IRS’s Automated Collection System Beginner’s Guide

IRS ACS: What to Expect From the IRS’s Automated Collection System

You just received a notice from the IRS Automated Collection System ( ACS), and now you’re panicking. What does this mean, and how does it affect your finances? You then try calling, end up on hold for two hours, and probably get disconnected. What do you do now? Luck is on your side today because we will tell you everything you need to know.

In this guide, we will discuss what the ACS does, why you’re getting a notice from them, and the best course of action. To get help now, contact the tax experts at East Coast Tax Consulting Group today.

Key Takeaways

• ACS: The IRS’s Automated Collection System
• Notices: The ACS can send you CP14, CP501, CP503, and CP504, just to mention a few.
• ACS collection actions: The ACS can initiate wage garnishments, tax liens, and bank seizures.
• ACS call centers: When you call the ACS, you’ll talk to a random employee who’s not familiar with your case; there’s no continuity.
• Revenue officer: If you don’t make a plan on how to clear your tax debt with the IRS, your account may be sent to a revenue officer.

What Is the IRS Automated Collection System?

The IRS’s ACS is designed to streamline the collection and management of tax debts. The ACS is programmed to manage routine and complex collection processes. It can automatically assess penalties, send notices, and track payment histories. It also uses complex algorithms to determine appropriate actions based on a taxpayer’s existing data.

The ACS minimizes the need for human intervention, allowing faster actions in cases where immediate action is crucial. This is an upgrade from when the IRS exclusively relied on extensive paperwork and prolonged communication, which caused delays and discrepancies.

Understanding How the IRS’s ACS Works

Before we continue, it’s crucial you understand what to expect when you interact with the ACS.

Getting a hold of an ACS agent over the phone is a sport; if you’re lucky, you’ll get one in 30 minutes, but it’s normal to stay on hold for up to two hours. And unfortunately, getting disconnected is a lot more common than it should be.

Even if you’ve already called the center a couple of times, you usually have to explain your case from scratch every time you call, since a different agent is probably going to answer your call each time. Although the agents take notes during calls and the notes should be visible in your file, they’re not always adequate, and not all agents take detailed information.

Once the agent understands your case, they can give you possible solutions to your problem. They could offer penalty abatement or help you set up installment agreements. Unfortunately, in some cases, the ACS agents might not have answers for you because they have the least training among the IRS employees who deal with the public.

If you feel overwhelmed by the long holds or the questions the ACS agent is asking you, consider consulting with a tax expert or CPA to help with your tax resolution.

ACS Notices and Demands for Payment

If you’ve received a notice from the ACS, it’s important that you take time to review it carefully before you take action. Ensure you understand all details in a letter, including the amount you owe, penalties, due dates, and deadlines. If you have questions, reach out to a tax expert

Here are some common notices you may receive from the IRS ACS:

• CP14: This notice notifies you of your overdue balance with the IRS.
• CP16: This notice informs you that the IRS corrected one or more mistakes on your tax return that led to a refund that was used to offset your tax liability.
• CP80: This notice is to let you know the IRS received a tax payment, but you haven’t filed a tax return.
• CP59: This notice informs you that the IRS has no record that you filed your prior year personal tax return. It often comes with Form 15103.
• CP259: This notice is to inform you that the IRS didn’t receive your business tax return by the deadline date for the tax period stated on the notice.
• CP516: This is a reminder that the IRS has no record of your filed prior tax return(s).
• CP518: This is the final reminder that the IRS hasn’t received your prior tax returns.
• CP501: This notice informs you that you owe the IRS money on one of your tax accounts.
• CP503: This is a second reminder that you have an unpaid tax balance, and the IRS didn’t receive any response from the previous reminder(s).
  CP504: This means that the IRS plans to levy your assets, but at this point, they will only seize your state tax refund.
• LT16: This notice is to inform you that the IRS is trying to collect taxes from you, and if you don’t take action, the IRS will take action that includes seizing assets. The ACS may also send this notice if you have unfiled tax returns.
• CP90: This is the final intent to levy notice; it states the IRS will seize your assets through bank levies or wage garnishments if you don’t appeal or set up payments in 30 days.

The list is far more comprehensive than this, so if you receive a different type of notice, don’t ignore it. Read to understand and check for accuracy, and contact the ACS if you have any questions.

The ACS Collection Process

If you have a tax debt from filing a return and not making payments or from an audit adjustment, your account is assigned to the ACS. This can take a few weeks or months after the tax debt is assessed.

As explained above, the IRS will send you several notices demanding that you make payment. If you don’t, the agency will send a Final Notice of Intent to Levy, which gives you 30 days to appeal through a Collection Due Process (CDP) hearing. If you don’t appeal or make payment arrangements, the ACS may start garnishing your wages or initiate a bank levy.

