IRS Asks for Patience

The IRS issued an “Operations Resumption Statement” last week on its website after opening its doors back up on October 17th.  The IRS wants taxpayers and tax professionals to know that that they are aware of the backlog that has resulted from the 16-day shutdown:

At this point, we know we received a large amount of correspondence during the closure. We know there will be a substantial increase in demand for our phone services and many other operations

In other words, “stop reminding us about the delays and long hold times; we know we have problems right now.”

The IRS also acknowledged that it will take time for the call centers and walk-in assistance centers to ramp up to normal levels of operation.  Since they are still assessing the damage caused by the government shutdown, there is no way to estimate how long the ramping up process will take.  I would guess that things will be slow for several weeks, perhaps even a couple months.  This is based on my experience as a tax attorney over the years.  Even one day off at the call centers often has residual effects on hold times and mail processing times.  A 16-day shutdown is unprecedented and we have no way of knowing when the IRS will be back to “normal” at this point.

In light of the enormous backlog that the IRS has committed to focus on over the next several weeks, the IRS has asked that taxpayers and tax professionals delay or limit their contacts with the IRS except in urgent situations.  Of course, after 16 days many of the issues that could have been considered non-urgent have now been upgraded to higher levels of urgency.  And I think the IRS realizes that too.  They just ask for our patience right now.  Ask anyone who deals with the IRS on a regular basis — if there is anything we know, it’s patience.

IRS is Closed, but Still Accepting Your Payments

The IRS has provided a detailed explanation regarding what services are available during the lapse in appropriations — and it’s not much.

  • no live telephone assistance
  • no walk-in availability at local IRS offices
  • no refunds to be issued
  • no correspondence will be opened/reviewed
  • no tax return processing
  • no third party transcript requests
  • no installment agreement requests will be reviewed
  • no hardship status requests will be reviewed
  • no offers in compromise will be reviewed
  • no audit, exam, or appeal conferences
  • no levy releases (presumably)

The IRS clearly stated that they will not be issuing any new levies during the lapse in appropriations.  This applies to automated levies that are generated by ACS (Automated Collection System) as well as those issued by live field agents.  However, the caveat there is that some levy notices appear to have gone out after the government shutdown because they were post-dated.  If a particular levy notice was actually issued prior to the IRS closing its doors, then it will be impossible to get it released for the time being.  Also, “intent to levy” notices (those that warn taxpayers of future levy risks) will continue to be mailed out by the automated system.

But we know that at least some IRS personnel continue to work through the shutdown.  What are they doing?

  • cashing your checks
  • conducting criminal investigations
  • issuing emergency levies & seizures

Emergency collection actions usually involve situations where collection of the tax is in jeopardy: for instance, where the CSED (Collection Statute Expiration Date) is approaching and the IRS is on the verge of forever losing an opportunity to collect a substantial tax debt.  Even during normal operations, the IRS is quite selective in what it deems a “jeopardy” situation.  So during the IRS closure, this scenario would be “extremely limited” according to the IRS.

Government Shutdown: Residual Effects on IRS

The effects of the “government shutdown” have been far-reaching and I’m certain we will feel the effects for months to come, even if everything is switched back on soon.

In IRS world, even one day off tends to cause residual delays and bottle-necks.  For example, when the IRS observes a national holiday and shuts down on a Friday or a Monday, the work tends to pile up, making it more difficult for taxpayers to get help for the following couple business days.  This is especially true in the IRS call centers where they have little control over work flow.  A salaried employee, such as an IRS revenue officer, can put in extra time before a day off so that work doesn’t pile up too much.  But the work flow of an hourly call center employee is more dependent on the volume of inbound taxpayer phone calls.

The IRS always experiences high call volumes on Mondays and days following holidays because IRS problems don’t just go away on their own.  If you can’t get through to the IRS on one day, you’ll probably try again as soon as possible.  And I don’t feel like the IRS hold times have ever really recovered to what they once were before the IRS began furloughing employees earlier this year.  But now we are talking about an unprecedented closure of several days in a row (and how many more, we do not know).  I would not be surprised if the residual effects of the IRS shutdown are felt well into 2014.

No IRS Furlough in August

The IRS had originally planned on five furlough days (unpaid days off) this year.  The first three went on as scheduled, the July 22nd furlough day was canceled somewhat at the last minute and turned into an optional work day, and now the final furlough day of the year (August 30th) is going to be postponed.  According to IRS Acting Commissioner, Danny Werfel, the IRS recently found ways to save money and was able to cancel the July 22nd agency-wide furlough day.  And the IRS hopes to be able to cancel the August 30th furlough too, but cannot make that determination at this time:

We have made substantial progress in cutting costs. … Our progress is such that we have decided to postpone the furlough day scheduled for Aug. 30. We still have more work to do on the budget and cost-savings, so we will reevaluate in early September and make a final determination as to whether we will need another furlough day in September.

Hopefully the IRS will continue to find ways to cut costs.  Furloughs are not good for taxpayers because they make it very difficult for taxpayers to obtain the information they seek.  Even if they are not calling on the exact date of the furlough, the backlog it creates  on the other days is somewhat of a burden.  Furloughs are obviously not good for IRS employees either.  Even if they are ultimately canceled or postponed, the mere announcement of a furlough day tends to disturb the morale and confidence of employees.

July 22nd: Optional Work Day for IRS Employees

Tax attorneys and other tax professionals plan their work days around their interactions with the IRS.  So, when the IRS is closed on a weekday, they take note.

