The Taxpayer Advocate is an independent office within the IRS that helps taxpayers when they feel they are getting a raw deal from the IRS. As part of this service, the department also sends an annual report to Congress on various IRS issues. The most recent report is full of all kinds of goodies, but lets take a look at the scathing information on collection efforts.
Nobody seriously disputes that the IRS is slow to go after delinquent taxes. If you don't pay your taxes on April 15th, the IRS will not be on the doorstep the next day. The problem, of course, is they will eventually come. How long it will be till that fateful day is something the Taxpayer Advocate more or less annihilated the agency on.
The Taxpayer Advocate blistered the IRS in its report to Congress in regard to the time it takes to go after back taxes. While no actual time period was reported, it is apparently a very long time. The Advocate complained that the delay was so long that taxpayers ended up owing huge amounts of money once interest and penalties were figured into the process. This resulted in most of the taxpayers being in no position to pay the amounts due, even if they wanted to.
How bad is the problem? Taxpayers were put in such a hole that the government could only recover 15 cents on the dollar on average. In fact, so many taxpayers were assigned crushing debt that an odd, funny and sad thing happened. The IRS ended up writing off more debt as non-collectible than it actually collected. Now that is a sign of really bad efficiency.
Levies are another area that makes people sweat. Who wants their bank account or paycheck levied for back taxes? Well, the IRS has problems here as well. The Taxpayer Advocate reported a very ugly little statistic. It turns out the IRS uses the levy procedure 84 percent of the time on the elderly and disabled. You guessed it. The IRS goes after their social security checks. Nice.
The response of the IRS to all of this has been to outsource its collection efforts to?well, collection companies. The program has been an utter disaster. The agencies have misused private information, broken just about every law related to collections and generally done a really bad job. While the IRS still has the program in place, one can anticipate the end of it in the relatively near future.
At the end of the day, back taxes are a bad deal and you should deal with them. In doing so, you can relieve a bit of the stress by realizing the IRS isn't exactly the master of actually collecting them.
