10 Frustrating Things You Can Expect in Dealing Directly with the IRS

Posted 3/15/2009 1:06:04 PM

Before you try to resolve your Internal Revenue Service back tax liability on your own, you should be mindful of the time and frustration you will likely experience in dealing with the IRS. Although you cannot be totally shielded from some of the frustration (e.g. see Item 1 below), a competent representative will go a long way to mitigate most of the frustration you would likely experience if you dealt directly with the IRS to resolve your tax matter.

1. No Contact Made by Representative

Although you may have obtained representation, the IRS will oftentimes contact you directly. When you inform the IRS that you are represented, do not be surprised if the IRS representative informs you that your representative has not made contact with them. While sometimes this may be true—e.g. early in the representation before you return your signed IRS Form 2848, Power of Attorney—oftentimes it is just a result of poor record management by the IRS.

If this happen to you, request the IRS representative’s contact information (name, IRS identification number, telephone number, and fax number), and then instruct the IRS representative that you have representation. Also, let the IRS representative know who your representative is and that your representative will be in contact with him or her shortly. Do not provide any additional information to the IRS representative even if requested. Thereafter, contact your representative and inform him or her of what occurred. Your representative can take the appropriate steps thereafter on your behalf.

2. Lost in the Mail

Although the IRS is not to contact you via telephone after you hire a representative, you will continue to receive correspondence from them in the mail. The IRS should also send a copy of this correspondence to your representative, but oftentimes it seems to get lost “in the mail.” Thus, to ensure that your representative is properly notified of any information provided to you by the IRS, you should immediately forward to your representative a copy of any IRS notices that you receive. This ensures that your representative remains informed as to what the IRS is doing or threatening to do regarding your IRS back tax liability.

3. Surprise At-Home or At-Work Visits

An IRS representative may show up at your home or place of business to confront you about your back tax liability. This may occur if you are missing many tax returns or if you owe the IRS a substantial sum of money. Typically, the IRS representative is a Revenue Officer assigned to your account.

In this situation, you should request the IRS representative’s identification number and contact information and inform him or her that you have representation to assist you in resolving your tax problem. Inform the IRS representative that he or she is to communicate solely with your representative. You need not answer any other questions. Once the IRS representative leaves your location, immediately contact your representative and inform him or her of the encounter. Your representative can take the appropriate steps thereafter on your behalf.

4. Drowning in Documentation

One of the most frustrating aspects of dealing with the IRS is to have to respond to multiple document requests. Before the IRS will accept your claimed financial situation, they will require that you substantiate your income, expenses, and assets by providing written proof of each. Unfortunately, there is very little that can be done to stop the IRS from making multiple requests for information.

However, to mitigate this headache, prepare before hand. First, go to your local office supply store and purchase some file folders. Label one file folder “Income”, another “Expenses”, and another “Assets.” You can then create additional folders for any sub-categories you want to track within these three broad categories. For example, you may want to track income by type, expenses by type or assets by type, or you may want to track each category by month. After you have completed your filing system, place each check stub, statement, or other financial document you receive into the appropriate folder. Your filing system should be kept in a semi-secure area, such as within a file cabinet. Maintaining your filing system will keep your information organized and easily accessible in the event that the IRS does request your financial information.

5. On Hold Classical Music

If you have ever called the IRS, you know that they love their classical music. You probably also know that the IRS has a very limited collection of classical music because the same songs seem to rotate over and over again. Because of the IRS wait times, you probably know these songs by heart.

The IRS explains that their hold times are just the result of being extremely busy. We suspect that the IRS just loves to make you wait. In any event, you will need to have patience and fortitude when calling the IRS because you are probably going to be put on hold for a very long time, while listening to soothing classical music to pass your time. Please make sure you are prepared to wait before calling the IRS.

6. The Computer System Will Crash or Prior Telephone Call Notes Will Be Lost

This item oftentimes goes hand and hand with the On Hold Classical Music discussed above. After finally getting through to an IRS representative, do not be surprised if you hear, “We’re sorry, but our system crashed and we cannot access your records at this time” or “We don’t have any record of you calling in before.”

Our experience has been that the latter response generally seems to occur after we have previously gotten an IRS representative to agree to certain aspects of a client’s case. It will seem as if all of your prior efforts to resolve your case just got flushed down the drain and you will need to start over. As you can imagine, either of these comments can be very frustrating considering the amount of time and effort you would have already put in to resolve your case.

