Tax Collection Process

Having an IRS problem is an overwhelming experience. Unfortunately, the threatening IRS collection letters are only the beginning of an IRS tax problem. When IRS problems get this far, you probably need IRS help.

From IRS tax liens to bank levies to wage garnishments to outright closure of your business, or seizure of your home, the IRS has a number of powerful tax collection tools that could destroy your family's finances. However, taxpayers have a great arsenal of tax resolution tools to help minimize the devastating effects of IRS' enforced tax collections.

If you do not pay your IRS tax bill in full when you file, you will receive am IRS tax bill. This IRS bill begins the IRS collection process, which continues through alternative payment options and ends when your account is satisfied.

The first IRS tax bill you receive will explain the reason for your IRS tax balance due and require payment in full. It will include the tax due plus IRS tax penalties and interest that are added to your unpaid balance from the date your taxes were due.

If you cannot pay the IRS tax balance in full, you should pay as much as you can with the notice. The unpaid balance is subject to interest which is compounded daily and a monthly late payment penalty. Therefore, it is in your best interest to pay your tax liability in full as soon as you can to minimize the amount of interest and penalty charged.

If you are unable to pay your balance in full, IRS may be able to offer an individual payment plan based on monthly installments. It is no surprise that the majority of delinquent taxpayers cannot just write a check to the government, making the tax bill go away. Since, some taxpayers might not qualify for an offer in compromise or bankruptcy relief. We often negotiate long term payment arrangements with the IRS. In negotiating long term installment agreements with the IRS, our main objective is to insure that the IRS does not impose unreasonable repayment demands, thus leaving the taxpayer unable to meet their monthly obligations

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Once all payment options have been considered and it is determined that you do not qualify for an installment agreement, you may opt to file an offer in compromise. An offer in compromise (OIC) is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax liability. The IRS has the authority to settle, or compromise, federal tax liabilities by accepting less than full payment under certain circumstances. Our tax attorneys have extensive expertise with planning, preparing, and negotiating Offers in Compromise. Since 1997 we saved millions of dollars for our clients through the Offer in Compromise program

The IRS will accept an Offer in Compromise when it is unlikely that the tax liability can be collected in full and the amount of the Offer in Compromise reasonably reflects collection potential. An Offer in Compromise is a legitimate alternative to declaring a case as currently not collectible, or to a protracted installment agreement. The goal is to achieve collection of what is potentially collectible at the earliest possible time and at the least cost to the government.

The IRS has the authority to settle or compromise federal tax liabilities by accepting less than full amount under certain circumstances. One of the following factors must be established in order for the IRS to accept an Offer in Compromise and settle the liability:

1. The taxpayer cannot pay off the liability;
2. There is doubt that the taxpayer actually owes the liability;
3. The settlement would promote effective tax administration.

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The IRS may take enforced collection actions to secure payment. Some of the actions IRS may take to collect taxes include:

1. Filing a Notice of Federal Tax Lien,
2. Serving a Notice of Levy; or
3. Offset of a refund.

By filing a Notice of Federal Tax Lien, the IRS establishes its interest in your property as a creditor. The lien is a claim against your property, including property that you acquire after a lien is filed. The lien is required by law to establish priority as a creditor in competition with other creditors in certain situations, such as bankruptcy proceedings or sales of real estate. Once a lien is filed, it may appear on your credit report and it may harm your credit rating. Therefore, it is important that you work to resolve your tax liability as quickly as possible, before lien filing becomes necessary. Once a lien is filed, 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.

Notice of a levy is another method the IRS may use to collect taxes that are not paid voluntarily. This means IRS can, by legal authority, take and sell property to satisfy a tax debt. This could include your wages, bank accounts, Social Security benefits, and retirement income. If your tax liability remains unpaid, the IRS may also levy assets such as your car, boat, or real estate.

In addition, when you have an outstanding tax liability, any future federal tax refunds that you are due will be offset by the amount you owe. Any state income tax refunds you are due may also be levied, and the proceeds applied to your liability.

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If you need help dealing with an IRS Tax Problem call 888-829-5293 for a FREE Tax Consultation!