Part 1 of 4
Let’s face it, dealing with the Internal Revenue Service can be a frightening experience. The IRS has earned a reputation for instilling fear and angst in taxpayers since its inception in 1862. For well over a century people just like you have received dreaded letters from the IRS, and after reading them been left with more questions than answers. Typically, taxpayers take those questions directly to the IRS in search of answers. Taxpayers expect to be able to rely on the answers provided by the IRS, but unfortunately, you may receive answers that are simply untrue.
Fact: The IRS has no obligation to operate with complete honesty or transparency.
To be frank, the IRS is not on your side. It’s a common misconception that as a governmental agency, the IRS would work for the benefit of all taxpayers. In fact, the exact opposite is true. The IRS will employ every option available to collect tax revenue. When you are in their crosshairs, they consider you the prey.
The IRS agent can request information under false pretenses and communicate in a misleading fashion that serves to improve their collection efforts. Often, an IRS agent will threaten greater or accelerated enforcement action, or accelerated actions in an attempt to manipulate you. The most common tactics include:
- threatening to garnish wages
- threatening to empty bank accounts via a levy
- threatening to empty retirement accounts
- threatening to file tax liens against your property
- threatening to ruin your credit
While these enforcement actions can be taken at some point, mentioning them is a common bullying tactic that often scares taxpayers into acting outside of their best interests.
When presented with nothing but bad options, it is certainly understandable why you may accept anything that the IRS agent tells you as fact. Unfortunately, they operate subjectively with each taxpayer and are not governed by any rules or regulations that require complete transparency and honestly. IRS agent commonly communicate half-truths and withhold relevant information.
The first line of defense against these tactics is awareness and knowledge. You are now aware of their approach, which helps you know not to simply accept what the agent has to say. Plus, you can be knowledgeable of what steps are legally required in their collection efforts so that their threats are not effective.
Here is the list of notifications that must be administered before the IRS can attempt active collection efforts such as garnishment or levy.
|Required IRS Notifications before “active” collections efforts can be started|
|CP 14 – This is the 1st notice that indicates “Balance Due”|
|CP 501 – This is 2nd notice that indicates “Overdue Balance”|
|CP503 – This is 3rd notice that indicates “Important: Immediate Action Required”|
|CP 504 – This is the 4th notice that indicates “We Intend to Levy Certain Assets”|
|CP90/CP297/Ltr1058 – This is the final notice that indicates “Intent to Levy & Notice of Your Right to a Hearing”|
Each of these notices require the IRS to give you 30 days to respond. It takes a minimum of 5 months from your first letter received from the IRS before they can take any “active” enforcement action against you beyond just correspondence. Further, the IRS will send your final notice via a certified letter. Therefore, at any point prior to receiving certified mail, you should not allow the IRS to bully you into a decision.
Lastly, although the process takes at least 5 notifications, it is not in your best interest to ignore letters from the IRS. Even if you refuse to sign for a certified letter, they can still pursue enforcement action against you 30 days after the letter has been sent. In many cases, that enforcement action may not begin immediately; however 30 days after notice has been sent, the IRS has the right to seize assets for up to 10 years.