What to Do If the IRS Assigns a Revenue Officer to Your Business

When the IRS assigns a Revenue Officer to your business tax account, you should take that as a clear sign that enforcement efforts are escalating. When your case is part of the IRS Automated Collection System (ACS), there’s often a delay between notices and enforcement actions. When a Revenue Officer is involved, there’s usually no delay—they have the power to collect your tax debt via any legal means available to them. Your tax situation just got upgraded to urgent.

This doesn’t mean you’re out of time or options. With the help of an experienced tax professional, you can navigate your options, figure out the best path forward, and decide how to address your business tax concerns. 

Key Takeaways

• Revenue Officers indicate a significant escalation in tax collection efforts.
• The IRS often assigns Revenue Officers to businesses when trust fund taxes are unpaid.
• You may explore different resolution options with a Revenue Officer.
• Working with a tax professional protects your rights and helps you find the best solution for your needs.

An Overview of Revenue Officers and What They Do

Revenue Officers are senior collection agents with the IRS. The IRS typically reserves them for high-priority cases or those involving complex tax issues. They are often assigned to cases where taxpayers have failed to make any progress on their tax debt or communicate with the IRS about their options, resulting in their tax debt reaching an excessively high amount. 

Revenue Officers often take on the following tasks for the cases assigned to them:

• Investigating an individual’s or business’s tax situation via phone calls and in-person visits
• Reviewing documentation, including tax records, payroll records, bank statements, and other financial records
• Getting taxpayers to file delinquent tax returns
• Pursuing enforcement actions, such as liens and levies
• Assessing the Trust Fund Recovery Penalty when a business does not pay trust fund taxes
• Collecting unpaid taxes

Revenue Officers are known for being efficient and thorough in their work, and they have the legal authority to take aggressive collection actions when other efforts fail.

When Revenue Officers Get Involved in Business Tax Matters

The reasons a Revenue Officer steps in and takes a business tax case are slightly different from the reasons they may intervene in an individual’s tax case. The IRS may assign an RO if they have reason to believe that automated or passive collection efforts will not work—in many cases, this is because they have already tried automated collection efforts and have not received a response. 

Some of the main reasons an RO may be assigned to a business case include:

• Large unpaid tax balances, particularly those made up of trust fund taxes
• Ongoing failure to respond to IRS notices
• Multiple unfiled business tax returns
• Defaulting on installment agreements or failing to meet the terms of an offer in compromise, resulting in the tax bill being due immediately
• High-risk business activity, including cash-dependent operations and a history of tax non-compliance

When the IRS suspects that a business is a compliance risk, they may assign a Revenue Officer to get the business caught up and set up for future compliance.

Why a Revenue Officer’s Involvement Often Means Payroll Tax Issues

For many businesses, the IRS gets involved when there are unpaid payroll taxes. These taxes include the amounts withheld from employees’ wages to cover Social Security, Medicare, and income taxes. The IRS takes a much more serious stance toward this type of tax debt than other types of tax debt.

This is because employers are meant to withhold these funds from employees’ paychecks, set them aside, and hold them in trust until their next scheduled deposit date. They are not meant to be used for vendor payments, other bills, or any of a business’s other financial needs—even temporarily. The business is supposed to act as a fiduciary and hold the funds in trust for the government. When a business fails to deposit those funds, the IRS views it as similar to theft.

When a business falls behind on trust fund taxes and doesn’t take steps to rectify the issue, the IRS may then assess a Trust Fund Recovery Penalty. This penalty is equal to the amount of the unpaid payroll tax, and the IRS can pursue a party responsible for the tax payment personally.

How ROs Can Enforce Collection

The IRS generally prefers to have taxpayers pay their taxes voluntarily, but when they do not do so, Revenue Officers are legally permitted to take a range of enforcement actions. These actions include:

• Federal tax lien that follows all of your assets
• Levies on bank accounts and accounts receivable
• Seizure of assets that can be sold so the proceeds can be put toward tax debt
• Wage garnishment, including garnishment of the responsible parties’ wages if the TFRP is assessed
• Recommendation of criminal charges if willful evasion or fraud are suspected

First Steps After Being Contacted by a Revenue Officer

You’ll generally receive Form 725-B before you are contacted directly by a Revenue Officer. The form should tell you when and where your meeting with the RO will be. For businesses, these visits typically occur on-site so the RO can see the business’s operations and meet staff members.

When the RO shows up for their scheduled visit, you should verify their identity via their government-issued ID badge. Remain respectful and calm in all communications with them. Answer questions succinctly but directly, and don’t be afraid to ask for time to consult with your tax attorney.

Your tax attorney will also help you prepare your financial and tax records. Keep your records organized and clearly labeled so you can pull out relevant forms as needed. You don’t want to leave an RO waiting while you dig through years of paperwork—you generally want to stay on their good side as much as possible.

