Tax & Business Insights

Letters To a Black Hole -- The IRS?

Volume 15 Issue 5 -- September/October 2003

Why would anyone write a letter to the Internal Revenue Service when they know it probably will be shredded by the IRS, perhaps without ever being read? As strange as it seems, an unread or shredded letter can serve an important purpose.

Forget about the “paperless” society. It probably will never be perfected, but it certainly will not work when dealing with the IRS. Here=s why.

Consider a typical example based on a real case. Client Ima Blanko failed to pay her tax liability when she filed her tax returns, owing approximately $90,000 in tax. Ima attempted to negotiate an installment payment agreement but did what many taxpayers do B namely, she failed to get the IRS employee=s name and identification number, did not send correspondence by certified mail, and did not keep copies of letters and checks she sent to the IRS.

When you call the IRS these days, you may be routed from one city to another and you CANNOT return a call or speak to the same person twice.

Another misfortune about not being able to deal with an IRS employee who has a telephone number is that you have to wait forever “on hold” and listen to 47 repeats of Eine Kleine Nacht Musik and other Mozart pieces. Even if you like Mozart, it is still impossible to enjoy the music, or even to ignore it, because the music is constantly interrupted with IRS messages allegedly of great import, like “Don=t hang up.”

In Ima’s case, we dealt with a Ms. B. Barfalulu (hereafter “B. Barf”) at the St. Louis Automated Collection Service (ACS) office. Unbeknownst to us, B. Barf talked a “good game,” but made no entries into the IRS computer system. After a month and a half of our attempting to negotiate an installment payment agreement, the matter was referred to the Taxpayer Advocate=s Office, since we were getting nowhere with ACS. Sometimes the IRS Taxpayer Advocate=s Office can be extremely helpful to a practitioner.

In Ima=s case, neither the Taxpayer Advocate=s Office nor any other IRS office had any record of the efforts to obtain an installment payment agreement for Ima. This meant that B. Barf had been working on the matter for approximately a month and a half and had not documented one darn thing, or that the IRS system failed (as it often does), or both. Since IRS-ACS works exclusively by “what=s on the screen,” the lack of information in the computer system meant essentially that none of the previous contacts with B. Barf were recorded.

What is one to do when dealing with a B. Barf situation? About the only thing that can be done, which, fortunately, was done here — mailing certified letters covering the points agreed to with B. Barf. It is essential that the letters to the IRS be sent by certified mail, return receipt requested. (You cannot send a letter by Federal Express to IRS Service Centers.) The only record of the numerous discussions with B. Barf was the certified letters, copies of which were later sent to the Taxpayer Advocate=s Office.

Often, when speaking with ACS representatives, when the subject comes up of confirming a discussion in writing, the IRS Rep (like B. Barf) will say something like, “You can=t call me back and you can=t write to me.” In fact, we include this in our letters — “We know the letter will be shredded, but the only evidence that may exist of the points discussed are in this letter.” Stated differently, when dealing with an IRS Collection office, it is necessary for the Practitioner to create and preserve the paper trail. An integral part of that “trail” is the certified mailing of documents.

Is there an alternative? Probably not, at present.

A word of advice B it is not a good idea to write a letter to the IRS without a power of attorney and ask that a response be sent to the taxpayer. You may never learn if the client receives the response. Even if the client receives a response, the client may lose the response or fail to get it to you in a timely fashion. For these reasons, it is always advisable for the representative to get an IRS power of attorney (APOA@), Form 2848, and then send the POA with the letter or correspondence.

Do not expect or depend on the IRS=s vaunted computer system to work. Often it does not, and unless you keep a paper trail, record of your discussions may not exist. Hence, whatever was agreed to may go completely undocumented, if you happen to get an IRS employee like B. Barf.

In conclusion, oddly, letters to the black hole of nowhere make sense.

While designed to be accurate, this publication is not intended to constitute the rendering of legal, accounting, or other professional services or to serve as a substitute for such services.

Redistribution or other commercial use of the material contained in Tax & Business Insights is expressly prohibited without the written permission of Tax and Business Professionals, Inc.

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