I attended the 35th Civil and Criminal Penalties Conference in Las Vegas last week where one of the panels gave the Deputy Commissioner for SBSE (Collection), Darren Guillot, the opportunity to discuss the things happening in Collection. I also had the opportunity to meet Keith Fogg, former professor at Villanova University School of Law, my alma mater, who recounts in Procedurally Taxing the following regarding Darren Guillo’s discussion:
- In 2019 there were approximately 9.5 million non-filers – meaning individuals who failed to file a federal income tax return despite having a filing obligation. While it is a little hard to be precise, the information available to the IRS for that year suggests this many individuals (I think Darren was only talking about individual non-filers at this point) had enough income to have a filing requirement. Certainly, a decent number of these non-filers probably are due a refund but it was assumed the majority would owe.
- Collection is looking to Artificial Intelligence for help in responding to taxpayers. Starting in the summer of 2022 an authenticated voice bot will answer questions and let taxpayers set up an installment agreement. Going live now is a chat bot which will allow taxpayers to get answers and to make a one-time payment. Darren called this the unauthenticated version, but it can still be helpful. There will be essentially no wait time to talk to the chat bot.
- He is hopeful that the nearly 3 million people who qualify for a streamlined installment agreement each year will find this service helpful and that having people use it will take some of the pressure off of the Automated Call Sites (ACS).
- He described something called the Case Creation Non-filer Identification Program which is a system for identifying non-filers and specifically high dollar non-filers. Individuals identified through this program will receive a CP 59 letter (CP stands for Computer Paragraph) alerting them of the need to file. Darren said that in the tests taxpayers have responded favorably to this letter.
- He said that ACS is now working high dollar cases up to $1 million. Collection is identifying the types of cases where even though the amount of income earned by the individual is high, the likely collection action is the type that ACS supports. In the past the cut off for ACS handling a case was much lower but the cut off doesn’t reflect the type of collection action necessary to bring a taxpayer into compliance. Though he did not frame it in this manner, I expect that a high dollar delinquent account in which the taxpayer is a wage earner or someone who otherwise has assets that would be easy to levy will end up in this program.
- In 2019, 843,000 of the 9.5 million non-filers were considered high income. For this purpose, the taxpayer was considered high dollar if more than $100,000 in income was reported to the IRS.
- Revenue Officers (ROs) are the front-line collection employees in the field and generally maintain an inventory of about 50 to 70 cases. Now, there are less than 2,000 ROs working for the IRS. This is the lowest number of ROs since 1970. Darren said they had dwindled in size from about 4,000 in 2010.
- He said there is enough work for several thousand more ROs and collection representatives (the individuals who work in ACS.) The IRS is hiring now, and if legislation passes with funds for the IRS it will be hiring a large number of new ROs and collection representatives.
- Finding new employees to hire is an issue. The IRS found high interest by well qualified individuals in collection representative positions in Puerto Rico. It has hired 400 people and is about to open its largest ACS site which will be located in Puerto Rico. It is in the process of hiring another 400 for a second site in Puerto Rico which will open by the end of the summer of 2022.
- Darren said the IRS has gotten better at identifying individuals who owe money. In 2019 it was collecting about $430 per return. In 2021 it has collected an average of $686 per return. It has shifted ROs from working on delinquent returns to balance due returns.
- Because the IRS has lost so many ROs its presence has diminished. Many smaller cities that previously had an RO presence no longer have one. To reach communities it might not otherwise easily reach given the current location of its staff, Collection is sending ROs out in “sweeps.” It will send 12-13 ROs into a community for a week to knock on doors and confront delinquent taxpayers who otherwise might not see an IRS field presence. The purpose is not to create criminal cases but to drive filing and payment.
- Collection did sweeps virtually during the pandemic. Darren said that these sweeps have been very effective, and he expects to continue them not only in the US but also overseas with an upcoming sweep in Australia.
- It is also going to conduct a sweep of high dollar return preparers who have not filed their own return. Collection’s name for the sweeps is Revenue Officer Collection Sweeps or ROCS.
- Darren described another operation called Surround Sound run by the office of fraud enforcement seeking high dollar cases and the prospect of criminal referrals.
- Related to this discussion, he said that the IRS is getting much better at finding taxpayers who own digital currency and pursuing those individuals who have not filed and paid.
Darren closed his remarks with a plea to practitioners to assist taxpayers in understanding the importance of timely filing even if they cannot pay at the time of filing, because the penalty for late filing is 5% per month which is much greater in comparison to the penalty for late payment which is 0.5% per month.
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