Dealing with the IRS’s Automated Collection System (ACS) when presenting financial information is a learned process. Unfortunately, the best teacher is experience. This article is designed to assist you with the process and hopefully cut down your time spent for presenting financial information to the IRS for partial pay installment agreements and currently non-collectable status.
The Problem with ACS
Anyone who has ever assisted with a resolution completion on behalf of a client with debt to the IRS that requires financial information being given to ACS over the phone ought to receive a medal! It does not matter if you are a tax attorney, CPA or EA, you have experienced the fun of dealing with ACS when presenting a financial for a client who has personal debt less than $250,000. When describing the IRS’s ACS unit, it is best to picture a room of over 10,000 people answering phones and it is a crapshoot as to who you get. There are different calling locations around the country, therefore you will hardly ever, if ever, get the same person twice on the phone. If you do it is a miracle.
Have you ever been nearly complete presenting the financial information over the phone and the call “drops”? And when you call back, you get another agent and you find out the hour spent with the previous agent was a complete waste because they did not input any of the information into the computer system so you have to start all over again? Unfortunately, this happens quite a bit. Also, the quality of IRS ACS agents varies widely. If you are lucky, you get one who knows the laws and regulations and works well with others. However, when you have attempted enough of these calls to ACS you will invariably run into those employees that IRS seems to have pulled off the street that morning and just put a headset on their head.
According to the Taxpayer Advocate Service’s (TAS) annual report to congress for the IRS, in 2018 $47 billion was assigned for collections to the ACS unit, of which they collected only $3.4 billion. Under their “Most Serious Problem” tab in the report, TAS outlines how “ACS utilizes mailed notices to generate taxpayer contact”. The report goes on to say that ACS actually suppresses monthly notices to keep their call volumes down. Meaning that debts continue to accrue penalties and interest while taxpayers are awaiting their legal right to be notified.
How do you help your clients in ACS Related Cases
To help your clients, make sure you respond to the first notice they receive for a debt as soon as possible. If the debt is under $25,000 and the client can afford a monthly payment over 72 months (*be aware of expiration dates on the debts) you can set up an easy installment agreement right on your computer. If your client owes between $25,000 and $50,000 and can afford a 72-month agreement, it is just a simple phone call but be sure to let your client know it is POSSIBLE to still have liens filed. The IRS usually does not file liens for these agreements, but it is possible. Presenting financial information on any debt amount is a different animal.
Let’s try to make this process as easy and simple as possible for you and your clients. If you do a lot of financials for clients, it would behoove you to make a check list for your clients so there is nothing missed. It is not always the best thing to hand your client a 433A or 433F and have them fill it out as it is too easy to miss something. Prepare your own check list of items based upon your experience will work better.
Generally, you will need, at the very least, the previous three months of the clients’ bank statements for all accounts and proof of income. Make these the first two items on your lists for clients. From there it will be a matter of gathering their monthly bill information, housing, utilities, vehicle payments etc. and all other monthly bills. Too much information is never enough. Gather all the information and determine what may need proof.
You may not need proof for everything, utilizing the IRS’s Collection Financial Standards will assist with that. Whenever possible utilize the standards if it makes sense. The IRS does not live in the real world when it comes to living our real lives, prepare your clients for the IRS’s view of a “financial” and what is allowable and what is not.
Be prepared to discuss with your clients what monthly bills fall into a questionable category. Things like private school payments for children, college assistance for children, i.e. books, room and board, tuition payments, bills that are over the IRS’s standards, etc. can all be called into question. Anything you see the IRS may question, prepare the clients for the possibility that proof may be needed in the form of monthly statements or outlined on bank statements etc. Doing your due diligence ahead of time and having the necessary proof ready before you call can really cut down the time it takes to set up a resolution whether it be a partial pay installment agreement or even and especially a currently non-collectable resolution over the phone with ACS.
Final Thoughts on IRS ACS Employees
A few of final thoughts…prepare ahead of time for any “negotiating” points such as odd monthly bills or anything over standards that you will need to justify. Advocate for your client. And remember to ask the client about any state tax debts and whether they are in an installment agreement with the state so it can be placed into the financial. If they have debt to a state, it may be best for the client to set up a state agreement BEFORE the IRS. Be aware of how the IRS allows for state tax debt installment agreements. Most of the ACS agents cannot even use their own formula from their own Internal Revenue Manual (IRM for figuring this out. So oftentimes the state agreement will be allowed in full as a monthly bill.
The final thing is credit cards. There is a fallacy that the IRS automatically disregards them, so many representatives for taxpayers do not even include them in the financial information. The best rule of thumb is to include them and force the ACS agent to disregard them or know their own rules and regulations. Many times, you can get monthly credit card payments included if you have one of those off-the-street agents. The point is, if you do not at least try, you are doing your clients and injustice. Again, advocate for your client.
Remember your client is paying you for a resolution service so do all you can to protect them as best you can.