11 June 2020

How IRS Collection Works?

The IRS Collection process can be broken down into seven phases:

Return filed
Tax Assessed
Billing Notices/Demand For Payment
Statutory Lien Arises
Notice of Federal Tax Lien (NFTL) filed if owe > $10,000
Final Notice – 30-Day Appeal period begins
Levies issued

How do you resolve your debt?

Your debt can be resolved at any point in the IRS’ 7-step process, but the sooner the better!

Here is what to do no matter the phase.

Tax Compliance

First get into compliance. Get your tax returns filed. In most cases you will only need to go back six years. Get current on payments. This means ensuring your paycheck withholding is sufficient or estimated payments have been made.

At this point, do not pay money on old debt, rather ensure you are not getting further behind, digging yourself into a bigger hole.

Contact the IRS

Call the IRS and find out what needs to be done. What tax returns are missing? Make payments to get current. Are there penalties that can be reduced? Make a proposal to resolve the debt. Ask for more time.

What options do I have to resolve this problem?

Most taxpayers resolve their tax debt through one of three ways:

Currently-not-Collectable (CNC). Show the IRS that you simply cannot pay, and the IRS will stop asking…for a while.
Offer-in-Compromise. Offer to settle the debt for LESS THAN the amount owed based upon proof that your offered amount is the best the IRS will likely ever receive from you. This is the “squeeze blood out of a turnip” solution.
Installment Agreement – Payment Plan. This is the most common way for taxpayers to work out their debt with the IRS. The IRS offers several variants of installment agreements based on your specific situation.

Need help with your Tax Situation? Let me know.

Jeff Roltgen, Tax Rescue CPA
Jeff@TaxRescueCPA.com
www.TaxRescueCPA.com

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