IRS Revenue Officer vs Revenue Agent: Know Who You’re Dealing With

The Revenue Agent: Examination

A revenue agent conducts field audits. Under Treasury Regulation section 301.7605-1, the IRS decides whether an examination will be conducted in the field or at an IRS office based on the complexity of the return, and a field examination generally takes place where the books and records are kept, often the taxpayer’s place of business. Audits by mail and office audits are handled by other IRS employees.

The revenue agent reviews records, asks questions and prepares an examination report proposing any changes. Revenue agents determine tax; they do not collect it. If an audit proposes additional income tax, the taxpayer can agree, or disagree and appeal. In general, the IRS cannot assess a disputed income tax deficiency until it has issued a notice of deficiency and the period to petition the Tax Court has passed, or a Tax Court decision has become final.

The Revenue Officer: Collection

A revenue officer works in the IRS collection function on accounts with unpaid balances and on unfiled returns. According to the IRS, it initiates most contacts through regular mail, but in special circumstances its employees will call or come to a home or business, such as when a taxpayer has an overdue tax bill, or to secure a delinquent tax return or a delinquent employment tax payment. IRS collection employees may come to a home or business unannounced to collect a tax debt. Even then, taxpayers will generally first receive several notices by mail.

Collection has enforcement tools that examination does not, including filing a notice of federal tax lien and levying wages, bank accounts and other property. In employment tax cases, the IRS can also pursue the trust fund recovery penalty under section 6672, which can make a person who was required to collect and pay over withheld taxes personally liable for the unpaid amount if the failure was willful. The IRS must send written notice proposing that penalty at least 60 days before its notice and demand for payment.

Protections in Collection

Collection actions are subject to their own notice and appeal rules:

• Before a levy. The IRS will usually levy only after it has assessed the tax and sent a notice and demand for payment, the taxpayer has neglected or refused to pay, and the IRS has sent a Final Notice of Intent to Levy and Notice of Your Right to A Hearing at least 30 days before the levy.
• Collection Due Process. That levy notice describes the right to request a hearing with the IRS Independent Office of Appeals during the 30-day period. A similar hearing right follows the filing of a notice of federal tax lien: the IRS must send notice within five business days after filing, and the taxpayer then has a 30-day period to request a hearing. A timely request for a levy hearing generally suspends the levy actions that are the subject of the hearing. Certain levies, such as jeopardy levies, levies on state tax refunds, disqualified employment tax levies and federal contractor levies, may be made before a hearing, with a hearing offered afterward.
• Collection Appeals Program. Disputes over liens, levies, seizures and the denial, modification or termination of installment agreements can also be appealed under the procedures in IRS Publication 1660.
• Resolution options. Depending on the facts, options can include an installment agreement, an offer in compromise or a temporary delay of collection when the taxpayer is unable to pay.

How to Confirm Who Is Contacting You

According to the IRS, an IRS representative who visits will always provide two forms of official credentials, a pocket commission and an HSPD-12 card, and you have the right to see them. The IRS does not call to demand immediate payment by prepaid debit card, gift card or wire transfer, and it instructs taxpayers to make payments to the “United States Treasury.” The notice or letter you received will also show whether the matter is an examination or a collection case.

Responding to Each

Revenue agent

Respond to document requests by the stated dates, organize records by issue, and ask for more time before a deadline if needed. If you disagree with the proposed changes, the 30-day letter explains how to appeal.

Revenue officer

Respond promptly and file any missing returns. A revenue officer may request financial information, often on Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-B, Collection Information Statement for Businesses. Provide accurate information, keep track of any deadline the officer sets, and evaluate payment options based on the actual financial picture.

Both at once

A taxpayer can be under examination for one period while collection pursues a balance for another. Each function follows its own procedures, so the responses should be coordinated. A representative authorized on Form 2848 can work with both.

The Bottom Line

A revenue agent determines whether more tax is owed; a revenue officer collects tax that has already been assessed and secures unfiled returns. Each stage has its own deadlines and appeal rights, and knowing which one applies is the first step in responding correctly.