax account problem
• Taxpayer did not receive a response or resolution to the problem or inquiry by the date promised
• A system or procedure has either failed to operate as intended, or failed to resolve the taxpayer’s problem or dispute within the IRS
• The manner in which the tax laws are being administered raises considerations of equity, or has impaired or will impair the taxpayer’s rights
• The TAS determines compelling public policy warrants assistance to an individual or group of taxpayers

Completing the Form 911 is only one of the ways available to request TAS involvement. The aggrieved taxpayer may also simply write a letter or call the toll free telephone number, which is (877) 777-4778. If TAS contact is made telephonically, the TAS representative will go through all the same information/questions on the form. The IRS is supposed to suspend its collection activities while the case is in review with the TAS, but this does not always happen. The signing of Form 911 allows the IRS to suspend the Collection Statute Expiration Date (CSED), but it does not automatically give the taxpayer additional time to comply with IRS deadlines.

2. Form 433-F – Collection Information Statement

The Form 433-F is typically the form used by the IRS when taking a financial statement for purposes of setting up an Installment Agreement (IA) or placing a back tax account in Currently Not Collectible (CNC) status. It is a streamlined version of the Form 433-A, which is typically used in connection with Offers in Compromise (OIC). The Form 433-F requires information regarding bank accounts, investment accounts, real estate and other assets, credit cards, income, and expenses.

It is usually preferable to give financial information over the telephone as opposed to mailing or faxing Form 433-F to the IRS. However, the IRS is more likely to request that an unrepresented taxpayer complete the form.

3. Form 9465 – Installment Agreement Request

Form 9465, Installment Agreement Request, is just what the name suggests. It is typically sent in the same correspondence along side a balance due notice, giving the taxpayer an easy way to request a monthly payment plan.

Form 9465 is deceivingly simple. To the uninformed taxpayer, it would appear that the IRS accepts whatever figure is entered on the form. However, if the balance owed is over $25,000, there is no point in completing this form because the request will be rejected. The IRS will want a full financial disclosure.

Furthermore, a taxpayer filling out form 9465 in its entirety will give the IRS more information than the taxpayer is legally required to give. Section 5 of the form asks for the name and address of both the employer and the banking institution. Taxpayers are not required to reveal levy sources if their aggregate assessed balance is less than $25,000.

Section 11 of this form can also been seen as a trap to the unwary. It asks for the bank routing number and account number for purposes of setting up electronic fund withdrawal. This could be misconstrued as mandatory, although it is only one of the payment options that are available.

4. Form 433-D – Installment Agreement

Form 433-D is a little more rare, because the IRS is usually willing to set up an Installment Agreement (IA) without going through the formality of completing and signing the form, which is a document that formalizes the IA. There is no legal difference between an IA that is set up over the telephone and an IA that is set up using Form 433-D.

If Form 433-D is ever required, it is usually in connection with cases assigned to Revenue Officers (RO). An RO is more likely to require completion of Form 433-D because RO cases typically involve higher balances and more scrutiny and work on the part of the IRS. If the IRS has invested substantial time and resources in arriving at an agreement, then it would prefer to make the agreement as formal as possible and create a paper trail just so there is no discrepancy as to the terms.

There are a couple things to watch out for on the Form 433-D. One is the increase/decrease term. ROs like to try to increase the payment amount after a debt retires. Of course, this is not always a bad thing; it can sometimes be used as a bargaining chip by the taxpayer (or the taxpayer’s representative) to get a lower initial payment. It is common for people to foresee improvements in their financial situation down the road. ROs may also try to pencil in additional terms and conditions, and there is a box specifically for that purpose.

5. Form 2159 – Payroll Deduction Agreement

There are three primary IA payment options: mail in a check, electronic debit, and payroll deduction. The taxpayer can initiate the electronic debit option on either Form 9465 or Form 433-D. The payroll deduction option requires completion of Form 2159.

There are three parts to Form 2159: the Acknowledgement Copy (to be returned to the IRS), the Employer’s Copy, and the Taxpayer’s Copy. The same potential traps are present on this form as are present on Form 433-D, namely the “increase/decrease” clause and the “additional terms” box. The front page of each copy is identical. However, there is an instructional second page to each copy, with each containing different information.

• IRS Copy contains a list of internal codes and number designations.
• Taxpayer’s Copy contains some rather redundant instructions on how to fill out the form and what to do with it after it is completed.
• Employer’s Copy contains instructions to “continue to make payments unless the IRS notifies [the employer] that the liability has been satisfied.” This could obviously be prejudicial to the taxpayer. First, the likelihood that the IRS will notify the employer in a timely manner is not very high. Second, it could be potentially very difficult to cancel the payroll deduction agreement if the taxpayer’s financial situation changes and he is unable to continue with the IA.