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IRS Moving Cautiously as It Reboots Enforcement Efforts

Posted on Jul. 23, 2020

Careful and alert are the watchwords for IRS enforcement and collections operations as the agency moves forward after expiration of its People First Initiative, according to a senior IRS official.

“Our return to enforcement activities is going to be gradual,” Darren Guillot, deputy commissioner for collections and operations support in the IRS Small Business/Self-Employed Division, said July 22. “It's not going to resume like a light switch.”

Speaking on an American Bar Association Section of Taxation webinar, Guillot said the IRS is continuing to reopen amid the coronavirus pandemic, with 75 percent of collections operations support personnel working remotely — up from 5 percent pre-pandemic. He noted that the number of automated collection support employees has risen from less than 2,000 before the pandemic to 2,889 today, with all additional hires having been recruited and trained remotely.

“Despite all these barriers the last five months have brought us, we've been able to increase our ability to answer more phone calls,” Guillot said.

The IRS’s enforcement efforts are picking up again after the July 15 expiration of its People First Initiative, which delayed or deferred payments and ceased almost all field collections and enforcement actions.

Thanks to that initiative, the Taxpayer Advocate Service has seen a dip in its collections workload, according to National Taxpayer Advocate Erin Collins. “Our numbers on collection issues have gone down considerably,” she said on the webinar. “I think new cases are not coming in because the IRS has pencils down.”

Bad Time for Tax Crime

The post-People First environment will see intensified activity in some areas deemed important to preserve and improve tax compliance, Guillot said, adding that the IRS will be aided by new data tools and enforcement strategies.

“I don't think anyone could have picked a worse moment in history to be a tax criminal,” Guillot said. “You'll be seeing that for yourselves in the coming months.”

High-income nonfilers remain a special concern for the IRS, Guillot said. The agency has initiated a program called Surround Sound to determine which cases should be referred to examination for audit and which to the Criminal Investigation division for fraud, he noted, reiterating his remarks on the topic from the previous week.

IRS in-person visits in February — part of the agency’s Hi-Def program to identify high-income nonfilers — brought many into compliance, but the collection queue still has more than 983,000 cases pending, Guillot said.

The IRS is also continuing its crackdown on employment tax avoidance, Guillot said. The agency had reduced the amount of unpaid employment taxes by $5 billion through fiscal 2019, compared with five years earlier, he noted, but he added that collections employees still have almost 530,000 employment tax cases on their plates.

In addition to liens, levies, seizures, trust fund penalties, and fraud referrals of employment tax cases, the IRS is also pursuing civil fraud penalties, Guillot said.

Cutting Slack

With the pandemic ongoing, the IRS is still easing up on some taxpayers, Guillot said. “We are not returning to the status quo,” he said. “We are getting back to business, but we’re doing it in a smart and compassionate way.”

IRS offices are reopening with social distancing and physical barriers to protect employees and taxpayers, but will limit operations or close offices if necessary to prevent the spread of the coronavirus, he noted, echoing comments made by IRS Commissioner Charles Rettig the previous day.

Face-to-face contact between taxpayers and IRS field collections employees will occur “only in exceptional cases,” Guillot said. These include elections in jeopardy, placing assets beyond the reach of the government, and continued pyramiding of employment tax liability, he said.

Pending offers in compromise may now be closed without taxpayer consent, Guillot said. But the agency isn’t defaulting to installment agreements because the taxpayer filed a return with a balance due, he said. Instead, the new balance can be added to the existing installment agreement to avoid default, he said.

IRS automated collections are also temporarily refraining from asking for taxpayer financial statements for those who owe less than $250,000 and can pay their tax debts within the statutory time frames, Guillot said.

Guillot pointed out that he issued a memo to collections managers and employees on July 6 “encouraging and authorizing our revenue officers and employees to emphasize greater flexibility.” IRS collections officers will take into account the impact of unemployment, local coronavirus conditions, and other mitigating factors, he said.

“Enforcement is a last resort,” Guillot said. “It's never a first resort.”

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