The IRS Debt Collection Process

The IRS collection process always starts with a tax assessment. Until the IRS makes an assessment, there is no official tax debt. Without an effective assessment in place, no collection efforts will ensue. An assessment takes place when the IRS officially notes in its record how much a taxpayer owes for any tax year or tax period. Assessments are based on returns that are filed by the taxpayers, returns the IRS files in place of returns a taxpayer neglects to file, or from changes the IRS makes to a return. Hopefully you can avoid the entire process of dealing with the IRS from the bad side, but if not, ensure you have sought out an excellent los angeles based tax attorney to assist you!

Sometimes the first IRS notice a taxpayer will receive will inform them about the existence of a debt is a Notice of Taxes Due. This notice will state that the taxpayer owes a certain amount for a certain year or years and is generated with the IRS processes a return the taxpayer filed and sees that it was not paid in full. Another IRS notice is a Notice of Proposed Changes, where the IRS makes changes to a return the taxpayer had already filed and adds taxes and or penalties and interest. The IRS also sends a notice when it files a return for a taxpayer for a year that the taxpayer did not file his or her own. A return that the IRS files in lieu of one that the taxpayer never filed is called a substitute or a return. It can be important for a taxpayer to replace a substitute for a return as the IRS does not credit the taxpayer for any deductions the taxpayer would have been eligible to claim.

If the assessment is consistent with the return that taxpayer filed and is accompanied by a payment from the taxpayer for all taxes owed, then the assessment does not lead to a tax debt. On the other hand, if a taxpayer doesn’t pay a tax debt in full, the IRS will initiate efforts to collect on the delinquent tax debt. Seeking appropriate tax resolution advice is the first thing you should do as a debtor. Any time a tax payer has a debt of over ten thousand dollars, or receives a threatening letter from the IRS it makes good sense to seek the right advice and ask about options for resolving IRS tax debt. Given the right circumstances, even a large debt can be settled for a smaller amount.

It can be the case that the first time a taxpayer realises that they owe the IRS at all is when a Notice of Intent to Levy is received. A Notice of Intent to Levy is a written warning that is mailed to the taxpayer, alerting the taxpayer that the IRS is attempting to collect on a tax debt. Notices of Intent to Levy can come with a ten or thirty day warning period, giving the taxpayer time to take action to protect themselves. Notice of Intent to Levy should never ever be ignored.