These actions are really hard to undo, so it’s best to make payment arrangements as soon as you can. In some cases, the IRS may take your account out of the ACS and refer it to a revenue officer for collections.

ACS vs. Revenue Officer: Key Differences

IRS tax debts can be collected by the ACS, revenue officers (RO), or even private collection agencies, depending on the amount and circumstances of the case.

In some instances, the IRS will transfer an account from the ACS to an RO because the tax debt is a high balance, the collection statute expiration date (CSED) is close, the case involves complex tax issues, or the taxpayer has a long history of non-compliance.

As a taxpayer, you can also request the IRS to transfer your account from the ACS to an RO. There’s no guarantee, as the IRS gets to decide whether your request should be approved, but they’ll consider it.

Here are the main differences between dealing with the ACS and an RO:

• Access and availability: When you call the ACS, you’ll have to deal with being on hold for a long time, but if you’re patient, you’ll eventually get to talk to an agent. On the other hand, you can only talk to an RO when they’re in the office, so you may end up playing phone tag.
• Meetings: You’ll never meet an ACS employee face-to-face to discuss your case. However, an RO can request an in-person meeting by sending a 725-B letter.
• Customized solutions: You talk to random agents with the ACS, so they may struggle to grasp the unique details of your situation and can only offer general advice. In contrast, an RO understands all the nuances of your case, so they are better equipped to help you. Keep in mind, the job of both ACS and an RO is to collect the tax debt as quickly as possible.
• Level of scrutiny: Keep in mind that this also means the RO will closely review your finances and assess your assets and income in case they need to collect the debt involuntarily.
• One person: When your case is assigned to a revenue officer, you only work with one person, and in most cases, you can’t request a new representative. In contrast, with the ACS, you deal with whoever answers the phone. Both have their pros and cons.
• Collection processes: Both ROs and ACS can garnish wages, tax liens, and seize bank accounts. However, only a revenue office can seize physical assets.

What ACS Can and Cannot Do

Here are some actions ACS can take:

• Send computer-generated payment reminders and levy notices
• File a federal lien
• Garnish your wages
• Seize the funds in your bank account

The ACS uses the information it has in its database to perform these actions. The ACS also performs all the actions in a certain order. For example, the ACS must send you a Final Notice of Intent to Levy and Notice of Your Right to a hearing before issuing a levy.

Here’s what the ACS can’t do:

• File lawsuits
• Seize your personal property, house, or business assets.

When your account gets to a serious stage, the IRS transfers it to the Revenue Officer, after which you can no longer deal with the ACS.

If you call the ACS and they tell you your account was passed to an IRS collection officer, it’s time to take your tax liability extremely seriously. Remember, an RO can seize your personal property and seize your bank accounts. If you haven’t consulted a tax professional specializing in IRS collection mattersyet, it’s time to talk to one about your options.

Options for Resolving ACS Cases

Setting up payment arrangements stops the IRS from taking involuntary collection actions against you. Consider the following:

• Payment in full: If you’re financially able to clear your tax debt, pay it off, and the ACS will close the case against you.
• Installment agreements: This option allows taxpayers to pay their tax debts in monthly payments. There are various options available.
• Offer in compromise (OIC): This is a program that allows you to pay less than you owe, but you have to prove that you can’t pay the whole amount without experiencing financial hardship.
• Currently not collection (CNC) status: The IRS can put your account on CNC if you’re experiencing financial hardship, which temporarily stops collection actions.
• Penalty abatement: If you have a reasonable cause, like death, illness, or natural disasters, that prevented you from filing on time, the IRS can reduce or eliminate the penalty. Or you might qualify for First-Time Abatement.

Frequently Asked Questions (FAQs)

Here are some answers to common questions on the IRS ACS:

Which is better? ACS or an IRS tax revenue officer?

It’s a preference. With ACS, you may end up on hold for hours, talking to random agents on every single call. If your case is assigned to a revenue officer, you only have to deal with a single person, which gives you more continuity, but there’s also a lot more scrutiny into your individual situation.

Can I have my case transferred from a revenue officer to the ACS?

No, the moment your case is assigned to an RO, there’s no going back. You have to settle through the revenue officer.

How do I contact IRS ACS support?

You can call 1-800-829-1040 or the phone number on your notice. You can also call 1-800-829-3676 for tax forms and instructions for current and previous tax returns.

Ready to Deal With Your ACS Problem?

Dealing with the ACS can be so stressful because it means long wait times, talking to multiple agents about your tax problems, and not getting clear guidance on the way forward.

But the good news is that your case hasn’t been assigned to a revenue officer yet, which often means that it’s easier to set up payments without supplying financial details.

At East Coast Tax Consulting Group, we are ready to step in and deal with the ACS on your behalf. We have extensive tax knowledge and years of experience. Reach out to us today, and let’s start your path to tax compliance.