Receiving IRS letters and notices can be very stressful, but it can feel worse when you get a letter requesting an in-person meeting. That’s the purpose of IRS Notice 725-B. What does this notice mean? Why does the IRS want to meet with you in person? What should you do? How should you prepare for the meeting? To help you out, this post untangles the details.
What Is the IRS 725-B Notice?
Called an appointment letter, Notice 725-B means a revenue officer wants to meet with you. They may want to meet in their office, at your business, or at your home. They send this letter to schedule the meeting rather than showing up unannounced.
Does the IRS Make Surprise Housecalls?
As of July 2023, the IRS has stopped making surprise house calls, except in very rare situations. In the past, revenue officers used to knock on people’s doors or go to their businesses, but this practice was halted for the safety of both IRS employees and taxpayers. Now, if the IRS wants to meet you, they will send out an appointment letter called Notice 725-B.
The only times the IRS may show up unannounced include:
- To serve summonses and subpoenas.
- Seize assets at risk of being hidden from the government for unpaid taxes.
In the past, the IRS went to thousands of people’s homes and businesses without advanced warning every year. Now, the agency is likely to do only a few hundred visits every year. In other words, most taxpayers (even if they owe hundreds of thousands of dollars to the agency) will not get an unexpected knock at their door.
Why Did the IRS Stop Housecalls?
In April 2023, the IRS revealed its new Strategic Operating Plan. This plan was based on 10-year funding from the Inflation Reduction Act (IRA). The agency plans to focus more on the collection process while also improving services for taxpayers, modernizing technology, and making compliance efforts fairer.
Additionally, due to intense distrust of the government (and strangers knocking on doors in general), the IRS decided that it wasn’t safe to have revenue officers show up unannounced. On top of that, scammers often go to people’s homes, pretending to be from the IRS. By stopping house calls, the IRS hopes to protect taxpayers from these scams. Now, if someone is at your door saying they are from the IRS, you can assume that they are a scammer.
What to Do If You Receive Notice 725-B
Generally, you only receive this notice if you have unpaid taxes and a revenue officer is trying to collect the debt. Here’s what to do if you receive a 725-B notice.
- Note the deadline and make sure that you have a response ready in time.
- Decide if you want to meet with the revenue officer on your own or with help.
- If you want representation, reach out to a tax attorney as soon as possible.
- Determine why the revenue officer wants to meet with you.
- Gather the documents requested by the revenue officer in the notice.
- Review your position on any subjective issues that involve interpretation of the tax code.
Finally, set a date and time for the meeting with the revenue officer. Keep in mind that you are entitled to representation, and you may need to request extra time while you look for a tax attorney. Once you’re ready to schedule a meeting, consider holding it on neutral turf at your attorney’s office.
Otherwise, try to meet at the revenue officer’s office. When possible, avoid meeting at your home or office. Although you cannot hide things from the IRS, you also don’t necessarily want them in your space.
How to Prepare for Your IRS Meeting
As you prepare for your meeting, closely review the list of requested information on the 725-B notice. Often, you will receive Form 9297 (Summary of Taxpayer Contact) with this notice. This form should outline the information that the revenue officer wants to see. Depending on the situation, this may include income documents, business paperwork, bank records, receipts, invoices, and other financial documents.
Should You Bring a Tax Attorney to the Meeting?
Ultimately, you should make this decision based on your comfort level and your budget. First, absolutely don’t avoid hiring an attorney to save money. With most cases, you come out ahead when you work with a tax attorney. They can guide you toward the best resolution, help you request penalty abatement, and negotiate subjective issues with the revenue officer.
There are certainly small tax issues that you can handle on your own. For example, if you file a tax return and can’t afford to pay the tax liability, you can probably set up your own payment plan on the IRS’s website. However, once you’re in a position where the IRS wants to meet with you in person, matters have typically escalated, and at that point, you most likely want representation.
In particular, you should reach out for help if the IRS is threatening to seize your property or if there are complicated legal issues involved in your situation. You should always get representation if there is any risk that you have committed a tax crime.
What if You Disagree With the Notice
If you disagree with the notice simply because you don’t want to meet with the IRS, the best course of action is to get help. Unless you can afford to pay your tax debt in full immediately, there is generally no way to get around this meeting. If you ignore the request for a meeting, you will find yourself in a worse position with the IRS.
However, if you disagree with other aspects of the letter, you should contact the IRS as soon as possible about the issue, and you should reach out to a tax attorney if you cannot get the IRS to understand your position. This applies if the notice shows an incorrect tax debt, has miscalculated penalties, and/or features incorrect information about you. If you believe that the tax debt is due solely to your spouse and that you should not be held liable, you may want to look into innocent spouse relief.
What Is an IRS Revenue Officer?
A revenue officer is an IRS employee responsible for collecting taxes. When an individual or business has an unpaid tax bill, the revenue officer will attempt to contact them to make payment arrangements. The officer will also try to learn more about their financial situation to identify a source of funds to pay the bill. For example, if a revenue officer is asking about your assets, they are trying to figure out if you have assets that you could sell or borrow against. When they ask about your income and expenses, they’re trying to identify disposable income that you could use to pay the tax bill.
Why Is a Revenue Officer Contacting You?
Note that revenue officers don’t handle all unpaid tax accounts. Most accounts start in the Automated Collection System (ACS). The ACS can send collection notices, issue tax liens, and even start wage garnishments. However, it’s just automated, so it can only go so far. If you ignore the bill or if you owe a significant amount of money, the IRS may assign a revenue officer to your case.
Often, the revenue officer makes their initial contact by sending out Form 9297 (Summary of Taxpayer Contact), or the 725-B notice may be their first contact with you. In almost all cases, the initial contact takes place through the mail. Then, you will likely end up talking on the phone and meeting in person.
The revenue officer’s job is to collect your bill. When they go to work in the morning, that’s what they see on their to-do list. In other words, once a revenue officer is assigned to your case, the situation is getting serious.
What If You Cannot Afford to Pay the Bill
Often, people ignore their tax liabilities simply because they don’t have the means to pay the bill in full. Thus, they just ignore the situation, and it escalates. Ignoring unpaid taxes can lead to penalties of up to 50% of the balance for filing or paying late, and interest and other penalties can be added on top of that.
However, the IRS has options, and to protect your finances, you should contact them directly or talk with a tax attorney about the best relief path. Here is an overview of the basics:
- Installment agreement – Make monthly payments on your tax debt until it’s paid in full.
- Partial payment installment agreements – Make monthly payments until the collection statute expires, and then, have the IRS forgive the remaining balance.
- Offer in compromise – Pay a settlement in a lump sum based on your finances and get the remainder forgiven.
- Penalty abatement – Get penalties removed from your account, generally used in conjunction with other payment plans or settlement options.
When you talk with us, we will help you figure out the best option for your situation. There are also programs such as currently not collectible that are designed to protect you from unwanted collection actions if you cannot afford to pay anything.
Contact a Tax Attorney for Help
Don’t go into an IRS meeting ill-prepared. Instead, hire a tax attorney and make sure that you’re ready for a confident, productive meeting. Contact us today at Seattle Legal Services, PLLC to set up a free consultation. Whether you’re dealing with Notice 725-B, in-person meetings, or other issues, we can help you.