When the IRS Telephones You
Introduction You get home from work and there, on your answering machine, is a telephone call from the IRS.
How should you plan your response? This article helps you decide if you can handle the matter yourself or whether it is time to call a tax attorney.
Don't Panic Yes of course you are concerned.
After all the largest collection agency in the world has selected you for some government love.
You need to do something, but you don't want to do anything dumb either.
So let's run over some basic rules that will give you an approach.
First things first.
Was it really the IRS that telephoned? Some people have reported scams in which a telephone caller pretends to be the IRS.
Their motivation may something as simple as getting you to give your birth date or social security number.
All IRS employees are required to state their name and an identification number.
If in doubt, you can call any local IRS office and verify that a person is actually an employee of the IRS.
How Big is Your Problem? Let's assume that it really was the IRS who telephoned you.
You have a problem, but how big of a problem do you have? The IRS never telephones first.
It always sends letters before telephoning.
There are serious letters and less serious letters.
Unless you have been throwing the letters away unopened (not recommended), you already know something about why you received a phone call.
Ordinary Collection Calls The IRS uses an Automated Collection System (ACS, and yes the IRS really does use that acronym).
In this system, the IRS will send you a tax bill, a letter requesting more information or asking for payment.
If the letters are ignored, you can expect a call from a call center.
The good news is that you can probably handle the matter yourself and do not need to hire anyone.
You can promise to send some missing bit of information or if money is the problem, you can ask for a payment plan.
Hint: To stop the collection process from escalating, be sure to follow through on whatever it is that you agree to do.
Serious IRS Calls If the caller identifies himself as a Revenue Agent, things are a little different.
At this level you are already under investigation.
It may be unfiled tax returns or it may be the balance due on a return, or it may be an audit.
Whatever the case, the IRS does not randomly assign Revenue Officers to taxpayer cases, because it is expensive (for the IRS).
Someone has already determined that you need the individual attention of IRS employee.
Is It Time to Get Help? The conventional wisdom is that that now is the time to say nothing, except that "my tax lawyer will call you in the morning".
The reason is that it is this very moment when clients damage their own case.
They make an admission or blurt out something that may otherwise hurt their case.
(By the way, it is a federal crime to lie to an IRS Agent about a tax matter).
Most people cave when the Agent says something like, "If you have nothing to hide, why do you need a lawyer?" You know how this works, right? You have seen it a million times on TV cop shows.
The suspect always gets badgered into admitting something.
If you are firm, the IRS employee will understand that you have a right to representation.
Be polite.
Don't Let Your Ego Get In Your Way Professionals and small business owners are the worst offenders, but it can happen to anyone.
After all you're an adult, and you can handle yourself just fine, right? The smooth talking IRS employee says "I just need a few details and I'll be out of your way".
Think about our cop analogy.
The detective knocks at the door and asks nicely, "Can I come in for a minute?".
Of course the suspect agrees and before the commercial break, the cops have put the suspect on the defensive.
His ego gets in the way and he blurts out something.
The cops give each other knowing looks and make some notes.
Put your ego on the sideline.
IRS Agents are evaluated on their performance.
In general, the Agent would prefer to close your case with a completed collection action than by saying to his boss that he could not find anything.
Now the Exceptions Ok, I told you the hairy and scary parts.
But there may be circumstances when you can effectively handle your own case.
Rule No.
1.
Be polite.
Rule No.
2.
Maintain your objectivity.
If you get emotional talking about your situation or get angry, it's time to stop and get someone else involved.
Rule No.
3.
Be polite.
Know When to Fold If your case truly involves something simple, like forgetting to report those winnings from the Casino Bingo game, you may be Ok.
You can agree with the additional tax, pay it and be done.
Things can get dicey.
Suppose while you are being investigated for the unreported gambling winnings, the Agent discovers that you claimed your best friend Fido as a dependent.
That's tax fraud and could be big trouble.
So, if you handle your own tax matter, use common sense and remember Kenny Roger's lyrics, "You've Got to Know When to Hold 'Em, Know When to Fold 'Em".
