Letter 725-B: The IRS Wants to Meet With You

When it comes to taxes, one of the few things that is worse than getting an unexpected letter is getting an unexpected visit from the IRS at your home or place of business. If you’re not prepared, a surprise visit from someone you like can be unsettling. Now, imagine a visit from an IRS employee who wants to review your financial records and collect money from you. That can feel like a nightmare.   But here’s some good news. The IRS announced a new policy that, absent rare circumstances, it will no longer send revenue officers to taxpayers’ homes or businesses without contacting the taxpayer first to schedule a meeting. How will the IRS let you know that they want to meet you in person? This request will come in the form of a special notice called, Letter 725-B, Meeting with Taxpayer – Confirmation.

Why Is the IRS Ending Unannounced Visits by Revenue Officers?

The IRS had been sending agents to taxpayers’ homes and businesses for decades. It was one of the tactics the agency relied on when it couldn’t reach a taxpayer or get them to pay. So, why is the agency stopping this practice?   The IRS has at least two explanations for this change. The first explanation concerns tax scams. While most con artists will send a letter or call the taxpayer, some will show up at the taxpayer’s home pretending to be an IRS employee. This has caused plenty of confusion and concern for not just taxpayers, but law-enforcement officers who get called during these surprise visits.   The second explanation relates to the changing political climate in the United States and the growing hostility to the IRS. Most Americans don’t like the IRS, or at the very least, want to avoid dealing with an IRS agent or officer. But, in recent years, this aversion has become more extreme and led to concerns about the safety of IRS employees when visiting taxpayers.   To be clear, the IRS is not stopping all unannounced taxpayer visits. These will still happen, but only in unique situations. For example, the IRS may believe a surprise appointment is necessary because the taxpayer might try to hide or move property to prevent the IRS from seizing it. Most likely, these unannounced visits will only occur a few hundred times per year, which is a lot less than the old policy where tens of thousands of unannounced IRS visits took place.

What to Expect from Letter 725-B, Meeting with Taxpayer – Confirmation

This letter will ask you to set up a day, time, and location for your meeting with the IRS revenue officer handling your case. You’ll want to set this up by the deadline listed in the letter. If you don’t, the IRS could proceed with a collection action, which could include placing a levy on your bank account or garnishing your wages.   Your 725-B notice will probably be accompanied by Form 9297, Summary of Taxpayer Contact. This is a request for information that the IRS feels it needs to resolve your tax issue. You should plan on bringing the requested information and documents to your 725-B meeting.

Scheduling a Meeting After Getting the 725-B Letter

If you’re an individual taxpayer, you’ll have several potential locations to have your meeting with the IRS. The first option is the IRS Revenue Agent’s office. Assuming this is close by, this should be one of your first choices. The second option is to have it at the office of your tax representative, such as an attorney, CPA, or enrolled agent.   If you haven’t hired a tax pro or the IRS employee’s office is too far away, you have the third option of holding the meeting at your home. This should be an option of last resort because you don’t want to give the IRS more information than you have to, by holding the meeting where you live.   If you have the meeting at your house, the IRS revenue officer will pay attention to how you’re living. In particular, they’ll take note of your standard of living. The IRS employee will check to see if the way you live is in line with the information you’re giving the IRS, such as your income and list of assets.  The last thing you want to do is have the IRS question your financial situation because the information you’re providing doesn’t seem to match your lifestyle.   Even if there’s a perfectly logical explanation as to why you appear to be living beyond your means, it can result in more work on your end. For instance, if you request a partial payment installment agreement, you might need to provide extra information to prove to the IRS that you’re struggling financially.   In some cases, an individual taxpayer can hold a meeting with the IRS over the telephone. But, the IRS only allows telephone conference 725-B meetings in limited situations. If you’re a business taxpayer, then the meeting will most likely occur at your place of business.

What Happens After I Receive a 725-B Letter from the IRS?

What you do next depends on whether you have a tax professional handling your tax matter. If you have one, the 725-B letter will most likely have been sent to them and not you. However, it’s possible you’ll still get this letter if the IRS hasn’t been informed that you’re being represented by a tax lawyer, enrolled agent, or certified public accountant (CPA). If this happens, you’ll want to forward a copy of the 725-B letter to your representative who can then schedule the meeting and explain what to expect.   If you’re handling your tax situation by yourself, you’ll need to go ahead and set up the appointment on your own. But before you do, you should ask yourself if you want to hire a tax professional.

Should You Bring a Tax Pro to the Meeting?

The point of this meeting is for the IRS to review your financial information and help you pay your unpaid taxes and/or file any missing tax returns. While you may not necessarily oppose this objective, you need to remember the IRS is primarily focused on getting its money, not protecting yours. The IRS will look out for your interests only to the extent it’s required by law.   This might mean the IRS wants a higher monthly payment when setting up a payment plan or expects you to pay a larger amount of money when accepting your offer in compromise. Having the assistance of a tax professional ensures the IRS properly considers your best interests in addition to its own.   If your tax matter is relatively straightforward, you feel confident in what you’re doing, and there aren’t any complex or uncertain tax questions in your case, then you can probably go to this meeting without the help of a tax professional. That being said, even in these situations, you might still want to hire a tax pro to help you if any of the following factors apply:  

• You have the money to hire a tax professional.
• The IRS is trying to collect a large amount of money from you.
• You’ve had past tax problems with the IRS.
• You strongly disagree with the IRS concerning the validity and/or amount of your tax debt.
• The IRS is getting close to placing a levy or lien on your assets.

 

What’s the Advantage of Hiring a Tax Professional for my 725-B Meeting?

If you hire a tax attorney to handle your tax case, you’ll enjoy several benefits. First, you may not need to attend the meeting and if you do, you’ll most likely have the option of having it at your representative’s office.   Second, you don’t know what you don’t know. For example, your representative will know what the IRS is trying to achieve with each question or document request. Remember, tax attorneys deal with IRS employees on a regular basis.   Is the revenue agent asking for a particular financial statement because they need to see the numbers on that sheet of paper to determine your financial eligibility for a type of installment agreement? Or are they requesting it in the hopes it’ll include extra information that might help them learn of assets they didn’t know existed?   Third, your tax professional can help you decide what documents you need to provide for the meeting. This can save you time in preparing for the meeting as well as help avoid revealing more information to the IRS than necessary.   Fourth, you have someone who can double-check the IRS when it makes a decision or considers information. Revenue officers are human, so mistakes are possible. You may be able to spot these, but probably not as well (or as quickly) as someone whose primary job is to stand up to the IRS. It’s also faster (and cheaper) for everyone involved if an IRS mistake gets corrected at the meeting instead of a few weeks or months later.   Fifth, your legal rights are more likely to be honored and respected when you hire a tax professional to represent you. Not only will your representative have a better understanding of what the IRS can or can’t do to you, but should the IRS violate your rights, they’ll know what you need to do to correct that violation.

Get Help Dealing with a 725-B Letter from the IRS

Receiving Letter 725-B means you have a chance to decide how you want to have your tax meeting with an IRS revenue agent. If you think you’ll want help preparing for that meeting or prefer to have a tax professional attend that meeting for you, contact us at the Timothy S. Hart Law Group, P.C. for a consultation.