The IRS Automated Collection System (ACS) is utilized by the Internal Revenue Service (IRS) to collect delinquent back taxes. The system was initially developed in response to the surge in tax debt collections during the 1994 tax season. The system consists of a large network of agents that are connected through data links to local tax offices. When taxpayers fail to pay their taxes, the Automated Collection System is set up to notify the taxpayer and place the funds into an account. Generally, when a taxpayer fails to pay his/her taxes, the collected funds are held in an account and are used to make future payments to the taxpayer. Taxpayers may also choose to pay off the balance in one lump sum or via a series of smaller monthly payments. To facilitate these processes, the automated collection system connects call centers with local IRS agents to whom a taxpayer can provide payment information. When a refund is received, the account representative calls the taxpayer and the case is closed. There are two types of mechanism used by the IRS to initiate a levy: A” Levy” and a” Bid”.

how does Irs Acs work

A levy is initiated by an agent on behalf of the IRS. A collection due process is conducted only if the taxpayer does not settle the liability within a reasonable period of time. If a collection due process is initiated, it remains in effect until the liability has been paid in full. If an offer of settlement is made on behalf of the taxpayer, the collection due process is terminated upon receipt of the acceptance notice from the revenue officer. If the taxpayer contests the levy, a collection due process hearing is held. The hearing is conducted before an administrative law judge (ALJ). The hearing is held within four weeks of the date that the IRS issues the initial levy notice. An IRS agent present at the hearing will: (a) review the collection due process; (b) make an assessment of the taxpayer’s financial circumstances; (c) make a recommendation as to the best course of action for the taxpayer; and (d) issue a final order to the taxpayer. The final order will identify the taxpayer’s IRS recovery asset, specify a timetable for the recovery, describe the IRS recovery strategy, provide a detailed explanation of all IRS recovery expenses, and provide directions for future collections. There may also be an offer of compromise, which the IRS considers a third-party settlement, though neither party actually ends up collecting from the other party.

If the ALJ determines that the levy is proper, the IRS then sends a notice of tax lien and a statement of claim to the taxing agency’s local office. The notice and statement of claim (also known as an Offer of Default), if accepted by the IRS, gives the taxing agency two months to respond to the notice or file a reply claiming that the tax liability has not been waived under any circumstances. If the IRS accepts the offer of default, it then enters into a notice of federal court – known as a Notice of Federal Claim – that allows the taxpayer to file a federal claim against the unpaid tax liability in the form of a court action. The federal claim then goes to a federal district judge, who decides whether the debt owed to the IRS is owed to the government or the taxpayer. The IRS ALJ and the collection due process hearing both have one thing in common: they address the collection due process. The ALJ will determine the amount of back taxes owed but will not address the tax liability itself, nor will it address an audit resolution (if one was ordered by the court) or a request for tax relief. The IRS will handle these matters through the collection due process hearing. For example, when the taxpayer does not show up for a scheduled court date, the IRS ALJ may state that the taxpayer did not attend the specified hearing because he/she failed to “show up with the necessary documents.”