I recently had the great misfortune of dealing with an IRS agent that I had never dealt with before. She was located in a different state and was responsible for handling a novel legal issue that had never been considered before.
I had never met this woman before. I’ve never spoken to her, written letters to her, or had any contact with her on any level or with anyone in her office.
Nevertheless, she was arrogant, condescending and abusive towards me. She told me that I had no idea what I was doing, that I needed to associate someone else who was competent in tax law to help me, and that she gave very little credence to my point of view about the merits of the case.
I have faced this kind of thinking many times over the last 38 years. It seems that the Internal Revenue Service has an extraordinary talent for hiring people who are frequently wrong but always certain.
So today I want to talk about some of the things that you should do when you’re dealing with the Internal Revenue Service to handle these kinds of personal attacks and the condescending abuse that is often ingrained in many IRS agents:
- First Contact
Sometimes an IRS agent will send you a letter saying that you are about to be audited and schedule a time and place for that first meeting. Other times an IRS agent may actually show up at your doorstep unannounced, particularly in collection cases where they are seeking money or assets in order to pay tax liabilities.
In both cases, the IRS keeps a history of what you tell them. That history frequently is very different than what you actually told them. That’s right folks, what the IRS agent heard is not necessarily what you said. It has often been astonishing to my clients when they read what the agent wrote down during the interview. They are aghast at how little connection there is between what they actually said and what the IRS agent wrote down.
I strongly urge you to very carefully and politely tell an unannounced IRS agent that you have an attorney or an accountant representing you and that you have nothing to say until they contact your representative directly. And then close the door. That’s right folks close the door. The IRS agent will not be offended because he knows that if you have a power of attorney he has to cease.
2. Hire A Representative
The federal tax law allows you to have a representative act on your behalf before the Internal Revenue Service. This prevents the IRS from being personally abusive toward you during meetings and conferences with agents.
The reality is taxpayers are much more willing to resolve the case on unfavorable terms if they have been personally threatened by an IRS agent. I’ve seen this repeatedly over the years and the government is fully aware of that fact, often working diligently to try to make sure that you are at these meetings in order to acquire better information to support their case and to create the impression that your circumstances are dire.
I have also often seen the opposite- clients telling me they thought they had a great relationship with the agent who promised a favorable result only to find out later they had been badly misled.
Don’t fall prey to this. Hire a good representative and focus on the right result.
- Experience of Your Representative
The best way to get the right tax result is to hire an experienced representative who is familiar with IRS administrative and judicial procedures. There are numerous taxpayer rights that are available to you, and numerous ways to resolve the case, but they often will not be provided to you voluntarily at the first stages of the case. But a competent representative will know both.
And don’t fall prey to representatives who tell you they are a tax accountant or tax lawyer. Instead ask them how many cases they’ve had actually go to trial and how many written opinions they’ve had published. This will give you a true indication of what their skill and experience levels are.
The capable representatives often are paid by the quality of the result they obtain and do not by send endless pages of bills for nuisance activities such as copying, postage, telephone conferences, emails, etc. We’ve all seen those kinds of legal bills and we all detest them.
- Levels Of Appeal
In dealing with the IRS, it is important to recognize that there are multiple levels of review. An IRS agent typically will not tell you that there are multiple levels of review and certainly will not tell you how the administrative procedures vary in those various levels of review.
Stated differently, the agent that you’re dealing with almost always does not have the final say in the resolution of your case. While they may very well exercise every possible effort to get you to settle with them and to accept the liability in an amount that you may not owe, the reality is that there are multiple levels of review with multiple skill levels of agents in that review process. There are also levels of judicial review available as well.
Don’t be hornswoggled into agreeing to a liability that you do not owe simply because the agent aggressively threatened you or fails to inform you.
Avoid The Stress
One of the most damaging things the Internal Revenue Service can do to you is to have you so emotionally upset that your business and family suffer. In those cases the cost of conflict with the IRS may seem not to be worth extended effort.
You need to have confidence in the representative that you retain. He or she may be able to give you an estimate of approximately as to how long the case will take, the likely result, the likely fee of attaining that result, etc.
Then live with confidence in that projection.
Also, remember that if you end up owing the IRS, you almost always can obtain an extended payout agreement. This makes it worthwhile to fight to the bitter end to get the right result and then to pay it off over time.
So don’t be bullied into a settlement that is unfair, or be forcibly stressed into accepting a bad resolution or otherwise victimized by the personal abuse and attacks of that agent.
Let me end by saying that I have met a large number of very good people who work in the Internal Revenue Service and who I have great respect for. They are focused on getting the right result at the earliest possible opportunity with the least expense and developing evidence to support that right result. This article is not about them- it’s about the salaried government bureaucrats who don’t share that approach.
So don’t be a victim! Take these suggestions to heart and be prepared.
David Leeper is a Board Certified federal tax attorney with 38 years experience . He can be reached at 915-581-8748 or by email at email@example.com