Resolution Options to Consider

After your visit, the RO will likely give you specific deadlines to address any issues raised during the visit. They may request specific documents or give you a proposed collection action. This is when you need to meet with your tax attorney and figure out how to get caught up—waiting too long to address your situation may result in levies, liens, and wage garnishment. 

Options that may be available to you include:

• Installment agreement: An installment agreement spreads your tax debt over a period of several years, allowing you to pay in full without risking more aggressive collection actions.
• In-business trust fund express installment agreement: This type of installment agreement is intended specifically for businesses that owe $25,000 or less in payroll taxes and can pay off the balance within two years. It does not require a financial statement or verification.
• Currently not collectible: If your business is currently running on such a thin margin that you cannot make any payment toward your tax debt, you may be able to request temporary currently not collectible status.
• Offer in compromise: Taxpayers approved for this option can pay off their tax debt for less than their current bill. Be prepared to provide extensive financial documentation to prove that you qualify.

Regrouping After a Visit

If your business has missing tax returns and other records, prioritize catching up on filing after your RO visit. The vast majority of tax relief programs require that you be up-to-date on required tax returns before you can apply.

Make sure you submit all requested documents or complete all requested actions by the deadline provided. Revenue Officers are generally willing to be flexible when it comes to repayment, but they do require evidence that you are working in good faith to handle your tax situation.

How a Tax Attorney Can Help You

Why do you need a tax attorney when a Revenue Officer is assigned to your business tax case? There’s a lot at stake when your tax issues have reached this level of enforcement. Revenue Officers are there to collect taxes—they are not there to protect your rights or advocate for you as a taxpayer. 

When you have an attorney, you can feel confident that you’re protected from government overreach. Talking to a Revenue Officer is a little bit like talking to the police; anything you say can be used against you as the IRS attempts to collect. For example, if you casually mention an asset, the RO may see that as a sign that you should liquidate the asset and may deny your request to make monthly payments. 

Having a tax attorney on your side can also minimize the amount of direct contact you have with the IRS. This is a huge benefit for taxpayers who have been living under the weight of tax issues and the anxiety they cause for months or years. By filing Form 2848, you give your attorney the right to communicate with the IRS on your behalf.

A tax attorney with experience in business tax problems can analyze your current tax situation, get an understanding of what the IRS is looking for, and strategize a plan forward. Once you have a thorough plan that includes the right relief options for you, you can look ahead to the future and get caught up.

It’s especially important to have a tax attorney if you are facing a potential Trust Fund Recovery Penalty. This penalty does not go away if the business closes, if the business goes bankrupt, or even if you declare bankruptcy. It can affect your finances and your tax compliance for years to come. You must get ahead of this situation and protect your personal finances.

When a Revenue Officer is assigned to your business, it means that your business is on the IRS’s radar. You’re no longer part of the Automated Collection System—there is an actual person keeping up with your case, looking at any steps you’re taking (or not taking), and deciding how to proceed with your case. With the right professional help, you can get expert advice and guidance that protects your business. 

Call W Tax Group at 877-500-4930 or fill out our online contact form to get your free tax relief consultation.

Frequently Asked Questions

Why did I get assigned a Revenue Officer instead of a regular notice?

The IRS may assign a Revenue Officer if it sees a pattern of non-compliance that has resulted in a sizable tax bill with no effort to resolve it. They tend to assign an RO more quickly if trust fund taxes are involved.

What happens if I ignore communication from a Revenue Officer?

The Revenue Officer will not stop attempting to collect what you owe. They have the legal authority to place liens, use levies to seize assets, garnish wages, and otherwise take aggressive collection action against you.

Can the Revenue Officer come to my business?

Yes. While the IRS has stopped most surprise visits to taxpayers’ homes, they still may drop in on businesses, if needed. They often prefer to visit business taxpayers in person to see the business and speak to staff members with knowledge of the company’s financial operations.

I don’t think I’ve done anything wrong—do I still need a tax attorney?

Yes. Even if you think you’ve done nothing wrong, there’s a possibility that you’ve missed important filing requirements, failed to pay necessary taxes, or otherwise run afoul of tax law. A tax attorney can help protect your rights, review your tax transcript, and provide you with your options.

Can my CPA help me?

Yes, in some cases, your CPA can help you deal with a Revenue Officer, but only if they have the right experience to do so. Often, a Revenue Officer’s contact with your business means that you should contact a tax attorney instead of your CPA.

Sources:

https://www.irs.gov/businesses/small-businesses-self-employed/in-business-trust-fund-express-installment-agreement
https://www.taxpayeradvocate.irs.gov/notices/currently-not-collectible/
https://www.irs.gov/individuals/understanding-your-letter-725-b
https://www.irs.gov/help/how-to-know-its-the-irs