I was on the phone today with the IRS about a client. Back in October he received an IRS notice regarding his 2012 return. We believed the IRS notice was incorrect. With this particular notice the only option was to write the IRS. I did so (I had a Power of Attorney for the client), sent it via certified mail, return receipt requested, and noted that it was received three days later.
We heard nothing until last week.
The client has now received the first of a series of collection notices (a CP501). This is the first of four steps in IRS nastygrams about balance dues (CP501, CP502, CP503, and CP504). I called the IRS noting that we had sent in a letter disputing the original notice. The helpful IRS person noted that they had received the letter but it has yet to be assigned to someone. It has been over four months since I sent in the response. The woman I spoke to thought that the nine-week delay they put on sending out additional notices should be enough time for someone to read my letter.
If it takes all nine weeks, that would mean it took over six and a half months from the time I submitted the response until my client got a response. Many times the IRS will ask for additional information, and that might mean if it takes another six months that this will have gone over one year. Actually, that’s not as bad as something else that happened today.
I had a second client I was inquiring about. I had sent a letter disputing another IRS notice; this letter was sent in mid-December and received five days later (and yes, I have the certified mail tracking to prove it). The IRS has no record of receiving it, and the unhelpful individual I spoke to refused to put a stop on notices. I resent my previous response today (again, certified mail; this is another notice where I cannot fax a response). I will call the IRS three weeks after it was received to make sure that they have it noted in the system.
There are some takeaways for both practitioners and taxpayers. For practitioners, the current state of the IRS is such that you can expect a lot of delays in responding to notices. Think months instead of weeks. Expect to have to call the IRS to verify that your response was received, and make sure clients are aware that the IRS is moving like molasses rolling uphill. Make sure anything you send is documented: certified mail with proof of receipt if by mail; if faxing, make sure you have the proof of receipt. Given the lengthy delays our clients are going to be in fear for far longer.
The current customer service delays will lead to more clients being sent to ACS. A client rightly isn’t going to pay a notice he doesn’t owe. While the IRS can stop the sending of notices, sooner or later an account gets moved into ACS. I have one of these right now, and I have to call ACS every 30 days until the underlying matter gets resolved.
This will also lead to more Collection Due Process Appeals. If things get delayed long enough, ACS will refuse to stop collection activities. The next tool a practitioner can use is a Collection Due Process Appeal. If you’ve never been able to dispute the underlying notice, this should be fair game. And a CDP appeal does put a stop to collection activities. (This could also have the indirect effect of slowing other appeals.)
For taxpayers, you need to be aware that expediency is not part of today’s IRS. You have to be expedient in responding to notices but don’t expect the IRS to be expedient in getting back to you. Do not worry if it takes a long, long time to resolve something with the IRS. That’s just par for the course today.
Nina Olson, the National Taxpayer Advocate, noted that IRS budget cuts have hurt customer service. Unfortunately, the apparent political activities by some within the IRS have forced these cuts. Until then, everyone suffers.