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Connecticut IRS collections update

With our main offices located in Connecticut, and the bulk of our tax debt resolution work in the state, we have a fairly good pulse of what is happening in the local IRS Connecticut Collection offices.  This article will discuss what is going on, and what any taxpayer in a big tax problem should do about it, as most other states are facing similar circumstances.

irs collections connecticut

If you “ax” me about Connecticut, I’ll tell you a story of a economy that is melancholy, but small businesses that are as sharp as 20 Collinsville machetes.

IRS Collections overview

As as soon as you or your business owe the IRS money, an account with the IRS is opened up by Automatic Collections Services (ACS). ACS will send you notices of your bill. Now depending on what type of tax and the amount, your case may be refereed to a local IRS Collections field office, where your case will given to an IRS Revenue Officer to collect on. historically, if you owe back payroll taxes or owe over $100,000 in personal taxes, you are a prime candidate to have a Revenue Officer assigned to you.

In Connecticut, the IRS has  Field Collections offices in Bridgeport, Norwalk, New Haven, Waterbury, Wethersfield and New London (New London is actually staffed by just one Revenue Officer who reports to a group manager in Wethersfield). All of them are under incredible strain to close out cases.


IRS Revenue Officer numbers way below proper number 

For the past 5 years, every Field Office has been operating below capacity. The office hit the hardest by attrition and retirement, we believe is Wethersfield, which is operating at about at 1/2 capacity.  Quite simply, the IRS just isn’t hiring new Revenue Officers. And the old ones are leaving through retirement or promotions to other areas. In a lot of these IRS field offices, a Revenue Officer with 4 year experience is still considered the new guy.

And for Revenue Officers, their job is going form bad to worse.

Due to the budget constraints, these already understaffed local collections offices will be downsizing. As a result, no new collections cases will be put into the pipeline (what the IRS call the “queue”).  The new cases a Revenue Officer receives this week, will likely be the last one that will be assigned in a while. Also, many Revenue Officers in the northeast (Connecticut, New York, New Jersey) are receiving back their cases that went into hold because of Hurricane Sandy.

And its not just Revenue Officers. But local Collections support staff, such as group secretaries and the like, are also facing major cuts.


What does a downsized IRS field collections mean?

This means a few things in the short term: first, in those cases where we are waiting for an Revenue to get assigned, it’s going to take a while.  Second, the Revenue Officers that are left are going to be very busy picking up cases from the ones that are leaving.


So is downsized IRS collections  a good thing?

We think not. First of all, the IRS hasn’t gone away. IRS problems haven’t gone away. They will just now be serviced by national IRS collection centers — ACS. The job requirements to work at ACS aren’t as high. The training is not nearly as extensive. The level of ignorance, if I can be so blunt,  can be rather significant. The managerial oversight is not as robust. Basically, ACS can be very painful to deal with, and you will never speak with the same person twice. Compare this with a local revenue officer. One person is assigned to the case, and because of this, they tend to be more accountable to taxpayers. 

Second, one of the things that gets people to finally take action and solve their tax problem is when a Revenue Officer makes first contact by visiting a taxpayer at their home or place of business. If a IRS Revenue Officer came to your house, it is still a very arming action that compels people to finally do something about their tax problem. So when ACS keeps all these cases, not one will ever visit you in person, so it is very easy for many taxpayers to continue to ignore the problem, letting it get bigger and bigger. This isn’t good for anyone.

Third, ACS is not as highly trained nor in tuned with the facts on the ground. In Connecticut, the Revenue officers are well-aware of how bad the economy is especially for the self-employed. And many Revenue Officers are aware of how costly it is to do anything in the State of Connecticut. For instance, if reports are true, Texas is experiencing an economic boom, and Connecticut is mired in depression. These are extremely different collection circumstances that warrant different techniques. 


Is there a good side to a low-staff IRS collection office?

Yes. Because of the intense pressures IRS Revenue Officer are under in order to close out cases and move their “inventory” along, we find that well-presented, reasonable negotiations are accepted. there is not better than than right now to make an IRS debt settlement.

  1. Not helping things is when ACS defaults agreements because of small increases is tax debts. We've seen a few cases where it is seriously a waste of a Revenue officer's time to get revisiting in a case they settled month previous.

  2. The thought that ACS would have to deal with the cases that are generally assigned to RO's makes my stomach churn considering the fact that they have no discretion and sometimes, no knowledge of the rules.

    I wish there was a way to prompt taxpayers to take action on something they have neglected for so long, while at the same time allowing time for the case to be prepared properly for resolution with an RO so that it has the best chance of not being reopened again. For example, we have some cases with RO's that have at least 7 years of bookkeeping and tax returns to prepare and the taxpayer's have never made an estimated tax payment. That takes time and it's a shame that the case has to be held open for so long when the taxpayer is clearly not in a position to resolve quickly. The financial analysis should be last thing to be done, not the first.

    Would it be bad if the IRS had some sort of CNC that stalled the statute allowing taxpayer's one final chance to get their tax matter addressed before it it given to an RO?

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