How Does the Automated Tax Collection System Work?

People are often confused about the workings of the automated tax collection system. So let's talk about what this system does. The ATCS or the automated tax collection system takes care of the IDRES or Internal Data Retrieval System balance due and the cases of non filers that require telephone communication for the resolution of the issue.

To put the definition in lay man terms, the ATCS is a system that communicates with the tax payers who have defaulted on their tax payments. And this computerized system can pose a lot of problems. The ACS stores almost all the data on tax payers including details about their audits. This system was introduced in 1980 and after its introduction the tasks of providing notices to tax defaulters, examining cases and communicating with delinquent tax payers was assigned to the taxpayer examiners.

The ATCS supports every single piece of detail that has been uploaded to it; it contacts the creditors, collects court records, bank statements and corporate files; so basically, it has every single piece of information about your financial dealings. However, people often question the efficacy of this automated system in collecting taxes.

Most recently the ATCS was in debate because there was a congressional hearing to decide which offers the more effective and efficient mode of tax collection the ATCS or privatization. Most consume tax advocates and people who are set against privatization of such key portfolios believe that it would inappropriate to privatize tax collections so they support the ATCS which they also believe is the cheaper way out.

Nina Olsen; who was the Advocate for the IRS National Taxpayers argued against the privatization of tax collection citing the high cost of almost $12 million involved in this method. This cost included the commission of the private collectors which can go up to an astounding 24% of the total taxes collected. In the year 2008; these collectors were projected to bring in an extremely unimpressive amount of just as $23 million however, the government's net revenue would be $11m.

On the other hand, the ATCS requires no commission payments and has only cost the government $7 million in investment. However, its collections have been impressive to the say the least at $91.8 to $145 million brought in by the system. This is certainly more cost efficient and effective than the $81 million government dollars which are invested in the privatization of tax collections.

The IRS on its part defends the outsourcing of the tax collection process complaining that it is understaffed to collect debt and it simply cannot afford the added expenditure of hiring more tax collectors. However, they have decided to regain control of some of the cases so that they determine the efficacy of both methods.

Colleen Kelley, a spokesperson for the National Treasury Union Employees testified at the congressional hearing stating that the union that certainly does not deny the fact that hiring outside collectors (outsourcing tax collection) is the more expensive option than getting the work done by a qualified and trained IRS employee. Also opting for the former increases the risk factor associated with the providing extremely sensitive information about an individual to private companies.

Kelley, further went on record stating, that IRS employees were not only efficient but also presented a more cost effective way of tax collection with each IRS tax collector costing the US government 40 cents for ever $100 that they collect. In such a case there is certainly no reason to bring in private collectors.

In conclusion, most tax payers and experts believe that the ACS is better than private debt collection agencies. And that instead of letting private collectors handle the matter, the government can actually recoup revenues by letting IRS employees handle the job. If you have any questions related to the ATCS system or tax regulations; it is imperative to get in touch with a Dallas tax attorney or a qualified tax accountant at the earliest.

Did You Know That a Bankruptcy Can Stop the IRS From Collecting?

Economic situations and personal issues turn out to be the marring factors that push people into financial doldrums. Most people, unless you were born with a silver spoon, face financial adversity at least once in their life time. However, don't expect the IRS to be sympathetic towards your situation every time. They may very well chose to make you pay your tax dues adding to your financial woes.

Also don't expect the IRS to back away like some of the other collectors, as a matter of fact; they can be quite ruthless in their tactics from time to time. There are several collection weapons in the IRS's arsenal that can wreak havoc in your life, having said this; the statement is not intended to scare you. However, what most people fail to realize is that bankruptcy may sometimes act as your shield and protect you to some extent from some of the more brutal tactics that the IRS may employ to make you pay up.

There are two views about bankruptcy that are held by most tax payers; they either misconstrue it to be a very negative thing or assume that they can use it indiscriminately to ward of f the IRS and that it us by far the simplest escape from tax obligations.

You need to understand that bankruptcy comes as a boon for people in financial trouble because they can seek relief under it from debt collectors including the IRS. If you file for a Chapter 7 Bankruptcy, there are very good chances that your tax obligations may be erased along with the rest of your debts. However, do not assume that a bankruptcy court will always consider erasing your tax debts. For instance, people who opt for the Chapter 11, 12 or 13 bankruptcies will be get the opportunity to move the IRS to settle for an installment deal to resolve their taxation issues.

When you file for a bankruptcy you get an automatic stay, in other words, legal protection against your debt collectors. The moment a bankruptcy comes into the picture all the debt collectors including the IRS will have to cease all their actions against you till your bankruptcy plea is discharged or dismissed.

The only way in which the IRS can collect from you, in case you have filed for a bankruptcy, is by appealing to the bankruptcy court. However, you need to understand that the judge is on you side here and the only way in which the IRS can sway him/ her is by proving that you are committing a fraud by filing for bankruptcy. To put it simply, they will have to prove to the court that you are trying to wiggle your way out of your payments by resorting to a claim of bankruptcy.

Now remember if this is the case, you will find yourself in a lot of IRS mess not to say the other creditors who will come after you. However, in most genuine cases of bankruptcy the clock stops on your debt collectors till the bankruptcy claim is either dismissed or discharged. If the bankruptcy is dismissed the creditors are free to go back to their collection tactics.

Of all the form of bankruptcies Chapter 7 is the only kind that will erase your tax debts. However, you will have to fit into the category of specific conditions and requirements in order to file for a chapter 7 bankruptcy.

Finally, you need to understand that just because you have filed for Chapter 7 bankruptcy does not mean that the IRS will go away. There are several loopholes that the taxman can exploit to collect from you. For instance, if an IRS tax lien was filed before you filed for bankruptcy; in such a case, the IRS will have the right to any assets that the tax payer may hold despite filing for bankruptcy. In the other forms of bankruptcies you cannot erase your debts you can simply buy some time to pay your tax dues.