IRS tax liens, levies, & IRS seizures have all gone through the roof in the last decade, what’s next?
This post is a second review of the newly released information about the IRS Tax Gap. This second review focuses on the increase in enforcement actions, including specific numbers on increase tax levies, tax lien filing, and seizures from 2001 to 2011. If you have questions about this post, please reference: BP #71.
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Original irs.gov link and full text here:
With a staffing increase of 11%, IRS collections are up 163% over the last decade
How did the IRS do that? Automated collection efforts have boomed. Expect to see this trend continue. This includes collections (taxpayer owes back taxes, and repays it), examinations (audits), appeals, (denial of IRS appeals to be more specific), and document matching (i.e. Social Security and others). The less face time a Revenue Officer spends with a taxpayer who owes back taxes, the more time the IRS Revenue Officer has to cover their assigned cases. Eliminating travel time and face to face meetings speeds up the IRS collection efforts. This is the reason national tax resolution companies are sometimes more successful than their local counterparts. The national tax resolution companies are comfortable with the trend towards completing IRS related business by fax and phone. The IRS gains from this because it allows them to cover ground more quickly. The taxpayer wins when their tax attorney knows how to manipulate the system to get them what they need. I have yet to meet a client that likes it when an IRS Revenue Officer comes into the business or home waving around their badge asking for the delinquent taxpayer. And yes, they do that.
While staffing has not grown dramatically, turnover has. Many baby boomers are at the retirement age, so even though the numbers are not different, the faces are. When the IRS hires people fresh out of school, or early in the professional careers, those people have a hard time understanding what it is like to make hard decisions, maintain a payroll, and employ others. It is not that they are bad people, but lack perspective. As a result, there is a systemic indifference that causes collection problems for the taxpayer and IRS both. That’s an anecdotal observation, and I would love to hear other’s thoughts on it.
Increase in IRS collection enforced actions; broken down by tax liens, levies, and seizures
- 3,748,884 IRS levies occurred in 2011. Those numbers include IRS bank and receivable levies. It also includes IRS wage garnishments. This is a 556% increase in IRS levies over the last decade.
- 1,042,230 IRS tax liens were filed in 2011. That is 86,853 tax liens filed every month and a 245% increase over 2001’s numbers.
- Don’t be surprised if the same Revenue Officer who told you they would not file a tax lien against you turns around and does it the following day. Sometimes they have already filed the tax lien before they told you they would not. It happens all the time. If you see this kind of behavior, it is a warning as to the type of person you are dealing with.
- If you feel the IRS collection agent is being deceptive, you may be right. Tax liens can be filed at the discretion of the Revenue Officer.
- 776 IRS tax seizures occurred in 2011. This could be a house, business assets, or other types of real property. This is a 332% increase in IRS seizures over 2001.
- We consistently get the question “Can the IRS seize my house?” They can, but rarely will the IRS seize your home. There are so many other ways to satisfy tax debt. If you feel the IRS is at this point, something is seriously wrong. Communication or lack thereof is usually the culprit. If you or your representation has allowed it to get to this point, it is time for a second opinion, pronto.
- Something that is hidden here is the other ways people lose their homes when dealing with the IRS. Part of the IRS collection process is the IRS Revenue Officer tells you to get a loan. They will not ask you if you can afford that loan. So the taxpayer, thinking they have no other choice, gets a loan and then defaults it, losing whatever collateral they put up. Don’t let this happen to you. Another version of this is when the IRS bull rushes you into an installment agreement that you cannot afford. So you make your installment agreement payment instead of your mortgage payment. These are all problems that can be overcome with proper representation.
IRS criminal investigations and prosecution recommended have increased by 146%
The IRS’ conviction rate is 92.7%. The average sentence has increased from 18 month to 25 months over the last decade.
- Of the 3,410 prosecutions the IRS recommended, 1,622 of them were tax and tax related; which is a 168% increase over 2001. Over the same time period there was a 6% decrease in narcotics prosecutions for tax evasion. It gives the appearance that the IRS is more focused on prosecuting taxpayers over drug dealers.
- Whether you want to go to court, or you are dragged into court, it’s to be avoided if there is a genuine liability. The IRS wins the majority of the time and then you are charged their court fees on top of IRS penalty & interest.
- If you are concerned about a misstep in the IRS collection process, get representation so you can stay out of trouble.
IRS back tax collection effort summary
They are doing more with more. There has been a steady increase in IRS seizures, IRS bank & receivable levies, IRS wage garnishments, and IRS tax lien filings over the last decade. With the added pressure from congress to close the tax gap, we can only assume their collection efforts will be more aggressive in tax year 2012 and beyond. If you owe back taxes, do not wait for the IRS to take collection action. The IRS automated collection system appears to be shooting first and asking questions later.
Your call to action is this: Whether you intend to handle this tax problem on your own or you hire someone, resolve to take action now. Create a plan with goals, and meet those goals. If you are missing filings, set yourself a schedule and meet it. If you are getting certified mail, open it all and do what you need to. If you’re thinking you need help, I would like to talk to about the best course of action to solve your IRS back tax problem.
If you would like irs back tax help to be your first or second opinion, I can be reached at firstname.lastname@example.org.