How The IRS Can Make Your Business A Statistic

The Collection Division of the IRS composes of Revenue Officers whose job is to collect outstanding IRS liabilities from taxpayers as quick as possible. These Revenue Officers have access to intelligence collected by other divisions of the IRS and they will scope out your financial moves, and garnish your wages and other sources of income, and seize houses, cars and bank accounts.

The most common sort of collection case involves a small business that has fallen behind in payment of withholding taxes. A Revenue Officer’s inventory is brimming with cases like these. Revenue Officers are told to go out and use a firm enforcement image in collecting the outstanding IRS liabilities and also be mindful of statistics compiled by the IRS to measure the Revenue Officer’s effectiveness. The IRS will maintain statistics on seizures of property, levies conducted and case status including the shut-down of a business. So when a business continues to ignore the IRS or the business is not paying its liabilities as quick as the Revenue Officer would like to see, that Revenue Officer will now change his stance from collecting the tax to making the business a statistic by shutting it down.

Feuer Trucking Company Shut Down

If you think I’m exaggerating, listen to this true story of how the Feuer Trucking Company of Yonkers, New York, was closed by IRS agents. Two and a half years ago prior, Feuer’s owner admitted to his employees that the company was hauling more red ink than anything else. Feuer was two million dollars in debt – and half a million of that was owed in back taxes to the IRS. The taxes plus the heavy interest payments marked Feuer for bankruptcy.

To save their jobs, many of the employees got together and offered the owner $25,000 for the company. The owner accepted. Feuer Trucking began repaying its debts both to its creditors and to the IRS, negotiating installment payments of $3,000 a week to pay off back taxes while it continued to pay current taxes. But because of the high interest rates and penalties the IRS was charging on the old taxes – 26% – the IRS debt was growing faster than Feuer could pay it off. It passed $800,000.

Just before Christmas the IRS struck. Revenue Officer Donald Raftery seized the $60,000 in Feuer’s bank account, and notified Feuer’s customers to pay their bills not to Feuer, but directly to the IRS. He also demanded a down payment of $400,000 on back taxes. Feuer didn’t have it. So the next day a squad of IRS officers backed up by a small army of U.S. marshals, swooped down on Feuer. Pay up the $851,000 in back taxes, the officers barked, or we will seize and sell everything. Of course, Feuer still didn’t have the money, so the IRS Revenue Officer tagged everything in the office for seizure – including desks, computers and file cabinets.

Feuer’s office manager confronted Revenue Officer Raftery. “Mr. Raftery, do you recall in July that I told you what we were worth? I spelled it all out to you in black and white on paper?” Raftery agreed that he knew that Feuer, which leases its trucks and building, had less than 10% of the $851,000 in assets.” The office manager then inquired, ‘Why did you take this action?”. But the office manager did not get a response back from the Revenue Officer who just shrugged his shoulders.

The IRS eventually returned Feuer’s computers and desks, but kept the $60,000 it had seized from the bank account. Even more devastating to Feuer, the IRS did not return its Interstate Commerce Commission license to operate. Without a license, the trucks couldn’t legally go anywhere. Feuer was out of business. The IRS had shut down a company that was paying current taxes and paying its employees. Fifty workers were added to the unemployment dole.

No matter how you add it up, you would think that the government is losing by closing the company down.

You would think that this headline report on the blind-siding of Feuer was a shocking expose of an IRS action that turned fifty taxpayers into welfare cases. But the Feuer case is not a story in which an IRS agent has careened out of control or the bureaucracy has mistakenly made a seizure that is not cost-effective for the government. In fact, the IRS never makes calculations of whether closing down a firm will add or subtract from the Treasury’s balance.

The Revenue Officers of the IRS Collection Division are among the most powerful people in government. Ten days after demanding payment the IRS can seize a taxpayer’s house, car, land, or business for subsequent sale at public auction. They can serve a levy on a third party, such as a bank, an employer, or anyone who owes the taxpayer money. If they suspect you might skip town without paying they can seize right away. All of this can be done without a court order. And if they so desire they can file a Notice of Federal Tax Lien at the local courthouse, which freezes a taxpayer’s title to property and puts the IRS at the head of the line of creditors.

It is highly unlikely that Revenue Officer Donald Raftery when he shut down Feuer Trucking Company got in hot water with his bosses. They probably toasted him with champagne. Besides generating all that good publicity for the IRS, Raftery racked up some marvelous statistics. He seized a bank account, tagged property, shut a business down, and closed the case. I guarantee that the Feuer case had been a thorn in the side of the local IRS office. Group managers hate over-age cases like the Feuer case. They have to regularly file reports on why they continue to carry them in their inventory and send those reports up the chain of command. This makes the chain of command very angry because an over-age case is not a nice clean statistic they can file to show what a good job they are doing – and what’s worse is an over-age case implies that the network has gone soft. So the word goes out to close cases and build statistics.

The IRS is a law unto itself.

Everything the IRS did to Feuer is legal and the shutting down of Feuer Trucking Company was completely consistent with IRS policy. This report was not a mortal blow against the IRS by unveiling its tactics against Feuer Trucking. Instead, you should think of the report as free publicity for the IRS, opportunely placed just after the week most folks got their W-2’s in the mail and started to look their 1040’s over. The message is this: The IRS is a law unto itself. Watch out!

Not every taxpayer is treated equally by the IRS. Each group manager is allowed incredible latitude in interpreting the collection manual, a freedom that gives rise to cavalier and arbitrary methods of enforcement. The IRS looks like an unbeatable army, with intelligence divisions scoping out your financial moves, cracking troops of auditors probing your returns for weaknesses, and a corps of revenue officers winning the property battle by seizing houses, cars, and bank accounts. It should be no surprise that some of the best Revenue Officers have spent time in military service.

The IRS Revenue Officer typically shows up to a taxpayer’s home or place of business when the taxpayer is in debt to the IRS. This Revenue Officer will also make a personal visit to a taxpayer’s home or place of business in tax cases where a taxpayer owes the IRS employment taxes. The IRS Agent who comes to a taxpayer’s home or place of business is not making the personal visit to take a taxpayer satisfaction survey. The sole purpose is to collect money for the IRS. Regardless of how civil and pleasant the Revenue Officer initially appears to be – remember they are not there to be your friend – they want your money.

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. If you have outstanding liabilities with the IRS or any State Tax Agency, stand up to them by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego, San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

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