7. Miscalculation

The IRS’s internal computer system is slow and prone to miscalculations. Thus, it is very important that you conduct a real time calculation while communicating with the IRS. Although your calculations may not agree dollar-for-dollar with what the IRS calculations are showing, at least you will have comfort in knowing that the IRS is not overstating your income or understating your expenses. When you and the IRS agree on an amount, make sure you write it down and keep track of each amount as the conversation proceeds. You should keep the agreed upon income amounts in one column and the agreed upon expenses in another column, so that you can total up each column when you are done.

After going through all of your income and expenses, the IRS representative will calculate whether you have a positive or negative cash flow. You can also calculate your cash flow by subtracting your total expenses from your total income. If your calculated cash flow does not match that of the IRS, you should ask the IRS representative to confirm each income and expense amount included in his or her calculation. If there is a discrepancy, it is very likely that the IRS representative mistyped an amount or did not properly “check a box” in their system to indicate that a particular expense was allowable.

If after this review, your cash flow amount and the IRS representative’s cash flow amount are different, you can request an independent or managerial review of your cash flow financial statement. This will ensure that a third party is reviewing the form for all errors and mistakes. If the independent or managerial review still fails to address the discrepancy, you should request an appeal. The IRS representative will provide further instructions on filing an appeal.

8. Extending the Collection Statute Expiration Date

The IRS has 10 years from the date of your assessed tax liability to collect on the liability, including any associated penalties and interest. If the IRS fails to collect on your tax liability within this timeframe, the balance of your tax liability will expire and you will no longer be obligated to pay the IRS. The date associated with when your tax liability is set to expire is called the Collection Statute Expiration Date (CSED).

The IRS will often attempt to get you to extend the CSED. They will do this by requesting that you sign a waiver to the Collection Statute Expiration Date (IRS Form 900) as a condition of approving your tax resolution. They may also tell you that they are not willing to resolve your tax liability unless the waiver is included. If you refuse to sign the waiver, the IRS may threaten to continue enforced collection against you (e.g. levies on wages, bank accounts, etc.).

Fortunately, the IRS cannot require you to sign a waiver as a condition to resolving you tax liability. Also, the IRS can only ask for a waiver in connection with an Installment Agreement and must inform you that the waiver is not mandatory. So, if an IRS representative is pressuring you to sign a waiver, ask to speak with that IRS representative’s manager. If the manager does not remove the waiver as a condition of approving your Installment Agreement, request an appeal.

9. Eternal Review

On occasion, the IRS has placed a taxpayer’s account into what seems like eternal review. After you contact the IRS and provide them with all of our information, they may instruct you that your resolution needs managerial approval and will tell you to call back in 10 to 15 days. After the appropriate time, you call the IRS back only to be instructed that your resolution is still awaiting approval, and to call back in another 10 to 15 days. After the appropriate time, you call back again only to be informed again that your resolution is still awaiting approval, and that you should call back in another 10 to 15 days. This can go on for months, which will seem like an eternity.

If you suspect your case is in “eternal review”, contact the IRS and ask for a status update. If the IRS states that it is still awaiting managerial approval, request a call back from that IRS representative’s manager. The IRS manager is required to contact you within 24 hours. If the IRS manager fails to return your call, request a Taxpayer Advocate Assistance Order. The IRS is then required to either immediately address the underlying concern or forward it to the IRS Taxpayer Advocate Service for mediation.

10. Massive Confusion

This last one will surely make you frustrated. You contact the IRS regarding your account, but the IRS representative has no idea who has been assigned to handle your account. Has it been assigned to IRS Collections? Or, has it been assigned to an IRS Revenue Officer? Who knows? You are then provided an 800 number to another department who may have been assigned to handle your case. So you call, sit on hold for a lengthy period of time and are then told that your case is not in their department, so you are directed to another department, and so forth.

As you can imagine, no one is immune to the frustrations that occur in dealing with the IRS. However, a competent tax representative will have experience in dealing with these situations. They are also trained to track down who it is they need to deal with in order to resolve your tax liability. So, you do not have to bear this frustration. All you have to do is remain patient while your representative jumps through the bureaucracy to try to get you the tax resolution you deserve.