When dealing with IRC Collection department (Automated collection and IRS Revenue Officers) you need to be aware of the many enforcement tools they have at their disposal. These powers include:
1. Filing a Federal tax lien securing the IRS’s interest in a taxpayer’s property.
2. Issuing a levy to seize bank accounts, wages and subcontractor income.
3. Seizure of “hard assets” that have equity, such as real estate, automobiles and business equipment.
4. Using a summons to compel a taxpayer to appear at the Revenue Officer’s office and complete a financial statement (subsequently used to enforce #1, #2 and #3, above).
5. Investigate owners and managers of a business and assess them for liability for the trust fund recovery penalty (unpaid withheld payroll taxes).
6. Prepare “substitute returns” to put a liability on the IRS’s books when there is a refusal to voluntarily file returns.
7. Make referrals to the IRS Criminal Investigation Division.
8. Grant installment agreements and uncollectible status. Field Revenue Officers do not directly investigate and make determinations on offers in compromises and innocent spouse claims.
9. Pursue recovery of transfers of property to third persons intended to defeat the IRS’s interest, including via transferee liability and nominee liens.
10. Make personal visits to a taxpayer’s house or business. If you are not home, expect a card in the door. Best times for the visit: before long weekends.
11. Show up at a home or place of business to investigate allegations of criminal tax evasion. They carry badges and guns.