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When is the Right Time to Bypass Normal Channels at the IRS

Posted on Sep. 30, 2015

When representing a client during an examination, or in the collection process or in Appeals, a time can come when complete frustration sets in and you despair that you can never accomplish what you need for your client. How do you know when it’s time to give up on the normal process and move to a different path? In taking the different path, whether it is going to the manager of the employee handling the case, going to TAS, going to your client’s Congressman, or in very extreme cases making a referral to TIGTA, you know that you may likely burn a bridge with the person at the IRS handling the case. How do you balance between the potential benefit to your client or to the system and the known negative consequence? What duty do you owe to your current client with the problem versus your other clients or future clients whose cases may feel the impact of your broken relations? Does it matter that the IRS person works locally causing you to regularly encounter them versus the employee in a Service Center on the other side of the country? All of these thoughts and more go into the calculus of taking a case out of the mainstream path set by the IRS.

An article in the Fall 2015 TaxPro Journal by Charles Markham, “Intractable Tax Problems? Consider a Congressional Referral” got me thinking about this issue and whether any empirical research exists on this [See National Taxpayer Advocate Annual Report to Congress 2014, Page 549] or ethical opinions. In the article Charles does a good job of explaining how to go about making a Congressional referral. He also talks about how often you might make a Congressional referral – not often – and why. The discussion made me reflect on my years in Chief Counsel’s office and the attitude of those in my office toward practitioners who could not help themselves from elevating every case, or almost every case, in which they worked and did not get the result they desired. By elevating I mean these practitioners went to the manager, to TAS or to their Congressional representative. These practitioners held a special place in our hearts and it was not a good place.

Yet, moving a case into the hands of someone other than the assigned party needs to happen in some cases in order to assist a client in getting the correct result. The trick is knowing both how to do it and when to do it. Charles’ article is a good starting point. He describes the circumstances of the case in which he used the Congressional referral and the fact that the case was at a standstill. He mentions that “much of its power comes from being used sparingly.” His article gives a detailed and excellent roadmap to making a Congressional referral by describing each document that should go with the request and what to say. Similar thought and care should go into a referral to a manager, to TAS or to TIGTA. Asking to speak to the manager or submitting a 911 should never happen without the same type of detailed presentation that Charles describes in his article for a Congressional request. This will allow the person receiving your request to immediately understand what you want and why. Every effort to avoid personalizing the request should occur.

I thought I would add a few observations and draw on some former IRS employees to add theirs as well. I contacted four former colleagues I worked with in Richmond. Each worked as a manager and, of course, before that worked as the line employee.

Going to an employee’s manager is the easiest and the hardest of these options at the same time. The request to the manager fits into the easiest category since the manager should already have some engagement with the circumstances and certainly should know the general situation in which your request fits. The manager can act more quickly than the other parties to whom you might make your plea and the manager, if convinced, certainly has authority to direct the employee to produce the result you seek. By giving the manager the chance to fix the problem before moving to TAS, TIGTA or to Congress, you allow the manager to diffuse the situation without the problems created by outside intervention which could cause both the employee and the manager to have lasting dislike for you. The more you already have a relationship with the manager, and the employee, the better you can gauge this approach. If it is a local office in which you practice regularly, you may have a good sense of the success the elevation to the manager will bring. On the other hand, the manager must work with this employee every day and their first reaction will generally seek to protect the employee. Many times the employee’s behavior in the case may already reflect the position of the manager.

My former colleague Mike Colley who worked in the collection division observed that

First line managers rarely change the decision made by revenue officers when it is a judgement call. They may not agree that it is the best course of action, but do not want the less gifted revenue officers clearing enforcement actions with them prior to discussing same with POAs. If the revenue office is “off the reservation”, his/her proposed action should be discussed with the manager and will be well received.

Revenue officers and their first line managers share information formally and informally. If a POA frequently requests a meeting with a first line manager, he/she will not be able to negotiate successfully when lobbying for an alternative to actions proposed by a revenue officer. In fact, the manager may be less inclined to grant the action requested to encourage the POA to work with the revenue officer in the future.

Revenue officers not only share info about the actions of POAs with their managers, they also share it with each other. POAs need to understand that a reputation for trying to delay appropriate collection actions spreads quickly and will prevail for a long time.

Revenue officers have a lot of discretion. They have discretion as to actions to be taken, and when such action can be taken. Don’t poke the bear!

Former colleague, Mark Rocawich, who had the unusual distinction to serve as both the Chief of Collection and of Examination in Richmond basically agreed with Mike’s observation about the low chance of success in seeking to elevate a matter to the manager. His remarks focused on getting the revenue officer or agent removed from the case as opposed to simply elevating the matter to seek to have the group manager overrule the employee. He cited the CDP process as an opportunity to take the case out of the hands of a revenue officer where the case might not be going on the desired path, but he also felt CDP was an opportunity to continue working with a revenue officer where it looked like a reasonable resolution was possible. Similarly, in exam cases the case can effectively be removed from the agent by going to Appeals; however, that tactic may have lost some of its value if the representative wants to make arguments not presented to the agent and Appeals returns the case to the examination division at that point.

