Tax Debt Bills From the IRS

Have you received a tax debt bill from the IRS?

Whether you agree or disagree with the amount on the bill call the IRS or an authorized tax professional right away. Do not compound or complicate the situation by ignoring it. It is always better to get assist early in the process. If you agree with your bill it is always in your best interest to resolve the amount due as quickly as possible. If you do not agree with the bill contact IRS or an authorized tax professional right away. Calling the number on the bill will get you the quickest response or you can write to the address on your bill. You can also visit your local IRS office. Check the IRS website for office locations and hours of operation. You can access Publication 594: The IRS Collection Process for details on how to take care of your IRS bill and the various ways you can pay your bill. Section 3: Filed and Have A Tax Debt also provides information on responding to the bill. The earlier you contact the IRS or an authorized tax professional the easier it will be to resolve the issue. 

What happens if you do not respond to your IRS tax debt bill?

Ignoring your tax bill will not make it go away. The amount you owe continues to grow and if you still ignore your bill your bank account may be attached funds maybe withdrawn by the IRS or your wages garnished. You may be threatened with property loss, a federal tax lien or an intent to levy. If you are unable to pay the bill in full immediately, pay what you can. Keep in mind that the information you disclose to the IRS about your current financial situation will be used to determine your possible options for payment. 

1. Contacting the IRS directly

a. The collection employee will ask for information on your present financial condition. The IRS will use that information to determine the possible options for payment. You maybe able to make monthly payments without providing additional financial information. The IRS collections employee may ask for additional financial information. The IRS collection employee will complete a financial statement form. The IRS collection employee’s ability to assist you with your tax debt will partially depend on your willingness to abide by the deadlines set between you and the IRS. If ignored the IRS may act to collect the amount due, such as attaching bank accounts and withdrawing funds or garnishing wages. If break your commitment by missing a deadline the IRS will continue to take the necessary steps to resolve the debt. This can include contacting 3rd parties for information regarding your assets.

2. Contacting an Authorized Tax Professional

a. Authorized Tax Professionals may include Enrolled Agents (EA), CPA’s and attorneys all of whom can represent you with the IRS. There are multiple advantages of contacting a Tax professional. 

i. Patience and Understanding. These two attributes of a tax professional cannot be overstated. Tax professionals recognize and sympathize with the amount of stress and anxiety the taxpayer suffers when receiving threats of wage garnishment or a Federal Tax Lien. Part of your tax strategy should take into consideration your personal and professional life story.

ii. Assist in organizing your personal and personal financials. It can get uncomfortable when the taxpayer contacts the IRS only to find themselves unable to answer the financial questions posed by the collection’s employee. As previously stated, the IRS uses the financial information proved by you to determine your ability to pay. If you answer the financial questions incorrectly you may find yourself agreeing to a repayment plan you cannot really afford.

iii. Filing previous tax returns. From being eligible to receive refunds to a potential offer and compromise with IRS, you will likely be required to file all prior year’s tax returns.

iv. Avoiding Federal Tax Liens, Wage Garnishments, Bank Account Attachment Withdrawals. You may have received notice from the IRS regarding a tax debt or worse; we want to assist you in preventing your tax debt situation from escalating to Federal Tax Liens, Wage Garnishments, Bank Account attachment Withdrawals and more. 

3. Notice of Federal Tax Lien. It can also include filing a Notice of Federal Tax Lien. A Notice of Federal Tax Lien provides notice to the public including potential creditors of the governments legal claim to your property. Although the IRS does not notify credit reporting agencies the filing of the lien may damage your credit rating. 

4. Levy.  The IRS can also issue levies. A levy is a legal action in which the IRS takes an asset to apply to your take debt. This can include your bank accounts. Funds from your account are sent to the IRS by your bank. Outstanding checks may be returned for non-payment. Your wages can be garnished, which means your employer will be paying a portion of your salary to the IRS in order to comply with the levy. The levy could also include Accounts Receivable for small businesses or rental income. The IRS will continue to take actions to collect the amount you owe. Penalties and interest will continue to be added to the amount you owe. The levy may also include seizure and sale of real property, vehicles, business inventory, equipment among other items. If the taxes are not paid prior to sale the property will be sold and the proceeds will be applied to the amount due. 

a. Summons. The IRS may serve you as the person responsible for tax liability with a summons to bring in financial documents and records to assist in the preparation of a financial statement to determine your ability to pay what you owe. Bring in books and records for the IRS to prepare an unfiled tax return and compel-testimony. In some cases, the IRS will summons other parties for information needed to collect or determine your tax liability. This could include summoning financial institutions, 3rdparty record keepers or those not able to comply with an informal request for information. The IRS can summons anyone with information that might be relevant to your case. If you fail to appear before the IRS after a summons is issued other legal actions can be taken against you.

i. Civil Enforcement. Civil enforcement of the summons will require your appearance before the district court or magistrate judge. 

ii. Court Order. An order may be issued to enforce compliance with the summons and punish the failure to comply. 

b. IRS Visit to Home or Business. If you continue to ignore your IRS bill a collection employee may pay a visit to your home or your business. Avoiding the IRS will not make the situation any better or make the situation go away. As the IRS continues to try to make contact attempts at collections also continue and escalate.

As you can see ignoring an IRS tax bill will not make it go away and only makes it more difficult to resolve. Contact the IRS or an authorized Tax Professional so you can work on solving the problem before it overwhelms you. If you need assistance organizing your personal or business finances, consider contacting an authorized tax professional first before you present your financial information to the IRS. And remember, if you agree with your IRS tax bill it is in your best interest to resolve the amount due as quickly as possible. If you do not agree with your tax debt contact the IRS or seriously consider contacting an authorized tax professional to resolve the matter. 

WARNING: IRS government employees represent the US government and its financial and legal interests. When communicating with an IRS employee remember that anything you say may be used against you in determining your penalties, interests or even criminal intent. If you feel confused or overwhelmed by your tax debt circumstance, STRONGLY consider exercising your 9th Right in the Taxpayer Bill of Rights: The Right to Retain Representation. An authorized tax profession will consider your tax debt situation carefully, helping you avoid unnecessary penalties and interest. By contacting taxdebtguide.org directly either by phone or email you will receive the contact information of an authorized and reviewed tax professional in your area.