The IRS is not here to serve the taxpayer’s best interest. It does not exist to find the solution that’s right for you or even to see how taxes can best fit into your budget. Most often I enjoy reading Michelle Singletary’s column in the Washington Post. However, the one from Saturday, February 8th is misleading.
In Michelle’s column “Can’t pay the IRS what you owe in taxes? This is the one thing you should do.” she took the position that, as a first step, a taxpayer contacting the IRS directly is the best course of action for dealing with IRS issues. As a certified public accountant and a certified tax resolution specialist who focuses on helping people with IRS problems and deals with the IRS daily, I strongly disagree with her claim. Dealing directly with the IRS could be the worst mistake a taxpayer makes; I have witnessed tax nightmare resulting from taxpayers following this course.
Unfortunately, the IRS is extremely understaffed and poorly trained, and taxpayers need professionals to guide them through this IRS maze. I am the first to agree that it should not be this way, but it is. Dealing with a bureaucracy is taxing—pun intended. Due to high rates of retirement and attrition, understaffing, budget cuts, and reduced training, calling the IRS requires waiting on hold for thirty minutes to two hours. If the taxpayer can get through to an IRS representative, she will often encounter an employee who is not well trained on how to deal with the taxpayer’s issues. Many representatives are too eager to put the taxpayer into an unsustainable payment plan that the taxpayer cannot afford. When payments are missed and the plan implodes, the taxpayer will be in a worse position than before with penalties and interest accumulating. Establishing an installment plan for the second time proves even more difficult. Guiding taxpayers to the correct IRS department to contact is a challenge. In many departments, IRS employees are supposed to assume that the taxpayer is dishonest and often go beyond their powers when requesting information. Without professional representation, taxpayers will often find themselves in an even bigger mess with even more questions than when they started.
IRS practices constantly change. The Internal Revenue Manual, the “book” which governs the actions of the IRS employees, is not even a book at all—it’s rarely available in print form. Why? Because it changes constantly. The cost of living factors used to decide if an individual qualifies for an Offer in Compromise, Partial Pay Installment Agreement, or Currently Not Collectible status also constantly change—it happened again in March. Which and how penalties may be abated also went through a big change late last year altering what is allowed and what is not. Federal Court cases and Tax Court cases change both the way the Internal Revenue Code is applied and the Internal Revenue Manual. It’s hard enough for taxpayers to keep up with the changes to how they file their taxes—I would consider it impossible for people outside the industry to keep up with all the moving parts in the tax law regarding how the IRS manages collections.
However, I do strongly agree with Ms. Singletary on several issues. There are a lot of bad guys in the tax-debt relief industry. She rightly refers to the large national tax mills who prey on people through million-dollar advertising and slick salespeople. They are infamous for promoting the Offer in Compromise, so they can charge their inflated fees. Then they change plans and attempt to force the client to agree to an inferior, less complicated, solution or worse to pay 100% of what the IRS claims is owed. Other times the organization forget about the client completely—not even returning phone calls.
I am often called in to clean up the mess caused by the large national tax mills and from taxpayers going it alone as well. Fortunately, many times I can go forward with a successful Offer in Compromise despite the previously missed deadlines, poor workmanship, and claims by the national tax mills that the taxpayer doesn’t qualify, but other times the damage has been done.
By the way if you hear anyone advertise that they will settle your IRS tax debts for “Pennies on the Dollar” please report them to the IRS’s Office of Professional Responsibility immediately. While I have not heard that phrase used in advertisements in years, I don’t doubt that it is still used, and it’s not legal to do so.
I haven’t had the chance to meet Eric Hylton, the Commissioner of the IRS’s Small Business and Self-Employed division, but I do know Deputy Commissioner Darren Guillot. Both have made great improvements at the IRS.
Ms. Singletary needs fist hand experience to understand how difficult it is to deal with the IRS and how complicated the laws are to force a change in opinion. That being said, I will continue to read, learn from, and enjoy her articles.
Randell W. Martin, CPA, MBA, CTRS