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Steve Kassel on Good Morning America

After being prominently mentioned in the New York Times on October 10, I received a call from ABC’s Good Morning America. I was invited on to do an interview with Charlie Gibson the next morning.

This is a transcript of that interview:

Charles Gibson, GMA:    In this half hour, Elizabeth, we turn to a subject that concerns all of us, taxes. You may remember that two years ago Congress called the IRS on the carpet in a series of well publicized hearings. Called the IRS on the carpet for allegedly abusing taxpayers. Now, according to the New York Times, the agency has left billions of dollars in back taxes go uncollected.

Has the IRS gone too soft? Joining us from San Francisco is Steve Kassel, a former IRS agent. Steve, it’s good to have you with us.

Steve Kassel, EA:    Good morning.

Charles Gibson, GMA:    Are there billions of dollars out there in uncollected taxes that the IRS isn’t going after?

Steve Kassel, EA:    There certainly are and there are a few reasons for that. One is that the IRS has changed certain policies which has impacted the way taxes are collected. Another is that many senior IRS personnel in both the collection and the examination side are being moved to taxpayer service functions which is what the Commissioner has opted to stress.

Charles Gibson, GMA:     Well, I remember in those hearings the IRS was called on the carpet for being so abusive and so aggressive in its collection tactics. Are they too worried now about being abusive; too worried about being repressive, even those agents who are still on collections?

Steve Kassel, EA:    I think so. A couple things happened. One, when I testified on Capitol Hill before the Restructuring Commission, I brought with me a stack of cases where the IRS had taken the statute of limitations; that is the amount of time the IRS has to collect the tax, out to as far as the year 2025. Normally they only have 10 years to collect the tax. Well, as a result of the Congressional investigations, that law was changed and the IRS now has very limited opportunities to collect taxes past the normal statute of limitations.

What also happened though is that they made a decision on their own last year that if a payment agreement will not satisfy a debt in full over the life of the statute of limitations, they will not enter into a payment agreement. And this has caused billions of dollars to be uncollected.

Charles Gibson, GMA:    So let me make sure I understand that last point. If a delinquent taxpayer, someone who owes the IRS a lot of money, can’t pay it off in full over the number of years that the IRS can go after them. If they’re just willing to pay over a little bit at a time, the IRS is saying “no we don’t want the little bit, we want all or nothing”?

Steve Kassel, EA:    In many cases, yes. 

Charles Gibson, GMA:    Why?

Steve Kassel, EA:    There is another opportunity called an Offer in Compromise. An Offer in Compromise is where we go to the IRS, typically hat in hand and we say “we don’t have the ability to pay this in full”. We’re going to make an Offer to compromise the debt for substantially less than the total due. 

Charles Gibson, GMA:     But it would seem to me something is better than nothing. Why would the IRS turn it’s back on something?

Steve Kassel, EA:    Well, you’re certainly right. The problem that the IRS has caused is when an Offer is not an appropriate course of action and a payment agreement won’t pay it off; for instance, I have a client in Connecticut that can afford pay $600 a month on a $100,000 debt. The IRS said you can’t do that. We won’t take just $600 a month. Well, we’re left in a position now where we may submit an Offer in that case, but the way I calculate out the numbers the IRS is going to collect far less than what we’re offering them in monthly payments.

Charles Gibson, GMA:    Let me ask you then, is this a good time for we the average taxpayer to try to stiff arm the IRS? I mean, if they’re being rather lax in the way they go after delinquents why won’t a lot of people…a lot more people be delinquent?

Steve Kassel, EA:    I think it’s a possibility that definitely does exist. What I would say for certain is that if you do owe the IRS today; this is definitely the right time to submit an Offer in Compromise. At the same time examinations are down 25 to 40 percent. Collection officials are putting many of their resources into customer service as well. So they don’t the bodies to even work the cases right now. 

Charles Gibson, GMA:    Steve, I’m out of time, but a quick yes or no answer. Has the IRS overreacted to some extent in that Congressional pressure?

Steve Kassel, EA:    I think so. They’ve gone 180 degrees. We need to make some changes that are less extreme.

Charles Gibson, GMA:    Alright. Steve Kassel, thank you very much. Appreciate talking to you. Isn’t that curious? We take a break. We’ll be back.