How the IRS handles collections

Tax time is right around the corner, and many people are concerned because they are not able to pay the IRS what they owe. Although ideally it is best to pay your taxes right away, there are options if you are unable to tackle your entire tax bill in one payment.

In many cases, you may be able to qualify for an installment agreement. You can make a request with the IRS to make monthly payments on your tax balance by filling out the Installment Agreement Request (Form 9465), which you can find on www.irs.gov.

Another option for paying your bill is to apply for an Offer in Compromise, or OIC, which allows a taxpayer to negotiate with the IRS to reduce a tax balance. In return, you would agree to pay the new amount within a certain amount of time. When making a decision about a possible OIC agreement, the IRS takes into account your income, your expenses, whether or not you have any assets and what they are worth, and your ability to pay the bill within six to 24 months.

When you do not pay your taxes

There are a number of remedies that The IRS has a number of remedies available to use against those who do not pay their taxes. If you do not respond to written attempts to collect the debt, the IRS may do the following:

  • Seize a tax refund. If you have a state or federal tax refund coming to you, the IRS can seize those funds in order to pay your balance.
  • File a tax lien. When the IRS files a Notice of Federal Tax Lien, it means that the government can put a claim against all of your property. This information is placed on your credit report, so your credit score may suffer. However, you can get the lien removed from your record when you pay your taxes, as well as interest and penalties, in full.
  • Issue a levy. When the IRS issues a levy, it means that the agency may siege your bank accounts, retirement income, Social Security benefits or wages. In addition, the IRS may also seize property, such as real estate, cars and boats.

Do you need help with your tax issues?

If you have a tax issue, you do have options - even if you've tried to work with the IRS on your own and been unable to get resolution. Contact a qualified attorney to find out what your rights are and how you can deal with your tax problems.