Ask The California Employment Tax And Payroll Tax Attorney – IRS Announces The End To Most Unannouinced Visits To Taxpayers’ Homes And Businesses?
By Robert S. Schriebman
On July 24, 2023, the IRS issued Fact Sheet 2023-17 announcing a major policy change that ends most unannounced visits to taxpayers’ homes and businesses by IRS collectors known as Revenue Officers (ROs).
RO Visits Can Be Very Stressful
I cannot imagine anything more stressful than a frantic call from my client informing me that ROs showed up at the business unannounced. My client, XYZ, Inc., owed the IRS several hundred thousand dollars in unpaid back payroll taxes, interest and penalties. The purpose of the ROs’ visit was to close down my client’s business operations for failure to pay all these back payroll taxes. Talk about a stressful situation!!
Padlocking a Business
The usual procedures followed by ROs in this type of situation is to first request that the taxpayer allow the RO to padlock the business without the RO having to obtain a Court Order from a US District Court Judge. The RO must first prepare a “Consent to Entry and Waiver of Rights to Privacy” and ask the business owner to sign the Consent so the RO does not have to obtain a formal Court Order.Most delinquent business taxpayers will refuse to allow the IRS to enter the business premises without first obtaining a Court Order. It takes time for the RO to prepare the appropriate Declaration and related paperwork to submit to the judge as a prerequisite for obtaining an “Order for Entry on Premises to Effect a Levy.” The lag time allows the business taxpayer to try to work out a solution with an RO, such as an installment payment agreement. In extreme cases a bankruptcy petition may be required to hold off the IRS’ closure of the business.
While this type of extreme action on the part of the RO is relatively rare since the IRS reform measures taken by Congress in the late 1990s as well as new Collection Due Process (CDP), business seizures resulting from unannounced RO practices still occur. Even rarer are seizures of a family residence. These usually occur in situations where the taxpayer has a history of not being cooperative in the collection process. Make no mistake, the IRS still seizes personal residences.
How Revenue Officers Work
Just to be clear, a revenue officer’s job is the collection of delinquent personal and business taxes. They do not conduct audits. Audits are conducted by Revenue Agents. Criminal investigations are conducted by Special Agents. Special Agents are armed and have law enforcement powers.
Prior to the issuance of FS-2023-17, the RO’s usual practice was to notify the taxpayer by letter demanding specific documentation and information and demanding a visit at the RO’s office. However, this did not stop the RO from showing up at the doorstep unannounced. If the taxpayer was not home or at the business, the RO would leave his/her business card and expect a call from the taxpayer. Under the new policy, this practice for the most part will stop, and the RO will arrange a visit in advance.
Not all future RO contacts will be by “written invitation.” There will still be situations that will demand that the RO show up unannounced and take extreme action to collect the taxes such as a levy, seizure, or the issuance of a summons.
IRS Commissioner Daniel Werfel told reporters that the reason for the new policy is in reaction to an increase in scam activity as well as IRS employee safety. Werfel said, “For IRS employees, there were fears about their own personal safety on these visits.” I can understand his concern in light of unprecedented gun violence throughout the country.
Unannounced visits will continue to occur when the RO believes that the taxpayer is evading communication and in situations where the RO is required to serve a summons or subpoena. If the taxpayer is evading the RO, the old rules will apply, and the RO will be free to serve liens, levies, and undertake seizure action in extreme circumstances. In other words, the new policy will not be a blanket unannounced visit prohibition.
There are some basic rules when dealing with an IRS collector. Let me give you a few of the most important:
- Think you can avoid the RO by ducking a letter calling for an appointment under the new policies? Think again.
- The key to success when dealing with any phase of the collection process is communication.
- The IRS RO has truly awesome powers and you need to be aware and understand them.
- The best way to get concessions from an RO is to show good faith in truly wanting to resolve your tax matter. Actions speak louder than words.
- ROs love money. Even if you cannot pay in full, do the best you can.
Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD, and he is not employed by the EDD or any other agency of the State of California.
Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
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