The Complete Guide to IRS Collections
Owing money to the IRS is a very serious matter. And it will not go away if you just ignore it. Keep reading to learn what your options are and how Brotman Law can help.
Owing the IRS is every taxpayer’s worst nightmare.
Your first clue will be a letter from the IRS informing you of the amount due. Then, the notifications keep piling on, with an increasingly threatening tone.
When you start receiving certified mail, you know you had better act … FAST!
If you have received notice from the IRS that you owe them money and you cannot pay, then give us a call. We understand your predicament and can review your case and discuss your options. In most cases, we can work out a settlement that will satisfy both you and the IRS.
If you owe taxes to the IRS, do not think that you can blow it off, like you might delay paying a credit card or medical bill.
The IRS takes tax collection very seriously and does not want to hear your excuses or sob stories as to why you did not or cannot pay your taxes.
They are not going to let you off the hook and you can count on them keeping in regular touch with you. Like a pesky fly that you just can not quite swap into oblivion.
What is the IRS collection process? People not paying their taxes is a very serious issue for the IRS. It is something that we as tax practitioners call the tax gap.
The IRS collection process is an increasingly serious step of collection measures designed to get people in compliance and make sure they stay in compliance.
One of the reasons people complain about penalties and interest so often is because it is a deterrent that the IRS uses to make sure that you do not owe money on your taxes.
When you see liabilities rise by 25, 30, 40 percent or, even higher, it is going to make you think twice about not paying your taxes.
The IRS does not just issue penalties and interest; they start out by taking increasingly serious actions such as garnishing your wages, levying your bank accounts, putting liens against your property and a whole host of other measures designed to force you back into compliance.
Usually, the IRS will give you a lot of latitude and opportunity to resolve your tax issue within reason.
One of the favorite sayings of the revenue officers that we deal with is that the IRS is not a bank. It is not giving you a loan on your taxes to pay for other things.
Therefore, what ends up happening is a disconnect between the IRS calling the terms of its loan so to speak, and between what most people consider ordinary and reasonable living expenses.
Most of the job that we do as a tax firm in defending clients against the IRS collection process, is translating their circumstances in terms that the IRS will respect and understand.
As you move through the process, the more you step out in front of it and mitigate your liability will go a long way to avoiding some of those more serious actions.
Actions the IRS Can Take Against You
The IRS uses the carrot and stick to get people into compliance and to get liabilities resolved. Generally, they use the stick more than the carrot.
What happens is the more time that passes from when the IRS is aware that you owe a liability, the more significant and strong the actions they take against you are.
Again, they want you in compliance. They want you to pay your taxes, they want you to get on a payment plan if you cannot afford to pay your taxes in full, and they are not going to tolerate you owing money to the government.
IRS actions can come in the form of straight-forward letters of notification to the extreme of sending special agents to your home of business.
As time passes, the IRS will take increasingly serious action against you. They start with letters.
You start getting letters — correspondence of increasing urgency. The IRS generally goes after low-hanging fruit. They start seizing bank accounts and wages and they can take a portion of your Social Security.
They are also looking for assets that they can quickly find and liquidate in order to satisfy the liability.
If they cannot locate those assets, and depending on how much liability you owe, then they may take stronger action against you.
They may send a field agent to your house. They may summon you and bring you in for an interview. They may demand the production of financial information or other documents that they may review to get their money back.
What happens is the longer that IRS liabilities go unresolved, the more serious the government is and the harder and faster they move against you.
From a planning perspective, It is really important that as soon as you become aware of an IRS liability, or as soon as you are in a position to take care of a tax problem, that you do so as quickly as possible.
Taking swift and prompt action will mitigate most IRS problems very quickly.