If you have unpaid taxes with the IRS, you can bet the IRS will eventually try to collect them from you. However, the IRS doesn’t normally send agents to your home or business asking you to write a check, as doing so can not only lead to dangerous confrontations but is also very inefficient, straining the IRS’s limited resources.
Instead, to increase its tax collection efficiency, the IRS utilizes something called the Automated Collection System, or ACS. While ACS is a largely automated system, the IRS temporarily suspended its operation because of the coronavirus pandemic. However, the IRS has recently begun ramping up ACS operations, so let’s take a look at what the ACS is, how it works, and what you can do if the agency tries to collect a tax balance from you using the ACS.
What Is ACS?
The IRS Automated Collection System is comprised of two components. First, it’s a computerized system that consists of an inventory of outstanding tax bills. The computer system creates letters and notices, including those relating to liens and levies, from this inventory and then mails those documents to the taxpayers. ACS is also comprised of a series of call centers located in various parts of the United States where taxpayers who receive these notices and letters from the IRS can call in to resolve their tax cases.
The IRS relies on the automated letter generation portion of the ACS to facilitate direct contact with the taxpayer. Then, ACS’s call centers find a way to settle the tax debt when a taxpayer calls, such as by setting up an installment agreement. In limited instances, ACS will initiate the telephone call with the taxpayer instead of waiting for them to call in response to an IRS letter.
How Does the Automated Collection System Work?
That depends on your definition of “work.” According to the Taxpayer Advocate Service, the ACS has a success rate of approximately 7%. In other words, for every dollar the ACS attempts to collect, it only recovers seven cents. That being said, you should still take the ACS seriously, along with any attempt by the IRS to collect unpaid taxes from you.
What exactly triggers the ACS to try and collect a tax debt from you isn’t fully understood, at least by those outside the IRS and those who work directly with the agency. Generally, cases involving large tax debts, such as those greater than $100,000, are less likely to be sent to the ACS and more likely to be handled directly by an IRS agent called a revenue officer. This doesn’t mean that once you owe the IRS $100,000.01, your case will be sent to a revenue officer. However, the primary goal of the ACS is to collect unpaid taxes as efficiently as possible, so it’s more likely to be used to collect smaller tax balances.
Once the ACS attempts to collect a tax bill, it generates a special reminder letter. With the resumption of ACS collection activities in 2024, this reminder document is usually Letter 38, Reminder, Notice Resumption. The purpose of Letter 38 is to remind you that you still owe taxes and that you need to act quickly to avoid further interest and penalties. It might be redundant to remind you about your tax debt, but ACS notices are often sent out for tax bills that are several years old, and it’s possible you might have forgotten about it or hoped the IRS forgot about it.
Letter 38 will contain information about what you can do if you can’t immediately pay your tax liability, what tax period the unpaid tax bill stems from, how much interest you owe, and any assessed penalties. If the IRS doesn’t hear from you, the IRS will usually send a follow-up letter. If you still don’t respond, the IRS will reassess what to do at that point.
For example, the IRS might remove your case from the ACS or keep it in ACS and have the computer system generate a 500-series notice to send you, such as a CP504 Notice of Intent to Levy.
Responding to the ACS Correspondence
If you’re reading this right now, you probably don’t intend to ignore Letter 38 or other similar ACS letters you may have received. The primary response to this letter is to call the IRS ACS phone number provided. Unfortunately, you shouldn’t expect a quick and painless process when you call. There are several things to keep in mind when calling an IRS ACS call center.
First, getting someone on the other line could take a long time. Long hold times are common; don’t be surprised if you’re waiting over an hour.
Second, be ready to explain your entire situation, even if you’ve already called several times and told ACS what’s going on. Many customer service representatives work at multiple call centers, so you’ll unlikely ever speak to the same ACS agent twice. Yes, they put notes in your file when you talk to them, but these notes often lack details or could be incorrect.
Third, how successful your call is with the ACS can largely depend on luck, as some ACS employees are more helpful than others. For example, ACS operators may try to persuade you to enter into an installment agreement, even if you clearly can’t afford to make the monthly payments and will likely default. Getting a better person to speak with means they’re more likely to listen and consider your unique circumstances when trying to figure out the best way to resolve your tax balance. Therefore, if you think you’re talking to someone who, for some reason, is choosing not to help you to the best of their ability, it might be worth it to hang up and call back to talk to someone else.
ACS Frequently Asked Questions
What if I don’t want to deal with the ACS to settle my tax debt?
You have two main options. The first option is to ask the IRS to move your case from ACS to a revenue officer. You might want to do this so you can have an individual agent handling your tax issue to provide continuity to your tax settlement negotiations. However, the IRS isn’t required to transfer your case just because you formally made the request.
The second option is to request a Collection Due Process (CDP) hearing. If you’re adamant about leaving the ACS, this is possible once afforded appeal rights, but the IRS denies your request for a revenue officer. One benefit of a CDP hearing is that it will temporarily cease all IRS collection actions until the hearing is over. Another benefit is that you’ll get a settlement officer from the IRS Office of Appeals to review your case.
This allows someone different to review your case and evaluate what sort of negotiated tax agreement is possible. There’s no guarantee you’ll see better results with a settlement officer, but having a “fresh set of eyes” on your case could lead to more favorable tax bill settlement terms.
What’s better, dealing with the ACS or a revenue officer?
It depends. One advantage of having a revenue officer is that you have someone familiar with your case, so you don’t have to rehash your situation repeatedly. Another benefit is that revenue officers are often better trained than ACS agents, so they may offer better alternative options for paying off your tax bill.
Before asking for a revenue officer to take over your case, understand that it can have a few disadvantages. One drawback is that only one person handles your case, and if they’re unavailable, you could get stuck. It’s sometimes hard to believe, but IRS employees are people too, so they go on vacations, call in sick, or decide to change jobs. As a result, you might find it harder to get in touch with them or have to start all over again should your case go to a new revenue officer because your old one is no longer available.
Another possible drawback is that they sometimes request in-person meetings to speak to you and review any documents you might have. Additionally, in some cases, having a revenue agent assigned to your case can lead to additional financial disclosures if you set up a payment plan. And don’t forget that as frustrating as it might feel to deal with the ACS; things could get worse with a bad revenue officer who seems unwilling to reach an agreement with you to resolve your tax issue. But unlike with the ACS, you can’t just hang up the phone and call again to get someone else to talk to about our tax issue.
Can the ACS take my home or car?
No, but they can create notices warning you of a tax levy. Assuming you ignore those notices or don’t reach an agreement with the IRS on paying your back taxes, the ACS can then garnish your wages or issue a bank levy and take money from your bank account. Generally speaking, the IRS rarely goes after taxpayers’ cars and personal residences, but if they do, it’ll usually be a revenue officer or some other agent of the IRS that handles those collection actions.
Will the IRS sue me to recover unpaid taxes while my case is with the ACS?
It’s unlikely, as the ACS doesn’t typically file lawsuits. What’s far more likely is that the IRS transfers your case to a revenue officer, who can then initiate a civil action to recover money or property from you.
Received a Notice from the IRS ACS?
You’ve just received an ACS correspondence, but despite calling the IRS ACS phone number and genuinely trying to resolve your tax issue, you feel even more confused and annoyed. Luckily, other options may be available to settle your unpaid tax bill.
If you want to learn more about these options, contact Wiggam Law. Call us at (404) 233-9800 or fill out our online consultation form to schedule a meeting with one of our tax attorneys today.