Sometimes dealing with the Internal Revenue Service goes smoothly. Yet there are times within this agency when one hand doesn’t know what the other hand is doing. And this year especially when budget cuts have resulted in poor customer service, resolving the issue can be stressful and take much longer than anticipated.
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I received a phone call earlier this week from a taxpayer suffering at the hands of the IRS. “It’s a nightmare!” Those were the first words I heard when I answered the phone. The gentleman, let’s call him Stanley, is in poor health. Stanley’s only source of income is Social Security Disability Income (SSI). He owes the IRS a substantial amount on back taxes. Cashing out his retirement fund to pay for medical expenses landed him in tax trouble because the withholding from the distribution did not cover the tax liabilities.
So we’re talking about a bona fide hardship case. Normally in this situation, the taxpayer would qualify to be deemed “currently not collectible,” which would relieve him from any collection efforts at all. The IRS would abandon collections then check back with him in a year to see if his financial situation had improved. If it had, it would set up a payment plan and if not the “currently not collectible” status would resume for another year.
Stanley called the IRS and offered to pay a small pittance each month. This sum is not enough to cover even the interest on the liability much less put a dent into the penalties and principal. He’ll likely be paying off the debt for the rest of his life.
But the IRS set up the payment plan under those terms. A couple of weeks later before even the first payment was due, he was notified that the IRS began garnishment of $200 per month from his SSI check, which increases his hardship circumstances substantially.
He called the IRS again and they promised to stop the levy but they refused to return the amount taken. Another month went by and again they yanked $200 from his check.
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Another phone call; another promise to stop the levy. We’ll have to see if next month’s check is intact or not.
Then today I received an email from another taxpayer with exactly the same problem. A payment arrangement had been agreed upon then two weeks later the IRS garnished the husband’s wages.
If this happens to you or if you are having other tax problems, be sure to call the number on the last notice you received from the IRS rather than the IRS main number where you are sure to be transferred from one department to another.
Document who you spoke with, including the employee ID number, the date called and the content of the conversation.
If you are at wit’s end and are more concerned with your mental health than with the IRS problem, consult a tax professional to speak on your behalf. You simply sign an IRS Form 2848 Power of Attorney. This allows the tax professional to engage with the IRS regarding your confidential tax file. Often times a tax professional can cut through the red tape and achieve results quicker.
If all else fails, call the Taxpayer Advocate at 1-877-777-4778. The Taxpayer Advocate is an independent agency within the IRS that goes to bat for taxpayers who have exhausted all other means of resolving a tax problem.