If the IRS is not satisfied with their Automated Collection System, known as ACS, they will assign your file to a local revenue officer, most likely in the office closest to where you live.
A revenue officer is basically the IRS version of a local tax collector, and here are the things that they go through to try and collect from you:
1. They may visit you at your home or your work or make a phone call to you. This will be your first contact.
2. They will sometimes ask you questions the first time they meet you. Other times they will set up an interview at their office or over the phone. The point of that interview is to get financial information from you. They may record the meeting or the phone call, but what they are really looking for is a detailed summary of your assets, your income, your expenses, and your liabilities. They will put all of this on an IRS Form 433A for individuals or a 433B for businesses.
3. After the revenue officer has gathered sufficient information on his Form 433A, he will then begin the process of trying to collect from you on your past debt. Usually, they will demand that you make immediate payment on the full balance. They know full well that most people cannot do that, but it’s a procedure that is encouraged by the IRS. They will often request that you obtain a bank loan to pay off your debt, and they will request that you sell assets. By and large, what actually happens in most instances is they try to get you into an installment payment agreement. Once they do that, they can then close their file and move on to the next delinquent taxpayer.
4. Revenue officers can also carry out what is known as enforced collection. In other words, they can levy your wages, your bank account, or seize other assets.
5. Revenue officers will sometimes categorize a taxpayer as Currently Not Collectible. Whether or not that is good for you depends upon your situation. The advantage of being considered currently not collectible is that the IRS and their tax collectors will leave you alone. The disadvantage is, your problem is not solved; it’ just going to come back and haunt you another day, and when it comes back it will be larger.