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Collection Division is alive and well


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The collection division at the IRS has not suffered the lack of funding and diversion of priorities which has plagued the rest of the IRS.  Historically, the audit division would propose adjustments, and if the taxpayer ignored repeated notices, then the adjustment would be turned over to the collection division for action.

The general position of the collection division would be that the taxpayer had ample opportunity to address the situation when it was tied up in the audit division, and that the taxpayer would simply have to pay up.  They would not refer the matter back to the audit division.  At least that was their general position.

Things have now changed, it seems like.  Taxpayers ARE responding to notices from the audit division, but the IRS is so bogged down with stimulus priorities, advance child credit priorities, and general lack of funding that they are simply not addressing correspondence or anything else from taxpayers.  But the delay does not stop the collection division from aggressively pursuing money, whether the taxpayer owes it or not.

Can anyone recommend a good strategy to deal with this on behalf of taxpayers who are legitimately trying to get their accounts settled while being beat up by the collection division?

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Ask for a "collection hold" while the IRS processes your client's return/payment/response/whatever's sitting in their mail pile. Use the phone/fax number on your client's notice; although, phone numbers have mysteriously disappeared lately. So, call the Practitioner Priority Line to ask for the hold.

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Thanks Lion.  The "collection hold" sounds like good strategy.  However, the collection hold must be communicated.  Calling the IRS at the number on the client's notice or the Practitioner Priority Line is not a viable strategy these days.

Your response is appreciated, as usual. 

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On 7/21/2021 at 7:06 AM, Corduroy Frog said:

The collection division at the IRS has not suffered the lack of funding and diversion of priorities which has plagued the rest of the IRS.  Historically, the audit division would propose adjustments, and if the taxpayer ignored repeated notices, then the adjustment would be turned over to the collection division for action.   Not true.  Congress has proposed $8B to hire 85,000 new RO's over the next ten years.   Also, collections was mostly closed down until 10 days ago. ACS letters went out but there was little collection action.  There were some exceptions where the statute of limitations was involved.

Audit results do not go into collections until a lengthy procedure, prescribed in the IRM is followed. This procedure can include an appeal and a petition to the tax court.  It could be a year before the audit assessments reach collections.  

The general position of the collection division would be that the taxpayer had ample opportunity to address the situation when it was tied up in the audit division, and that the taxpayer would simply have to pay up.  They would not refer the matter back to the audit division.  At least that was their general position. 

 Absolutely not true.  Collections for those years under examination are suspended while an audit is ongoing.  No taxpayer has to simply pay up.    They only have  what they can afford to pay according to their current income and allowable living expenses, which sometimes means no payment at all.  If there are large assets involved it does get somewhat more complicated.

Collections and examinations are totally separate and have no communications or referrals from one to the other.

Things have now changed, it seems like.  Taxpayers ARE responding to notices from the audit division, but the IRS is so bogged down with stimulus priorities, advance child credit priorities, and general lack of funding that they are simply not addressing correspondence or anything else from taxpayers.  But the delay does not stop the collection division from aggressively pursuing money, whether the taxpayer owes it or not.

No one should have any problem communicating with the examination (audit) division.  Every audit is assigned to an examiner and their direct phone line and fax are on their letters.

I just thought I would try to clear up some misconceptions about the way the IRS works.

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Max, thanks for your corrections, if indeed they are as you say.  I don't mind admitting when I'm wrong, and it sounds like I am wrong in a number of assumptions.

However, I do have a client who took exception to an audit finding via correspondence, and two weeks later received a collection notice to levy or seize assets.  Correspondence is slow, snail paced, but there is indeed a problem communicating with the examination division.  You cannot call them via phone, get their attention with a fax, or communicate with them in any other fashion.

If you have a suggestion based on your extensive knowledge, my client and I would appreciate some advice.

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7 hours ago, Corduroy Frog said:

However, I do have a client who took exception to an audit finding via correspondence, and two weeks later received a collection notice to levy or seize assets.  Correspondence is slow, snail paced, but there is indeed a problem communicating with the examination division.  You cannot call them via phone, get their attention with a fax, or communicate with them in any other fashion.

If you have a suggestion based on your extensive knowledge, my client and I would appreciate some advice.

The ITS sends out a myriad number of different types of letters.  Most of them are not collection letters.  At the upper right corner of the IRS letters, there is a box and the first line says Notice.  Next to it is a code number, such as CP14, CP52, CP504, LT-11, 1058, etc., etc.

What is the Number on the last letter your client received?

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  • 3 weeks later...

Hi Max -

Since we have posted per above, I have had two more business clients who have received threats to levy from the IRS, each of them claiming the IRS has "previously" contacted them regarding unpaid taxes.  Knowing these two, I seriously doubt they were contacted previously, but according to your protocol above, the liability was first calculated in the audit division before being sent to collections.  The liability is also something cryptic (doesn't make sense) on one of these, and the other liability is for a 941 and could be valid.

Some of the CP notices (I've had about 10 this summer) also don't add up, even by IRS own calculations.  Max, I will direct this to your attention, but will post for all to read.  Maybe other members of the board will tell they have had similar experiences.  I need to know whether I'm going crazy and need to quit.

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