The IRS Collections Process
The IRS collections process can be extremely exhausting. We are one of San Diego’s Top-Rated IRS Collections Attorneys Dealing with Liens, Levies, & Wage Garnishment. Many business owners (thanks to mainstream media) see the IRS Collections as the Men in Black who are only after your money. Well, the truth is the IRS does not care about your money. They care about the money you OWE them.
If the IRS thinks you owe them money, they will try and collect it from you. Plain and simple. The main issue is that IRS matters are often very confusing for taxpayers, because it is easy to misunderstand the difference between the Assessment and the Collections side of the IRS.
- The Assessment side of the IRS: this side basically handles your business (or personal) account when you file a tax return or if your tax return is audited
- The Collections side of the IRS: meanwhile, the IRS Collections Department’s only job is to collect what you owe and has no business with why you owe to start with.
What Does it Mean to “Owe” the IRS?
For personal taxes, this means they may:
- take your property,
- take your home,
- take the money in any bank account with your name on it (bank levy), or
- have your employer send them money out of your paycheck (wage garnishment).
If you own a business, the IRS may seize your business property and assets, including your equipment and accounts receivable. When the IRS starts contacting your customers demanding they send money to the IRS rather than you, many customers might stop doing business with you.
Accounts receivable collections are one of the most damaging attacks by the IRS. This is why it is very important to take assertive action by contacting a tax law firm with a proven track record of success.
The Process of IRS Collections
The IRS cannot just swoop in and take all your money and property. They must have sent several notices informing you of the amount you owe and the possible penalties of not paying.
Described below is a brief overview of how the IRS collections process works and what to do if you are unable to pay.
The First Notice
You will receive a bill explaining the reason for your balance with a requirement that you pay in full. This notice will include the amount due plus any interests (and penalties) that will be accrued if unpaid.
If You are Unable to Pay in Full
Contact the IRS immediately if you are unable to pay. The IRS offers several payment plans depending on how much you owe and your overall financial outlook. These payment plans are mostly monthly installments.
However, if you are still unable to pay even after all the payment plans have been considered, you can file for an offer in compromise (OIC). Contact us for a free consultation to see if you qualify for an OIC.
IRS Collection Notices to Secure Payment
The IRS will send several more notices informing you of how much you owe them. If you fail to voluntarily contact the IRS to pay your tax due or make payment arrangements, they will take legal actions to secure their payment. These include:
- Filing a Notice of Federal Tax Lien against you
- Serving a Notice of Levy against you (final notice)
- Offsetting the bill with your tax refund
Usually, when you start getting any of these notices, it means you have let things get out of hand. When you get the final notice, you have less than 30 days to either pay up or risk collection action such as a levy or garnishment..
When this happens, it is best to contact an experienced tax attorney to advise you on how to delay the collections process and resolve the matter. Contact us today for a free consultation. Fill out the form on the right to get started.
Appeal the Collection Process
The final notice the IRS will send you is to let you know that you have 30 days to pay the amount you owe or they may confiscate your real estate, the money in your bank, business equipment, and motor vehicles.
However, with the help of an experienced tax attorney, you could be able to avoid the IRS collections process and buy yourself some time. There are several ways to go about this. For example:
- You can agree to a payment plan. Make monthly installment payments to offset your tax due.
- You can submit an Offer in Compromise. This means you are able to settle your tax debt for a fraction of what you owe – but only if you are eligible.
- Show proof of financial hardship. The IRS will not levy your funds if you can prove that it will cause you (and your family) financial hardship.
- Dispute the tax liability altogether. If you can prove that you do not owe the tax due (either through an innocent spouse defenses or by arguing that the IRS assessed the tax in error), the IRS cannot levy your funds nor take any further collection actions.
- Request a collection due process (CDP) hearing. This delays the IRS from seizing your funds or property until after the hearing. And even if you fail to convince the IRS settlement officer, you can still petition the Tax Court.
The IRS offers several payment plans if you are unable to pay your tax dues. We cannot give you any specific advice on which payment plan to choose because we don’t know the details of your case. That is why we suggest you contact us for a free consultation.
In general, the best plan for you will mostly depend on factors such as how much you owe the IRS, how quickly you can pay it off, and whether your tax debt is personal or for your business entity.
With that said, listed below are the various payment plans offered by the IRS:
Guaranteed Installment Agreement
This payment plan is for you if your tax debt is $10,000 or less, and you are certain you can repay within 36 months or 3 years. You are required to make monthly payments until the bill is offset.
Streamlined and Extended Streamlined Installment Agreements
The streamlined payment plan is for people who owe the IRS less than $50,000.The entire balance must be paid within 72 months. If you owe less than $100,000 you may qualify for a streamlined installment agreement. For this agreement, the balance must be paid over 84 months.
Currently Non-Collectible Status
If you are unable to use any of the payment plans above, you can apply for this currently non-collectible status or CNC status. If the IRS grants CNC status, the IRS will not require any monthly payment, but they will periodically review your financial status to see if you can afford a payment at a later time.
Offer in Compromise
An offer in compromise is an opportunity to settle your tax debt for less than the full amount owed. The amount you will pay will depend on your resources and how you much you owe.
How We Can Help
If the IRS says you owe them money, chances are high that you have a lot of anxious and fearful) thoughts running through your mind. We are known as the “no worries” law firm for a reason.
We are here to help you resolve your tax problems with the IRS. We know how frustrating it can be to deal with the IRS. We can help you put an end to that frustration.
We will review your case and current situation, and we will propose appropriate solutions and alternatives suitable for you. Listed below are what we can help you with:
- Wage Garnishment
- Bank Levy
- Threatening Letters
- IRS Audit Notification
- Back Taxes
- IRS Seizures
- Innocent Spouse
- Installment Agreements
Contact Us Today
We have successfully negotiated many offers for clients who have trusted us over the years. We are confident we can help you resolve your tax problems as well. Contact us at our San Diego, Orange County or Beverly Hills tax law firm to schedule a free consultation today.
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