I am a former IRS agent in revenue officer. I was also a teaching instructor for the IRS. Let me introduce you to the IRS wonderful collection process.

The  IRS Collection Process

If you do not pay in full when you file your tax return, you will receive written notice of the amount you owe, a bill.

This bill starts the collection process, which continues until your account is satisfied or until the IRS may no longer legally collect the tax; for example, when the time period for collection has expired.

As a general rule the collection statute of limitation is 10 years.

The first IRS billing notice

The first notice you receive will be a letter that explains the balance due and demands payment in full.

It will include the amount of the tax, plus any penalties and interest added to your unpaid balance from the date the tax was due.

It is an easy and soft letter from the IRS gently asking you to pay your back taxes you owe the IRS.

If you cannot pay your back tax balance you should call us today so we can go ahead and try to settle your tax debt on the money you will IRS on your back taxes.

The unpaid balance is subject to interest that will compound daily and to 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.

IRS has two programs you may qualify for if you cannot pay your current backs tax debt.

After IRS takes a detailed financial statement they could possibly put you into an economic tax hardship or require a monthly installment agreement.

If you cannot full pay under an installment agreement you may 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 an agreed upon reduced amount.

Current Tax Hardships

If you are unable to pay anything because of a current financial hardship, IRS may temporarily suspend certain collection actions, such as issuing a levy until your financial condition improves.

The IRS may, however, file a Notice of Federal Tax Lien  while your account is suspended.

Remember it is very important to call IRS as soon as you get a tax bill you cannot pay.

By doing so you will halt or stop  the IRS enforcement computer to work out a temporary tax settlement.

Other billing notices

IRS may send up to 3 notices out upping the nastiness of the letters till they had enough and eventually send you a final notice.

Letter L- 1058 is the end of the chain.

Then enforcement takes over. Do not let this happen.

Some of the actions IRS may take to collect taxes include:

• Filing a Notice of Federal Tax Lien

• Serving a Notice of Levy, or

• Offsetting a refund to which you are entitled

The federal tax lien

The federal tax lien is a legal claim to your property, including property that you acquire after the lien arises.

The federal tax lien arises automatically when you fail to pay in full the taxes you owe within ten days after we send our first notice of taxes owed and demand for payment, and we make an assessment of the tax.

The government also may file a Notice of Federal Tax Lien in the public records.

The Notice of Federal Tax Lien publicly notifies your creditors that the IRS has a claim against all your property, including property acquired by you after the Notice of Federal Tax Lien is filed.

The filing of a Notice of Federal Tax Lien will appear on your credit report and may harm your credit rating. No creditor will want to touch you if you have a federal tax lien filed against you.

Once a lien arises, the IRS generally cannot release the lien until the taxes, penalties, interest, and recording fees are paid in full or until the IRS may no longer legally collect the tax.

The IRS will withdraw a Notice of Federal Tax Lien if the Notice was filed while a bankruptcy automatic stay was in effect. The IRS may withdraw a Notice of Federal Tax Lien if the IRS determines that:

(1) the Notice was filed too soon or not according to IRS procedures;

(2) you enter into an installment agreement to satisfy the liability unless the installment agreement provides otherwise;

(3) withdrawal will allow you to pay your taxes more quickly; or

(4) withdrawal is in your best interest, as determined by the National Taxpayer Advocate, and the best interest of the government.

The IRS also may use a levy bank, or wages

The IRS also may use a levy(seizure) to collect taxes.

The IRS may levy assets such as wages, bank accounts, Social Security benefits, and retirement income.

The IRS also may seize your property for the purpose of selling the property to satisfy a tax debt including your car, boat, or real estate.

In addition, any future federal tax refunds or state income tax refunds that you are owed, may be applied to your federal tax liability.

Contact us today for a free initial tax consultation and let us help work out a tax settlement if you owe IRS back taxes.