How should you plan your response? This article helps you decide if you can handle the matter yourself or whether it is time to call a tax attorney.
Don't Panic Yes of course you are concerned.
After all the largest collection agency in the world has selected you for some government love.
You need to do something, but you don't want to do anything dumb either.
So let's run over some basic rules that will give you an approach.
First things first.
Was it really the IRS that telephoned? Some people have reported scams in which a telephone caller pretends to be the IRS.
Their motivation may something as simple as getting you to give your birth date or social security number.
All IRS employees are required to state their name and an identification number.
If in doubt, you can call any local IRS office and verify that a person is actually an employee of the IRS.
How Big is Your Problem? Let's assume that it really was the IRS who telephoned you.
You have a problem, but how big of a problem do you have? The IRS never telephones first.
It always sends letters before telephoning.
There are serious letters and less serious letters.
Unless you have been throwing the letters away unopened (not recommended), you already know something about why you received a phone call.
Ordinary Collection Calls The IRS uses an Automated Collection System (ACS, and yes the IRS really does use that acronym).
In this system, the IRS will send you a tax bill, a letter requesting more information or asking for payment.
If the letters are ignored, you can expect a call from a call center.
The good news is that you can probably handle the matter yourself and do not need to hire anyone.
You can promise to send some missing bit of information or if money is the problem, you can ask for a payment plan.
Hint: To stop the collection process from escalating, be sure to follow through on whatever it is that you agree to do.
Serious IRS Calls If the caller identifies himself as a Revenue Agent, things are a little different.
At this level you are already under investigation.
It may be unfiled tax returns or it may be the balance due on a return, or it may be an audit.
Whatever the case, the IRS does not randomly assign Revenue Officers to taxpayer cases, because it is expensive (for the IRS).
Someone has already determined that you need the individual attention of IRS employee.
Is It Time to Get Help? The conventional wisdom is that that now is the time to say nothing, except that "my tax lawyer will call you in the morning".
The reason is that it is this very moment when clients damage their own case.
They make an admission or blurt out something that may otherwise hurt their case.
(By the way, it is a federal crime to lie to an IRS Agent about a tax matter).
Most people cave when the Agent says something like, "If you have nothing to hide, why do you need a lawyer?" You know how this works, right? You have seen it a million times on TV cop shows.
The suspect always gets badgered into admitting something.
If you are firm, the IRS employee will understand that you have a right to representation.
Be polite.
Don't Let Your Ego Get In Your Way Professionals and small business owners are the worst offenders, but it can happen to anyone.
After all you're an adult, and you can handle yourself just fine, right? The smooth talking IRS employee says "I just need a few details and I'll be out of your way".
Think about our cop analogy.
The detective knocks at the door and asks nicely, "Can I come in for a minute?".
Of course the suspect agrees and before the commercial break, the cops have put the suspect on the defensive.
His ego gets in the way and he blurts out something.
The cops give each other knowing looks and make some notes.
Put your ego on the sideline.
IRS Agents are evaluated on their performance.
In general, the Agent would prefer to close your case with a completed collection action than by saying to his boss that he could not find anything.
Now the Exceptions Ok, I told you the hairy and scary parts.
But there may be circumstances when you can effectively handle your own case.
Rule No.
1.
Be polite.
Rule No.
2.
Maintain your objectivity.
If you get emotional talking about your situation or get angry, it's time to stop and get someone else involved.
Rule No.
3.
Be polite.
Know When to Fold If your case truly involves something simple, like forgetting to report those winnings from the Casino Bingo game, you may be Ok.
You can agree with the additional tax, pay it and be done.
Things can get dicey.
Suppose while you are being investigated for the unreported gambling winnings, the Agent discovers that you claimed your best friend Fido as a dependent.
That's tax fraud and could be big trouble.
So, if you handle your own tax matter, use common sense and remember Kenny Roger's lyrics, "You've Got to Know When to Hold 'Em, Know When to Fold 'Em".
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