IRS – The Collection Process – IRS Insider

October 8, 2010
Written by: steve

I am a former IRS Collections Revenue Officer. I worked for the IRS for 10 years and been in private practice for 28 years. To reach me call  1-866-700-1040.  My website is www.freshstarttax.com.
If you do not pay in full when you file your tax return, you will receive a bill from the IRS. This bill begins the collection process, which continues until your account is satisfied or until the IRS may no longer legally collect the tax, for example if the collection period has expired.
The first notice you receive will be a letter that explains the balance due and requires payment in full. It will include the tax plus penalties and interest added to your unpaid balance from the date the tax was due. You can pay by sending the IRS a check or money order, payable to United States Treasury, with a copy of the notice. You may also pay by credit card by calling 888-872-9829, 888-729-1040, or 888-972-9829, or by debit card, by calling 866-472-9829.
If you cannot pay in full, you should send in as much as you can with the notice.  The unpaid balance is subject to interest compounded daily and a monthly late payment penalty. It is in your best interest to pay your tax liability in full as soon as you can to minimize additional charges. You also might want to consider obtaining a cash advance on your credit card or a bank loan. The interest rate your credit card or bank charges and any applicable fees may be lower than the combination of interest and penalties imposed by the Internal Revenue Code. Paying off your tax debt by using a credit card, obtaining a cash advance or a bank loan may also keep your tax debt from negatively affecting your credit rating.
If you are unable to pay your balance in full, we may be able to offer you a monthly installment agreement. You can use the Online Payment Agreement (OPA) or you can complete and mail an Installment Agreement Request, Form 9465 (PDF), with your bill. The option to have the payment directly debited from your bank account is available by simply completing lines 11a and b of Form 9465. Direct debit installment agreements require a lower fee than other installment agreements and help you avoid defaulting the agreement by providing you with the ability to make timely payments automatically. Some installment agreements can be established over the telephone. Refer to Topic 202, Tax Payment Options, for more information. If you are experiencing a financial hardship and are unable to pay anything, we may temporarily suspend collection action. Please call the phone number listed on your bill to discuss this option. Interest and late payment penalties will continue to accrue while you make installment payments or while collection is suspended.
If you are a member of the Armed Forces, you may be able to defer payment.
If you do not qualify for an installment agreement under any of the payment options, you may choose to propose an Offer in Compromise (OIC). An OIC is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax liability by payment of a reduced amount. Call our office for more details 1-866-700-1040.
It is important to contact the IRS and make arrangements to pay the tax due voluntarily. If you do not contact them, they may take action to secure payment.
Some of the actions the IRS can  take to collect taxes include:
1. Filing a Notice of Federal Tax Lien
2. Serving a Notice of Levy
3.These action will impact your credit

An explanation of this process is as follows:
The federal tax lien is a claim against your property, including property that you acquire after the lien arises. The lien arises automatically when you fail to pay the taxes you owe within ten days after we send our first notice. The government may also file a Notice of Federal Tax Lien, which further protects its interest in your property as a creditor in competition with other creditors in certain situations, such as bankruptcy proceedings or sales of real estate. The filing of a Notice of Federal Tax Lien may appear on your credit report and may harm your credit rating. Once a lien arises, the IRS generally cannot issue a “Certificate of Release of Federal Tax Lien” until the taxes, penalties, interest, and recording fees are paid in full or until the IRS may no longer legally collect the tax.
A Notice of Levy is another method the IRS may use to collect taxes. Levying means that we can confiscate and sell property to satisfy a tax debt. This property could include your car, boat, or real estate. The IRS may also levy assets such as your wages, bank accounts, Social Security benefits, and retirement income. In addition, we will apply future federal tax refunds that you are due, to offset the amount you owe. Any state income tax refunds you are owed may also be applied to your federal tax liability.
You can call the IRS at 800-829-1040 to discuss any IRS bill. Please have the bill and your records at hand when you call.
You have rights and protections throughout the collection process. Please refer to Publication 1, which provides additional information on Your Rights as a Taxpayer. More information on the collection process and your rights is available in Publication 594 (PDF), The IRS Collection Process, and in Publication 1660 (PDF), Collection Appeal Rights. These may be obtained by accessing the IRS web site at www.irs.gov.

Fresh Start Tax is one of the premier tax resolution firms in the country. We deal with all types of cases, individuals, businesses and high dollar corporate entities. We have a staff that specializes in every type of case. Some of our specialties include the following:

  • Immediate Tax Resolution and Representation
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Our company resume:

  • Our staff  has over 140 years of professional tax representation experience collectively.
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