IRS Enforced Collection Actions

IRS Enforced Collection Actions and Alternatives to Enforced Collection.

IRS Enforced Collection Actions

The Internal Revenue Service is a powerful and historically unrelenting creditor. The Internal Revenue Code grants the IRS extraordinary powers to enforce tax collection. The IRS has greater collection powers than those possessed by private creditors, which are usually required to obtain a judgment in court before forcibly collecting from a debtor.

The enactment of the IRS Restructuring and Reform Act of 1998 afforded taxpayers firm rights when the IRS seeks to collect unpaid taxes. However, many taxpayers are unaware of these rights and how to protect themselves from the actions the IRS can take against them.

The Federal Tax Lien

Generally, if you owe $10,000 or more to the federal government, the IRS will automatically issue a Federal Tax Lien against you. A tax lien is put in place after you fail to pay the assessed amount within ten days of receiving a Notice and Demand for Payment. The resulting tax lien is enforceable against all property and rights to property belonging to you. The IRS files a public document called a “Notice of Federal Tax Lien.”

A Federal Tax Lien does not mean your property will be seized. The IRS is required to send a “Notice of Intent to Levy” before seizure.

The Federal Tax Levy

A levy is the seizure of your property to satisfy delinquent tax debt. When you fail to make arrangements to pay your tax debt, the IRS will send a “Final Notice of Intent to Levy.” You have 30 days to respond. After that, the IRS can levy you at any time. The IRS has the power to seize your physical property like your home or car, but also property

that is yours but held by someone else, like your wages, bank accounts or rental income.

Wage Garnishment

The IRS can garnish your wages for collection of your federal tax debt. Wage garnishments are a type of IRS levy.

Alternatives to Enforced Collection

To prevent or stop forced collection action, you must take steps to resolve your tax debt. Professional help is often very beneficial for taxpayers seeking to resolve their tax debt. A licensed tax professional can request that your account to be marked as “not collectible,” arrange an installment agreement, submit an offer in compromise, or request innocent spouse relief.

When your account is marked “not collectible,” the IRS will not pursue enforced collection actions. However, this does not mean that the debt is forgiven. The tax liability remains due and continues to accrue interest and penalties for the remainder of the statute of limitations on collection. The IRS will periodically review your financial situation and, if they see that your situation has improved, will return your account to active collection status.

Currently Not Collectible Status

Installment Agreement

Installment agreements allow you to pay your tax debt over time. There are many different types of installment agreements. A licensed tax professional can help in arranging an installment

agreement that best fits your situation.

Offer in Compromise

In an offer in compromise, the IRS agrees to settle for an amount that is less than what is owed. The IRS will settle a tax debt for one of the following three reasons: doubt as to liability, doubt as

to collectability, and effective tax administration.

Innocent Spouse Relief

If your spouse is solely responsible for your tax debt, you may be eligible for innocent spouse relief, separation of liability or

equitable relief. If granted, these programs may partially or entirely relieve you of responsibly for the tax liability.

Withdrawal, Subordination, Discharge, or Release of an NFTL

A federal tax lien is not extinguished until you fully satisfy your tax liability. However, in certain circumstances, a federal tax lien can be

withdrawn, subordinated or released even if you had not fully satisfied your tax liability.

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