Dealing with the Internal Revenue Service (IRS) is never easy. The agency has the power to freeze your assets, seize your business or home, garnish your wages, and withdraw funds from your savings accounts. When the IRS opens an investigation into your tax returns (or lack thereof), your life can be thrown into upheaval. It’s important to learn what’s the difference between an IRS revenue agent and an IRS revenue officer in order to understand what they do and the rights you have when dealing with either one.
The IRS Revenue agent job description, as provided by the IRS, is as follows:
“In the IRS’ Small Business and Self-Employed (SB/SE) division, you’ll conduct examinations of individuals and small businesses to determine federal tax liability. In our Tax-Exempt and Government Entities (TE/GE) division, you will ensure the compliance of tax-exempt organizations and government entities. Agents in our Large and Mid-Size Business (LB&I) division work on large corporate cases.”
The job of an IRS agent is to perform tax audits of businesses, trusts, non-profit organizations, and individuals. An IRS agent is often tasked with performing audits of multinational businesses and Schedule C businesses. This agent will be assigned to the Offshore Voluntary Compliance Program (OVDP) in order to determine if failing to file Form TDF 9-22.1, Foreign Bank Account Report (FBAR), should be subjected to FBAR penalties. If you have questions about filing an FBAR, please see the linked resource from Abajian Law.
In order to work as an IRS revenue agent, the candidate will be required to have at least a bachelor’s degree in accounting from an accredited university or college with at least 30 semester hours in accounting classes, six of which may include the following classes:
● Business law
● Statistical/quantitative methods
● Computerized accounting or financial systems
● Financial management or finance
IRS revenue agents are not required to be Certified Public Accountants (CPA). However, if you are a CPA, then you would qualify for the basic requirements to become an IRS revenue agent. The main role of the revenue agent is to determine tax liability, not to collect taxes. Revenue agents determine tax liability by conducting a tax audit. They can make referrals of an audit case for civil fraud penalties and even refer to the case to the IRS Criminal Investigations.
An IRS revenue agent will not attempt to contact you in-person at your home. In fact, an IRS revenue agent is more likely to meet with you in a formal, business setting in order to keep the discussion as professional as possible. They will generally send a written letter informing you of the examination.
The IRS Revenue officer job description, as provided by the IRS, is as follows:
This series includes positions involved in administering, supervising, or performing work related to collecting delinquent taxes, surveying for unreported taxes, and securing delinquent returns. The work requires application of a knowledge of (1) general or specialized business practices; (2) pertinent tax laws, regulations, procedures, and precedents; (3) judicial processes, laws of evidence, and the interrelationship between Federal and State laws with respect to collection and assessment processes; and (4) investigative techniques and methods.The work requires analytical skills and judgment to make a range of choices such as: how to advise the taxpayer on liquidating tax liabilities; whether to seize and sell; whether to accept a part-payment agreement; whether to recommend 100-percent penalty assessment (aka trust fund recovery penalty); whether to accept an Offer in Compromise, partial lien discharge, or subordination, or whether to initiate suit recommendations.
The most challenging tax cases are handled by IRS revenue officers, who are legally allowed to collect taxes. These cases typically involve businesses and individuals who have not paid their taxes despite the IRS sending letters, making phone calls, levying taxes, and garnishing wages. Most IRS revenue officers are given wide parameters in determining whether or not a proposed installment agreement for payment of taxes can be accepted or denied. For this reason alone, it is imperative that you work with a Los Angeles tax attorney.
One of the most important requirements an IRS revenue officer must follow is that they are to meet a taxpayer in-person during the initial contact. This means that the revenue officer might show up at your place of employment, home, club meeting, or anywhere else they can find you. If you were not present when the IRS revenue officer visited, they will leave a card. Do not throw it out or ignore it. If there is a phone number, call it and schedule a time where the two of you can meet. If you don’t, the revenue officer will continue to make contact with you face-to-face.
If you owe more than $100,000 in taxes, it is likely that your case will be referred to an IRS revenue officer for review.
The powers of an IRS revenue officer are quite limited due to the Revenue and Reform Act of 1998. The legislation reduced the amount of times the IRS has seized personal assets and homes. However, IRS revenue officers are still permitted to do the following:
● Levy any accounts receivable
● Lien property
● Levy retirement funds
● Levy wages and bank accounts
● Subpoena documents
If anyone has ever told you that an IRS revenue officer can arrest you, they don’t know the capabilities of the position. An IRS revenue officer has no power to arrest anyone, even if the subject of the case has committed tax fraud. The revenue officer can only make a recommendation to IRS Criminal Investigations (CI) and if there is evidence that shows you committed tax fraud. Recently, the IRS is looking for more criminal referrals from IRS Revenue Officers.
Since IRS revenue officers have little training in tax law, statements you make to them will likely fall on deaf ears. This means that if you truly believe that no tax is to be paid, you will need to have your case returned to an IRS revenue agent from the revenue officer. Generally, in order to make this happen you will need to file an Offer in Compromise (OIC) due to having doubt as to liability regarding your taxes.
When you file OIC for doubt as to liability, you will need to list the reasons why you believe you do not have to pay the tax noted by the IRS or the reason it is incorrect. This is done by filing IRS Form 656-L. The form should also include an explanation as to why the IRS could wind up dealing with major litigation risks if the case were to reach the trial stage.
The other option you have when moving the case back to an IRS revenue agent from a revenue officer is to submit a request for audit reconsideration. You can find the process for submitting an audit reconsideration in the IRS Publication 3598. The IRS requires you to continue making installment payments, if you are doing so already, while you wait for a ruling on the audit reconsideration.
It can take years for an audit reconsideration to be approved or denied, which means by the time it is approved, the IRS might owe you a refund for the taxes paid. It’s important to note that there is a statute of limitations in place that can prevent you from receiving the refund. The statute of limitations is two years from the payment date or three years from the date you filed the tax return.
As a taxpayer, you have rights that the IRS revenue agent or IRS revenue officer must respect at all times. If you ever feel pressured by an agent or officer, politely tell them that you know your rights and that you are contacting a Los Angeles tax attorney for representation. An experienced tax attorney understands the law, your rights, and can help negotiate a settlement with the IRS agent or officer so that you do not have your wages garnished, accounts levied, or assets seized.
IRS revenue officers are expected to complete as many cases assigned to them as possible. You can use this to your advantage, to an extent. It is not to the advantage of the revenue officer to spend years getting you to pay every penny possible on the amount of taxes you owe the IRS. When a revenue officer contacts you, it is in your best interest to work alongside a tax attorney to create an installment agreement , submit an offer in compromise, or look to other options such as:
● Hardship status
● Innocent spouse relief
● Penalty abatement
If you and your tax attorney have gotten nowhere in dealing with the IRS revenue officer, it might be best to wait to receive one of the following:
● Notice proposing a levy
● Notice of Levy
● Notice of Federal Tax Lien
If you receive one of these documents you can then file a Form 12153, Request for a Collection Due Process Hearing (CDP). Doing so moves your case to a settlement officer and stops the collection actions of the revenue officer while negotiating a settlement.
Were you contacted by an IRS revenue agent or an IRS revenue officer at your home, place of employment, or any other location? If so, it’s time for you to consult with an experienced Los Angeles tax attorney about your situation. At Abajian Law, we take pride in protecting the rights of our clients who are dealing with the IRS. Call our office at 818-396-5059 to schedule a consultation with a member of our team. We operate offices in Los Angeles, Glendale, and Irvine to better serve our clients.