How closely does the IRS monitor your bank accounts when you’re in Currently not collectible status?
January 22, 2009 by Tax Blog
Filed under Questions & Answers
Rickenharp asked:
My $50K back tax debt to the IRS has been classified as currently not collectible for the past two years. I recently won a Disability settlement from Social Security and received a check for 4 1/2 years of back SS Disability payments (FYI: I am no longer disabled and am now working part-time). What I wanna know is, can I open a new bank account (I don’t presently have one) and deposit the lump-sum SSA check without having some kind of alarm go off at IRS HQ which results in their hoovering that account dry the second it clears? I fully intend to use a big chunk of the money to work out some kind of payment or offer in comprimise plan with them, but I need to be able to use some of it for urgent medical, dental and other essential expenses (such as a good tax attorney) first. Any information and or suggestions would be greatly appreciated. Where possible, please cite references, regulations, IRS publications, etc. so I can make sure I have my facts straight.
My $50K back tax debt to the IRS has been classified as currently not collectible for the past two years. I recently won a Disability settlement from Social Security and received a check for 4 1/2 years of back SS Disability payments (FYI: I am no longer disabled and am now working part-time). What I wanna know is, can I open a new bank account (I don’t presently have one) and deposit the lump-sum SSA check without having some kind of alarm go off at IRS HQ which results in their hoovering that account dry the second it clears? I fully intend to use a big chunk of the money to work out some kind of payment or offer in comprimise plan with them, but I need to be able to use some of it for urgent medical, dental and other essential expenses (such as a good tax attorney) first. Any information and or suggestions would be greatly appreciated. Where possible, please cite references, regulations, IRS publications, etc. so I can make sure I have my facts straight.
bostonianinmo on Thu, 22nd Jan 2009 5:15 pm
I’m a bit surprised you got that check from the SSA. Somebody dropped the ball on that one.
The IRS will be scanning for any activity in the banking sector and may already know about the SSA check if they’re talking to each other. Sometimes they do and sometimes they don’t. If they see the $$$, they’ll slap a lien on the account in a New York minute. Bye bye money.
Dano N on Fri, 23rd Jan 2009 1:16 pm
Let me start by saying that I respect Bostonias answers on here. He is very smart with most everything but he is off alittle bit on this one. The bank has no obligations to the IRS for any client. Now do to the Patriot Act the goverment will be notified of your activity, but not the IRS. The IRS runs random scans of bank account holders, and if their computer alarm them then they will investigate.
mattapan26 on Sat, 24th Jan 2009 5:53 am
It is my understanding, that when the IRS Collection Division classifies you as currently not collectible (53 status), the computer picks up changes to the income reported on your income tax returns and on 1099 forms. The social security payment may not be taxable and may not hit your return. That info won’t hit till next January and if you have documented the legitimate expenses (trips to Vegas probably don’t qualify) that you applied the funds to, your 53 status probably won’t change.
brainyblonde38 on Sun, 25th Jan 2009 12:02 am
Personally, I wouldn’t deposit the check without consulting with an attorney first.
IRS collection info below.
Custody Consultant on Tue, 27th Jan 2009 1:06 am
Don’t deposit that check into an account, it’s not worth the risk. Let’s say they ‘ACCIDENTALLY’ take it even though they weren’t suppose to if it’s been declared uncollectable. Do you want to have to hire an attorney to try and get the money back?
I’ll deposit it in my account for you and then give you the money (wink, wink). The best thing to do is setup a corporate account with others on the account and make sure you have a corporate veil that cannot be pierced. Do a google search to get details on the corporate veil if you’re not familiar.
STEVEN F on Tue, 27th Jan 2009 10:25 pm
Normally, they don’t wait until you get the check to seize funds coming from agencies of the Federal government. Standard procedure is to submit delinquent debts to the Treasury Department’s FMS. ALL payments from the Federal government go though the FMS for possible offset to pay such debts.
Clyde on Tue, 1st Sep 2009 11:12 pm
I agree with Dano N… if IRS smell something fishy on their random scan, Investigation follows… if you’re that person, better have some measures to follow… for things related to this matter, we can answer all you question at www.protaxcare.com.. We would be looking forward in helping you…