While audit is a particularly dirty word for most taxpayers, it is collections that really wring the money out of a taxpayer’s wallet. Most tax is paid voluntarily by taxpayers on a “pay as you go” basis. When taxes are withheld by an employer or paid on an estimated basis by self employed individuals, it is all about the refund for the taxpayer. In other words, the IRS or other taxing authority does not have to generally take collection action against a taxpayer since they have been paid in advance. However, when the tax has not been paid, all taxing authorities have special powers to collect tax without a court order. These “extra judicial” powers for collection are most pronounced with the Internal Revenue Service and the U.S. Government.
The US Government, through the Internal Revenue Service (IRS), has a special group of employees known as “Revenue Officers”. An IRS Revenue Officer can take money out of your bank account with their signature and without any other authorization based upon powers given to them by Congress. Of course, as with most other cases of government taking, notices need to be given and a taxpayer has the right to object and pose a defense. State and local taxing authorities generally have the same types of power, although less expansive in scope, than those of the federal Revenue Officer.
We are often called upon to assist taxpayers in fending off collection efforts from the IRS or state tax collectors. The lawyers and enrolled agents in our office have many years of experience in dealing with tax collection issues. We know the rules that the tax collectors must, but don’t always, follow in order to successfully sustain collection action. We know how to object if the tax collector has taken money that is needed to pay for important expenses such as food, clothing, and shelter. In some cases, we can even prevent collection action entirely.
Some of our clients qualify for bankruptcy discharge of outstanding, unpaid tax liabilities. In some cases, taxpayers with limited income would be exempt from either federal or state tax collection efforts. These protections must be properly asserted by the taxpayer because they are not self-executing. If you are contacted by a Revenue Officer or your bank accounts have been garnished by a tax collector, contact us immediately because time is important, and a response must be timely to prevent loss of the money permanently.