Earlier this year the IRS had announced a series of planned nationwide furlough days to help with its “bottom line,” one of them to take place on Monday, July 22nd.  Then a couple days ago the acting IRS Commissioner, Daniel Werfel, announced by way of internal memorandum that the agency would no longer be forcing its employees to take that day off.  The furlough scheduled for July 22nd was lifted.  However, realizing that many IRS personnel have already made plans for a three-day weekend, Werfel is allowing anyone to still take the day off if they want.

So what does this mean for tax professionals who need to contact the IRS on July 22nd?  What can we expect?

In my years of working in the field of tax controversy, I have come to realize the impossibility of trying to predict too much when it comes to the IRS.  But my guess is that Monday is not going to be the best day to call them.  Given the opportunity to take a 3-day weekend with pay, what IRS employee would come in and work (besides may the overzealous brown noser or somebody too dim to realize he doesn’t have to be there)?!  I think the IRS is going to be severely understaffed, probably to the point that it would be no different than a furlough day from taxpayers’ point of view.  And those that do go in to work on the 22nd are going to be stressed and unhelpful.  It’s probably best to wait until Wednesday or Thursday if you need to call the IRS next week.

I have noticed that one of the consequences of the furlough days thus far has been a sharp increase in hold times when trying to call into the IRS.  People that don’t get through on a furlough Monday tend to call back on Tuesday, and then Wednesday, etc.  The calls pile up just like all their other work.  These days it is not unusual to wait 45-60 minutes before the IRS picks up you call.

IRS Employees Protest Planned Furloughs

Why is it so amusing to imagine IRS employees picketing?  I almost wish I could be in Manhatten next week to see how it goes for them — it’s sure to be pretty rowdy, right?

The rally was organized by the National Treasury Employees Union (NTEU) Chapter 47 which represents IRS employees in Manhatten.  They will be protesting the upcoming unpaid furlough days, hopefully not using signs made with government materials on government time.

This is only one of many demonstrations that have taken place outside of IRS offices around the nation this year, including NTEU Chapter 20 in San Francisco on February 28th, Chapter 92 in San Diego on March 7th, Chapter 97 in Fresno on March 22nd, Chapter 143 in El Paso on March 23rd, Chapter 61 in Albany on March 26th, and Chapter 34 in Pittsburgh on April 15th.  Yes, that’s right, April 15th!  Here is Chapter 34 posing for a picture on the IRS’ busiest day of the year with one employee holding a sign that says (ironically, I think) “Let Me Do My Job”:

photo via

I really don’t have a problem with IRS employees protesting the sequester and furloughs.  I realize that they’re doing it on their lunch breaks.  I just think it’s funny that they are so opposed to a few days off this year.  Although they wouldn’t openly admit it, I suspect that more than a few IRS employees would be upset if the government reneged on the furloughs.

Long Holiday Weekends for IRS This Year

Now that tax season is over for the on-time filers, many IRS employees can relax just a little.  And for at least 5 additional days this year they actually can relax at home . . . without pay.  Bloomberg apparently got its hands on an internal IRS memorandum informing IRS employees which days have been scheduled as furlough days this year.

The IRS furlough dates are:

  • May 24
  • June 14
  • July 5
  • July 22
  • August 30

These furlough dates were chosen to coincide with the federal holidays already on the calendar, so we will be looking at several four and five-day IRS closures throughout the rest of 2012.  I say five days because the IRS often shuts down early the day before a holiday, sometimes for computer maintenance, and sometimes so they aren’t disturbed during their potlucks.  I’ve always thought that “computer maintenance” was code for holiday party or potluck, but that’s just my slightly jaded opinion.

The IRS, as well as many other federal government agencies, is resorting to furloughs in reaction to budget reductions that took effect earlier this year.  Acting IRS Commissioner, Steven Miller, explained his reasoning for the agency-wide closures:

We came to a decision that balances our primary mission to serve the taxpayers and considers the effect on employees. We settled on having uniform furlough dates for everyone and closing down agency operations entirely. This way, the IRS can gain additional cost savings on utilities and other services in our work locations.

According to Miller, the closures will affect all local taxpayer assistance centers and call centers. should be up, but the availability of online services such as Transcript Delivery Service and other IRS practitioner tools is unknown.  And, if necessary, there may be an additional two furlough days coming in August and September.  Plan your vacations accordingly.

It's always "hurry up and wait" with the IRS

It’s always “hurry up and wait” with the IRS.

The Offer in Compromise (OIC) process is a perfect illustration of this point. If a taxpayer finds himself with a tax debt that he cannot pay, one of his options is to file an Offer in Compromise by which he offers to settle with the IRS for less than what he owes. But the IRS will require that the OIC be filed as soon as possible; in fact, the IRS collections department will be poised to levy income sources if the offer is not filed (or some other resolution entered into). It is important to inform Collections of your intention to file an OIC, but they will most likely give you a short due date by which to submit the paperwork.

Once the OIC has been filed, then the waiting begins. It commonly takes several months just for the IRS to assign an offer to be reviewed. Offer examiners have to keep an eye on their caseloads because once a case enters their inventory, they are required to move it along promptly.

When an offer examiner or offer specialist has finished reviewing the offer, things pick back up and the taxpayer has to stay on his toes. Once again, deadlines are given that, if missed, could mean the end of the road. During this period of review the deadlines are typically attached to the submission documents that are required to substantiate details in the personal financial statement.

Once all the information is in and a determination has been made, there is usually additional waiting. The case normally must be submitted to a manager for further review, and that can take some time.

With the coming sequestration and IRS staff furloughs on the horizon, it is likely that the contrast between the hurrying and the waiting will be more pronounced. The IRS has said that furloughs will not begin until after tax season — that’s when we can expect longer-than-normal waiting periods at all levels of the IRS as there will be fewer IRS employees on duty to help.