Understanding the IRS Collections Process
The Internal Revenue Service (IRS) is responsible for collecting taxes owed to the federal government. If you fail to pay your taxes or make arrangements to pay them, the IRS can take steps to collect the amount you owe. These steps can be stressful and overwhelming, especially if you are not familiar with the IRS collections process. That's where a tax attorney comes in. A tax attorney can help you navigate the process and work with the IRS to find a resolution that is in your best interests.
IRS Notices
The IRS typically begins the collections process by sending you a notice. There are several types of notices that you may receive, each with a different purpose.
The first type of notice is a "demand for payment" letter, also known as a Notice CP-504 or Notice CP-14. This letter is sent when the IRS determines that you owe taxes and demands that you pay the full amount within 30 days. If you cannot pay the full amount within 30 days, you should contact the IRS to make other payment arrangements.
Another type of notice is a Notice of Federal Tax Lien. This notice is sent when the IRS has a legal right to your property because you owe back taxes. A lien is a claim against your property that gives the IRS the right to seize your assets to satisfy the tax debt. The lien also becomes a public record, which can affect your credit score and ability to obtain loans.
A Notice of Levy is another type of notice that you may receive from the IRS. A levy allows the IRS to seize your assets to satisfy your tax debt. The IRS can levy your bank accounts, wages, and other property, such as your car or home.
Federal Tax Liens
A federal tax lien is a legal claim against your property that the IRS can use to secure payment of your tax debt. When the IRS files a tax lien, it becomes a public record, which can affect your credit score and ability to obtain loans.
The IRS can file a tax lien if you owe more than $10,000 in taxes, penalties, and interest and have not made arrangements to pay the debt. The lien will remain in place until you pay the debt in full or the statute of limitations on collecting the debt expires.
If you have a tax lien, it's important to take action to resolve the debt as soon as possible. If you don't, the IRS may take further action to collect the debt, such as levying your assets or garnishing your wages.
Levies
A levy is a legal seizure of your property to satisfy a tax debt. The IRS can levy your bank accounts, wages, and other property, such as your car or home.
The IRS typically sends a Notice of Levy to the bank or other organization that holds your assets before seizing them. The notice gives you the opportunity to pay the tax debt in full or make arrangements to pay it before the levy takes effect.
If you receive a Notice of Levy, it's important to take action to resolve the debt as soon as possible. If you don't, the IRS may seize your assets to satisfy the debt.
Wage Garnishments
A wage garnishment is a legal seizure of a portion of your wages to satisfy a tax debt. The IRS can garnish your wages without a court order.
The IRS typically sends a Notice of Intent to Levy to your employer before garnishing your wages. The notice gives you the opportunity to pay the tax debt in full or make arrangements to pay it before the garnishment takes effect.
If you receive a Notice of Intent to Levy, it's important to take action to resolve the debt as soon as possible. If you don't, the IRS may begin garnishing your wages, which can make it difficult to pay your bills and meet your financial obligations.
How a Tax Attorney Can Help
If you are facing the IRS collections process, it's important to take action to resolve the debt as soon as possible. A tax attorney can help you navigate the process and work with the IRS to find a resolution that is in your best interests.
A tax attorney can help you negotiate with the IRS to reduce your tax debt or set up a payment plan that is manageable for you. They can also represent you in court if the IRS takes legal action against you.
If you are facing a levy or garnishment, a tax attorney can help you negotiate with the IRS to release the levy or stop the garnishment. They can also help you contest the levy or garnishment if it was issued in error.
A tax attorney can also help you with other tax-related issues, such as filing back taxes or resolving disputes with the IRS.
In short, a tax attorney can be an invaluable resource for anyone facing the IRS collections process. If you are struggling with tax debt and need help, don't hesitate to contact a tax attorney.
A tax attorney at Safeguard Law, PLLC can help you with your IRS troubles. Give us a call today.