INTERNAL REVENUE SERVICE: IRS

MAx Fabry is a regular contributor to a weekly column "ASK MAx" published in the SPRINGFIELD TIMES, Springfield, Oregon. The SPRINGFIELD TIMES is published weekly on Friday by S.J. Olson Publishing, Inc. This column is published on this blog by permission of the SPRINGFIELD TIMES. Visit their website at http://www.springfieldtimes.net.
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Dear MAx,
I went to the bank to withdraw some money from my account. I was informed that the IRS took everything from all my accounts! This is embarrassing and awkward as I have automatic payments made for electric, phone, mortgage, etc. My attorney tells me this is perfectly legal. I am a well-educated retired professional. It makes me sick to admit that I had considered suicide over this. I want others to know that this can happen to them.

Ernie

Dear Ernie,
Thank goodness suicide ended up not being an option for you! Hopefully, you have connected with a therapist and CPA to follow through on healing from this dilemma.
Please know, Ernie, you are not the only American experiencing the wrath of the IRS.

There is much documentation that the IRS, particularly, the Criminal Investigation Division (IRS CID), has on more than one occasion been accused of abusive behavior. In preparing this column I read many heartbreaking cases of people that committed suicide because of problems directly related to IRS collections. Unfortunately, the IRS continues the pursuit of payment through the family and estate even after the victim is gone.

As your attorney probably informed you, Ernie, the IRS has the legal authority to enforce liens and seize your assets without obtaining judgment in court. They do not have to warn you exactly when it will happen. It is important to understand the complicated structure of the IRS in order to be able to deal with them.

The Congress of President Lincoln created the first office of the IRS in 1862 during the Civil War. The purpose was to enact a progressive income tax that would pay war expenses replacing the flat rate tax, the first federal income tax system established in 1861. Since then the IRS has changed names several times, and has grown in complexity.

The IRS headquarters is located in Washington D.C. and is a branch of the U.S. Treasury Department. As of 1998 it has four major operating divisions, ten regional service centers, 33 district offices, numerous sub offices under the district offices. Since 1997 it is constantly changing as part of a “modernization” program.

A Commissioner, regional commissioners, district directors oversee the IRS structure, and Chief Counsel appointed by the President and confirmed by the Senate. There are over 100,000 employees working for the IRS. And, in 2006, the IRS started outsourcing collections of taxpayers debts to private debt collection agencies, paying 22-24% of the amount collected on each debt.

Over 200 million tax returns are processed each year. During the fiscal year 2006, more than $2.2 trillion in tax net refunds were collected; 44% attributable to individual income tax. In 2007 the IRS estimated it was owed $300 billion more than it collects. Thus, the IRS adapted a motto of “Service plus Enforcement equals Compliance” leading to more investigations of abusive tax schemes. Given the state of the US economy since 2008, you can believe that the IRS is stepping up their efforts to collect all outstanding debts no matter how small the amount or the human cost.

Within the structure of the IRS there is a taxpayer service function called the “Problems Resolution Program”. Developed in the 1980’s this program employs IRS troubleshooters to facilitate communication between taxpayers owing money and the IRS. These officers are located at service centers, regional and district offices and hold the powers to help you cut through the red tape to get things quickly resolved. For more information about this program go to: http://www.irs.gov/advocate/.

Ernie, you did the right thing contacting your attorney for advice. Whenever dealing with a tax-related legal issue an experienced tax attorney can help ensure that your financial and personal interests are fully protected. I would also advice you to be sure to connect with a therapist that can help you work this through to avoid the overwhelming stress that these situations incur. Of course, always having a good CPA that keeps updated with the ever-changing laws, rules, and policies of the IRS is a must.

Be well on your journey.
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Have a question about addiction, recovery, or life transitions such as retirement, career change, grief and loss issues, empty nesting, etc, ‘Ask MAx’. Send your questions to Lifestyle Changes, PO Box 1962, Eugene, OR 97440; or, e-mail your questions to maxfabry@lifestylechangescounseling.com. Learn more about MAx Fabry and read her blog at www.lifestylechangescounseling.com.