The Internal Revenue Service (IRS) provides a range of options to taxpayers that cannot meet their tax obligations in a timely fashion. However, the IRS tends to give far less leniency to some taxpayers than others, and “repeaters” are one such group that the IRS tends to accord far less leniency.
A repeater is defined technically by the IRS as an in-business taxpayer delinquent on taxes that has had several instances of delinquent tax obligations which came into existence in the immediate past two years of the current cycle. In common parlance, this means that a repeater is basically a taxpayer that has repeatedly become delinquent on multiple tax obligations in the recent past. The IRS does exercise some discretion when it comes to determining repeater status. For example, IRS personnel may decline to deem a taxpayer a repeater where one of the tax debts was accrued for a minor penalty or small balance issue and was quickly resolved, or delinquent taxes were accrued for which the taxpayer was later found to be not liable. Internal Revenue Service, Internal Revenue Manual, Identifying Repeater Taxpayers, 188.8.131.52 (05-07-2012) available at https://www.irs.gov/irm/part5/irm_05-007-008.html. However, the determination is at some point a highly technical one, and multiple failures to meet tax obligations in close succession will likely result in being branded a repeater for IRS purposes.
Once dubbed a repeater it is difficult to avoid IRS scrutiny, which is focused on those deemed most likely to repeat offend. IRS personnel will make contact with the repeater within 45 days of receiving the case, and the taxpayer’s failure to pay or begin paying outstanding tax obligations following IRS contact may result in asset seizure and collection proceedings.
For a taxpayer to lose their status as a repeater that taxpayer must achieve a good compliance record by having no delinquencies first come into existence for 104 cycles. That said, if a taxpayer begins to make timely and adequate payments of their Federal Tax Deposits after contacting and complying with the IRS, that taxpayer is no longer considered a repeater. For example, an agreement on an installment payment plan would allow a taxpayer to lose repeater status, provided the taxpayer complies with the terms of the plan.
For more information on the costs and risks associated with IRS repeater status, consult an experienced tax attorney that understands this area of law and can provide competent legal advice.
Please keep in mind the information and advice presented in this blog is not intended to be used as formal legal advice. Contact a tax professional for personalized tax advice pertaining to your specific situation. While we try and answer all parts of the question when we write our blogs, sometimes there may be some left unanswered. If you have any questions about your problems with the IRS, SBOE, FTB, or BOE, or tax law in general, call RJS Law at (619) 595-1655.