Wednesday, August 29, 2012

How Does the IRS Find People?

IRS's rulebook (The Internal Revenue Manual) has a whole section on how to find you and your assets.  IRS agents are trained from this manual on how to research public and private records to find you.  They do this research in person or online.

The IRS has a "Locator Services Program."  It includes a national asset locator tool, the credit bureau web browser, the tax research portal and the Department of Motor Vehicles.  These services provde easy access to public records such as real estate transactions, real property, corporate officers, vehicles, and aircrcraft, as well as information on people and businesses.  The national asset locator tools allow IRS agents to research public records data and perform nationwide research on you.

The IRS knows the Internet is a powerful tool for gathering information about you and your business.  The IRS also has corporate contracts for locator services and credit bureau services.  These services provide IRS employees with Internet access to do the following:
  • locate taxpayers or their assets
  • understand various types of businesses
  • understand various types of property ownership
  • confirm/validate the information taxpayers have provided to them
The IRS agent considers the level of cooperation from you, the type and size of the tax, and other factors to decide whether to use the Internet search.

They also make "third-party contacts" to find you and your assets. 

An IRS agent may perform a telephone number search, a social security number search and an employer identification number search.  Real property records are a critical source the IRS uses for locating you and your major assets.  The agent may also perform a courthouse records check either online or in-person.

DMV's require state residents who own a motor vehicle to register their motor vehicle and require state residents who drive a motor vehicle to hold a valid drivers license.  In addition to driver licenses, motor vehicle departments issue identification (ID) cards to persons who require an ID card.  The ID card looks like a driver's license, but is used for identification purposes only.  Information maintained by the various motor vehicle departments varies from state to state.  Most states provide driver information, lien holders, and vehicle information on cars, trucks, etc.  ID card information is also provided.  The IRS has direct access to all of it.  They can not only find you, but anything you are driving that requires registering.

National Uniform Commercial Code (UCC) filing records contain information from commercial lien filings.  These records can help IRS agents find assets used by businesses to secure commercial loans or to learn about financial relationships between businesses and individuals.

Corporate information is available from each individual state's Secretary of State, State Corporation Commission, or equivalent.  These organizations provide information regarding the date of incorporation and the officers of the corporation.  All states and the District of Columbia require that corporations register at the time of their incorporation, and the registration information is usually maintained in each state's capital.  Secretary of State information is one of the most effective sources available to the IRS agent for corporate accounts.  It provides third party information, corporate officers, and registered agents, and is also fairly effective for verifying the existence of assets.  IRS agents use the corporate information received from the Secretary of State research to assess the Trust Fund Recovery Penalty (TFRP), if applicable.

Limited Liability Company (LLC) information is maintained by each individual state's Secretary of State, or equivalent, often in the same database as corporation records.  These organizations provide information to IRS agents regarding the date of organization and the members and/or managers of the LLC.

The Employment Development Department (EDD) is a state agency, and in some states the agency name is different (the name changes from state to state).  EDD provides secure information regarding the payroll information supplied by employers who have filed with the state.  EDD information is especially useful when an employer may have filed state employment tax returns but not federal employment tax returns.  Information includes number of employees, payroll, etc.  The various state employment commissions (EC) have proven to be some of the best available sources of wage levy data for IRS agents.  Access to these sources has been greatly enhanced by on-line vendor access and tape-to-tape exchange programs.  These levy sources are very effective because the information is updated quarterly.

The IRS exchanges information with State Employment Commissions.

Utility company information helps IRS agents to locate you.  The IRS knows that often, taxpayers attempting to hide from the IRS and other creditors do not notify the post office of a new address.  However, taxpayers generally will transffer their utility service from an old address to their new one, so when a taxpayer moves within an area served by the same utility company, the taxpayer will provide an updated address to the utility company.

The United States Postal Service (USPS) provides an address update product - the National Change of Address Linkage (NCOA).  The IRS is a licensee of NCOA, and receives a consolidated data file with change-of-address information from the USPS on a regular basis.  The IRS benefits from the NCOA address update process by using the new addresses to attempt to contact and/or maintain contact with taxpayers. 

Visit our website for more information about how the IRS can locate you.

Let's get you caught up and in good standing with the IRS.  If you haven't filed, contact me, Gerald Yarborough at (800) 270-8616.

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