Former colleague, Bill Branch who worked in the Estate and Gift branch of the examination division, a more genteel practice area, had a more positive take on elevating the case to the manager. Each of my former colleagues has engaged in tax practice after retirement and Bill’s comments reflect both his experience inside and outside the IRS:

This can be a tough call, but I would not resist getting the group manager involved if I thought I was not being treated fairly by an agent.  Since working here, we’ve employed this move in five (?) audits.  I think it proved successful in four.  That is not to say we got everything we wanted, but the manager ended up making some concessions.  One thing to keep in mind [is that] most practitioners will “feel” it when they’re getting the shaft, or, at least, not a “fair shake” on the issues by the agent.  The manager should know that a practitioner isn’t going to ask for a manager’s involvement just to see if he can get a better deal without presenting any arguments of merit.  If the practitioner thinks he’ll get any concessions just by whining, he’s not going to get very far….  If the Taxpayer’s argument has merit, generally, the manager is willing to concede some and, perhaps, all of the issue.

George Gretes, who was the Chief, Appeals, before retirement had the following comments:

I agree with what has been stated above. If the case is in Appeals there should not be a concern about raising a problem to the manager. As noted earlier, these managers who are on the front line are, or should be, aware of the case and can take action to resolve problems and issues quickly and typically without creating additional problems. I also agree that a representative who is constantly going to the manager or elevating issues that have no merit is going to have his / her protest fall on “deaf ears”. In elevating a problem stick to the facts, the issue and try to avoid personality complaints and arguments.

The representative needs to know of all of the alternatives available to his client by including a search of alternative dispute resolution procedures in the Appeals section of the IRS Manual. For example, while the case is still in Examination or Collection (Compliance) and after raising the issue to the manager, consider asking for Fast Track Mediation, Fast Track Settlement or Early Referral to have Appeals involved in the case. Under these procedures Examination or Collection calls Appeals into the discussion to serve as a mediator or settle the issue or the case. Simply asking to use the process may move Compliance toward resolving the issue without involving Appeals. In addition, if the case is still not resolved under these procedures the case can go to Appeals and an Appeals Officer other than the one involved earlier will be assigned to the case.

If the case is in Appeals and the Appeals Officer is not working to resolve issue I would suggest asking to meet with the manager. If the issue is not resolved at that level I would ask for Post Appeals Mediation. Under this process another Appeals Officer or an Appeals manager is called into the process to resolve the issues. The problem with Post Appeals Mediation is that the “decision makers” must be at the meeting. That means the Appeals mediator will have settlement authority, your client may have to be there and they will be looking to make a decision at that meeting. By using the processes in place (after going to the first line manager) you are less likely to create a situation that you may regret in the next case you have before the IRS.

Going to TAS is another internal option before you seek Congressional assistance. If you have a good relationship with the Local Taxpayer Advocate, you may find that calling the advocate to discuss options for addressing the problem will help you in deciding what to do. If the LTA advocates bring it into their office after listening to your concerns and if you have confidence in your LTA, that provides a good sign that taking the case to the LTA will prove beneficial. The LTA may advise talking to the manager or seeking Congressional assistance. That person’s job is to fix problems stuck in the system. A good LTA probably knows the most efficient way to solve the problem. I have had good success partnering with the LTA on the decision of how to attack a problem. The more remote the location from your locality, the less likely the LTA will know the personalities involved but the LTA may still have a good sense of the systemic issues at play allowing her to provide good advice on how to attack it. Mark indicated that he found TAS very helpful in the past but that the budget cuts at the IRS had reduced the office with which he worked to a fraction of its former self making it very difficult to get assistance from TAS. Mike said “My philosophy is to make it easy for TAS to do their job. Be very clear as to the problem; all the actions you have taken (to include copies of letters to the IRS and proof of mailing; copies of correspondence from the IRS; and other information that documents the necessity of assistance from TAS).”

A Congressional request will draw an answer. The IRS will not run away from the request but you need to take care in the types of cases in which you choose to call upon the Congressional office. As Charles describes, in most cases, that office will slap a cover letter on your submission. If you want help in a case in litigation, the response from the IRS will generally be that the case is in litigation. That is not a process where the Congressional office can provide much help. If your case is stuck somewhere within the IRS, as Charles’ was, the letter from the Congressional office, which will draw attention at high levels, may prove the most efficient where you feel talking to the manager would be unproductive.

The nuclear option involves making a referral to TIGTA. This should occur only where you determine the IRS employee has done something wrong. Some things that IRS employees do wrong implicate Section 1203 of RRA 98 and can cost the employee their job. Most wrongful, or perceived wrongful, actions by IRS employees do not lead to dismissal but having a matter investigated by TIGTA can have serious consequences for the employee.

Those representing low income taxpayers may have a different take on working with the IRS because they so rarely encounter a revenue agent or revenue officer. Most of their cases get handled by groups of employees such as correspondence exam or ACS. Getting another employee to work on the case in those matters simply involves making the next contact with the IRS. Each time a different person touches the case. Going to the manager or TAS also involves different considerations since rarely does a relationship exist between a practitioner and an employee in one of the group functions.

Mike summed up his view of the situation with his comment that “the bottom line is that all practitioners will use the appeal process provided by the IRS when it is in the best interest of their client. However, the best practitioners do not file frivolous appeals on an ongoing basis.”

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