Historically, the Internal Revenue Service has always seemed a little bit scary, slightly out of reach, and shrouded in a sense of secrecy. It’s not been an easy system to navigate or interact with and that feeling only worsened during the COVID years and beyond.
The purpose of this article is to shed some light on what the IRS has been up to and what changes to their collections process we anticipate in the coming year.
Throughout 2021, 2022 & 2023, we saw a significant decrease in issuance of collections notices from the IRS. This was largely in response to the strain that the COVID pandemic put on taxpayers across the country.
Further, the IRS shut down their automated collection functions in its entirety. They’ve been instructed to reopen all of those functions in 2024. This means there will be a large increase in enforcement on all cases where untended back tax exists.
The IRS slowly reopened collections functions throughout 2023 and we anticipate a return to more “normal” - pre 2020 - collection efforts throughout this year and beyond.
So, what does this mean for you?
If you are missing tax returns for the last few years, it is important to remember:
The IRS can require that we file the most recent 6-years’ worth of returns if we have not done so;
The IRS can (and, will) file on our behalf if we do not file. This protects the IRS' interest in taxes that may be due for that year. When they do this, they are not taking into account any deductions you would otherwise be eligible for and this typically results in much higher balances than would be due if you filed an original return.
If you owe back tax and have noticed a softening in the IRS corresponding or enforcing against those balances due, we would suggest you prepare for a reversal of those more lenient practices. If you are in a position where you owe the IRS on prior year taxes and are NOT in a payment plan with them, you should anticipate:
A resurgence of collections notices in the mail;
A higher likelihood of wage or income garnishments - yes, they can issue levies to 1099 income sources;
A higher likelihood of bank levies;
A higher likelihood of lien issuance when you owe greater than $10,000.
If you do owe back tax, you should contact the IRS to discuss resolution options. If you wish for assistance in this aim, our team of experts is happy to talk to you.
On the heels of a time period where the IRS was not enforcing at levels consistent prior to the year 2020, it is also understandable that you may not know, entirely, where you stand with them. If you are in this camp, and wish to get an overview of your IRS account with a roadmap of steps that should be taken to address any outstanding issues, we can help. If you are unsure of where you sit with the IRS, our team of licensed Enrolled Agents can contact the IRS for you in an effort to:
Get a big picture overview of your account with the IRS;
Obtain a breakdown of all balances due with an understanding of collection statutes for any balances and how long the IRS has to collect;
Obtain an accounting of which returns may be missing and need to be filed;
Obtain Wage and Income Transcripts for any unfiled years. These will show any income reported to your Social Security Number for any years that have not yet been filed;
Obtain Account Transcripts for each year that there is a balance due to the IRS - these will show transactional detail;
Outline a roadmap with all available options to reach an amicable resolution with the IRS.
Our desire is to be sure you are set up for success. Understanding where you, and your business, stand with the IRS is an important component to that.
If you’re a truck driver who is behind on filing multiple years of tax returns and may owe thousands of dollars to the IRS, click here to learn more about how we can help, or give us a call at (866) 920-2827.