The IRS Has More Power Than You Think to Collect Taxes

Internal Revenue Service headquarters (IRS) in Washington, on May 22, 2023. (Madalina Vasiliu/The Epoch Times)

One U.S. agency that many people fear is the Internal Revenue Service (IRS). Of course, there is no need to fear when you honestly report your taxes. When taxes are not reported honestly, there is a good reason to fear the agency because it has more power than any other U.S. agency.

The IRS operates under the authority of the U.S. Department of the Treasury. Its mission is to collect taxes. Its goal is to help lawful citizens pay the correct amount of taxes and to enforce the payment of taxes on those people unwilling to abide by the country’s tax laws.

The IRS created the Criminal Investigation (CI) division to enforce violations of the tax code. It is the only agency to investigate currency violations, money laundering, and terrorist financing. Recently, it has significantly enlarged its ability to investigate cybercrime (cryptocurrency) and the funding of Russia’s war against Ukraine by its oligarchs.

The Agents of the IRS

The tax agency has three kinds of agents that do their investigative and legal work to help collect money from tax code violations.

Special Agents

The ones with the most power are the special agents, LevyTaxHelp says. These officers are the police force of the IRS, and they carry guns. Most people will never meet them.

• Revenue Agents

The revenue agents of the IRS do not have the same authority as the special agents. The main job of the revenue agents is to collect information and not to collect any back taxes. They conduct audits and obtain information to determine whether or not a crime was committed. If you have received a notification of a tax audit, this is the agent that will likely come knocking on your door. They will not demand money or take assets.

• IRS Revenue Officers

The revenue officer’s job is to find taxpayers that owe tax money and attempt to collect it—one way or another. They have considerable power to ensure your tax debt gets paid—and paid quickly. They have authority to garnish wages, levy bank accounts, file liens against your assets, and seize property. These individuals are often intimidating and can show up at your house.

The Limitations of Tax Collections

Although the liens and seizure of assets can make life uncomfortable, the IRS has some limitations what it can do to obtain money from you. They cannot, for example, seize all your possessions and leave you in hardship conditions.

Authority to Get a Handwriting Sample

When a document is questionable concerning its authenticity, an agent can obtain a handwriting sample from the person or persons in question. Getting this sample is not considered self-incrimination, and obtaining it is not protected by the Fifth Amendment.

Warrantless Searches

An IRS agent cannot search without a warrant unless there is reason for a lawful arrest. A warrant is unnecessary, however, if the property owner gives consent without coercion. Once arrested, the agent may search the person and premises for weapons.

The agency also probably already has your bank and investment account information. They do not need warrants for this information, and rarely will they need to dig deeper for more.

Power to Make an Arrest

Despite the general warrant limitation, there is much that they can take to satisfy your tax debt. A special agent can make an arrest, but will need a warrant from the Department of Justice to do so. They can make a warrantless arrest if a crime (tax crime or felony) is committed in the sight of the agent. They can also make an arrest as a private citizen.

The Unique Power of the IRS

The IRS has legal powers that other agencies of the United States do not have—including the FBI. While the FBI must obtain a warrant before getting information about citizens, the IRS does not need any approval. Law.JRank says they can get your bank records and information about you from your employer and other institutions without formal approval.

Computers detect problems with tax returns. They find inconsistencies between forms filed by employers, investment companies, crypto companies, etc., and between tax forms filed in previous years. They also find failure to file employment taxes from employers and income taxes for trust funds. When a crime is suspected, the Criminal Justice part of the IRS refers the case to the Department of Justice.

Property That Cannot Be Seized

Even though the IRS has a lot of power to seize property, there are some things that they are not allowed to touch. The list is from the IRS document 26 U.S. Code § 6334. Here are some of those items as given by IRSTaxApp:

• principal residences and certain business assets
• disability payments that are service-connected
• amounts designated to individuals receiving money through public assistance or from the Job Training Partnership Act
• salary, wages, or income necessary for the support of minor children
• some kinds of annuity or workmens’ pension payments
• payments for unemployment
• tools and books that are necessary for a business that does not exceed $3,125 in value
• and more.

Before putting a levy on a property, the IRS sends a “Notice for Demand for Payment.” Only after you take no action by a specified date will you receive a notice called “Final Notice of Intent to Levy.” In most cases, you have 30 days after this notice before the IRS seizes the property.

When the Deceased Owe Taxes

The good news is that the beneficiaries of the deceased who owe back taxes cannot be billed for them. However, the IRS will bill the estate for the owed taxes, which must be paid from the estate before being settled. Money placed into certain kinds of trusts, life insurance policies, and some retirement accounts are exempt from these taxes. In some community property states, TrustandWill says, the living spouse may be held responsible for some of the debt.

As much as $60 billion will soon be given to the IRS to add more agents to its force. Not only will it enable the agency to upgrade its systems but it also will hire many more agents for audit purposes. If you owe any back taxes or are worried about problems with recent tax forms sent in, be sure to update them and pay any taxes owed before the audit process can begin.

The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.