Sometimes dealing with the Internal Revenue Service goes smoothly. Yet
there are times within this agency when it seems one hand doesn’t know
what the other hand is doing. And this year, when budget cuts have
resulted in poor customer service, resolving the issue can be stressful
and take much longer than anticipated.
We received a phone call earlier from a taxpayer suffering at the hands
of the IRS. It’s a nightmare! Those were the first words I heard when I
answered the phone. This gentleman, let’s call him Stanley, is in poor
health. Stanley’s only source of current income is Social Security
Disability Income (SSI). He owes the IRS a substantial amount in back
taxes having failed to file returns believing his retirement income was
tax free. Cashing out his retirement fund to pay for medical expenses
landed him in tax trouble because the withholding from the distribution
did not cover the tax liabilities.
So we’re talking about a bona-fide hardship case. Normally in this
situation, the taxpayer would qualify to be deemed currently not
collectible, which would relieve him from any collection efforts at all.
The IRS would abandon collections then check back with him in a year to
see if his financial situation had improved. If it had, the service
would set up a payment plan and if not the currently not collectible
status would resume for another year.
Stanley called the IRS and offered to pay a small pittance each month.
This sum is not enough to cover even the interest on the liability much
less put a dent into the penalties and principal. He’ll likely be paying
off the debt for the rest of his life. But the IRS set up the payment
plan under those terms. A couple of weeks later before even the first
payment was due, he was notified that the IRS began garnishment of $200
per month from his SSI check, which increases his hardship circumstances
substantially. He called the IRS again and they promised to stop the
levy but they refused to return the amount taken. Another month went by
and again they yanked $200 from his check. Another phone call; another
promise to stop the levy. We’ll have to see if next month’s check is
intact or not. Then we received an email from another taxpayer with
exactly the same problem. A payment arrangement had been agreed upon
then two weeks later the IRS garnished the taxpayers wages.
If this happens to you or if you are having other tax problems, be sure
to call the number on the last notice you received from the IRS. If you
call the IRS main number you are sure to be transferred from one
department to another. Document who you spoke with, including the
employee ID number, the date called and the content of the conversation.
If you are at wit’s end and are more concerned with your mental health
than with the IRS problem, consult a tax professional to speak on your
behalf. You simply sign an IRS Form 2848 Power of Attorney. This allows
the tax professional to engage with the IRS regarding your confidential
tax file. Often times a tax professional can cut through the red tape
and achieve results quicker. If all else fails, call the Taxpayer
Advocate at 1-877-777-4778. The Taxpayer Advocate is an independent
agency within the IRS that goes to bat for taxpayers who have exhausted
all other means of resolving a tax problem.
