The Internal Revenue Service (IRS) strictly expects all taxpayers to file their taxes honestly and pay them on time. If a taxpayer’s records show that he or she has not paid, the IRS sends that taxpayer a bill and the collection process the IRS is notorious for begins.
The IRS’ “Gentler” Options
When collection begins, the IRS offers the taxpayer options on payment. The meekest enforcement of options is extending the time within which the taxpayer has to pay the taxes owed. The Service may recognize the inability of some taxpayers to pay. Those eligible for extension will have up to 120 days to pay the debt owed. If they are unable to pay on time, taxpayers should request this option.
An Offer in Compromise (OIC) enables taxpayers to settle their bill for less than what they owe. The criteria for acceptance of an offer are strict and relatively few offers are accepted every year. As well, the IRS has the prerogative to suspend or delay collection until the taxpayer’s financial conditions improve. However, interest and late payment penalties will accrue.
A final, similarly gentle option that “unable” taxpayers can avail is a monthly installment agreement. Payment arrangements such as direct debit from the taxpayer’s bank account or payroll deduction from monthly wages are possible.
Enforced Collection Actions
However, there are still taxpayers who are unable to qualify for the above options. From here on, the options become bleaker. The IRS collection actions tighten around a taxpayer’s property with a Notice of Federal Tax Lien, which files a claim against any property.
Another similarly compelling collection action is the serving of a Notice of Levy, allowing the IRS to confiscate and sell property to satisfy a tax debt, including cars, boats, real estate, and even assets such as wages, bank accounts, social security benefits, and retirement income. In addition, the IRS can also take future federal tax refunds that are due to the taxpayer to offset the amount owed.
However, the IRS takes care to inform taxpayers of their rights. Along with the bill or notice, Publication 1 (Taxpayers’ Rights) and Publication 594 (Understanding the Collection Process) are sent. Every taxpayer should know and have their rights respected and as well should receive fair, professional, and courteous treatment from IRS employees.
This article is intended solely to offer general information on the subject. None of the content should be considered as legal advice.
Learn more about the IRS Collection Process. The Thorn Law Group confidently handles and resolves any tax disputes for the Washington, D.C. area.