If you have not paid your federal tax liability, the Internal Revenue Service (“IRS”) will begin sending you a series of computer-generated bills. These bills start the IRS enforced collection process.
If you ignore the bills, the IRS become increasingly more insistent in their payment demands through enforced collection. The IRS collection process can seriously disrupt your business and employment relationships and negatively impact your credit rating.
The experienced tax lawyer at Columbus, Ohio-based Porter Law Office, LLC has in depth experience with the IRS’s collection process practices and procedures.
Taxpayer Options to Stop Enforced Collection Process
Option 1: Payment in Full
The first and best option available to taxpayers is to simply pay the entire tax liability in full. The IRS accepts payments by check or money order. Based on the amount of your tax liability, it may be wise to borrow funds, obtain a cash advance, or pay by credit card because the interest charged on these payment methods may be less than the interest and late payment penalties imposed by the tax laws.
Practice Pointer: The worst thing you can do when you receive a bill from the IRS is nothing. You or your representative should contact the IRS as soon as you receive letters requesting payment. If you do not make arrangements to pay the taxes, the IRS collect the tax by seizing your property under its levy powers.
Option 2: Request an Extension
If you cannot pay the entire tax liability in full, the IRS may be willing to defer payment. If you need extra time to access funds to pay the amount owed, the IRS may grant an extension. Generally, a revenue officer does not need manager approval to grant an extension of up to 120 days to allow you to secure funds.
Option 3: Currently Not Collectible
If your financial situation is such that paying anything will create a hardship, the IRS can place you in currently not collectible status. This will temporarily suspend collection activity against you. The amount you owe, however, will continue to accrue interest and penalties.
Option 4: Installment Agreement
If you cannot full pay your tax liabilities, but you can afford a limited monthly payment, you can request an installment agreement. There is a fee to set up an installment agreement, and interest penalties continue to accrue until the balance is paid in full. Payments under an installment agreement will include an interest charge computed on the unpaid balance. See I.R.C. § 6601.
Option 5: Offer in Compromise
If you have few assets and little prospect of generating sufficient income to pay the liability in full, you may be allowed to settle the tax liability for less than the full amount owed through an offer in compromise. See I.R.C. § 7122.
Option 6: Bankruptcy
Another alternative for a taxpayer facing IRS collection is to file a petition in bankruptcy. Certain taxpayers may be eligible to discharge income taxes in bankruptcy if they meet certain rules, restrictions, and limitations set forth in the Bankruptcy Code. For more information, contact Porter Law Office, or review the IRS’s publication titled, “Using Bankruptcy to Provide Relief from Tax Debt.”
IRS Enforced Collection Alternatives
It is extremely important to contact the IRS on the phone number listed on the notices you received. If you ignore the IRS and do not pay your bill, the IRS will take one of the following actions to collect the tax:
- File a Notice of Federal Tax Lien (“NFTL”) – A federal tax lien is a legal claim to your property. The federal lien arises when the tax liability is assessed and continues until the amount assessed is paid in full or becomes unenforceable. A federal lien will hurt your credit and make it more difficult for your to borrow money to pay your tax debts.
- Serving a Notice of Intent to Levy and Seizing Assets – The IRS is permitted by statute to levy (seize) your home, cars, or other property and, if necessary, sell the property at a public auction to generate proceeds to satisfy the unpaid tax liability. I.R.C. § 6331(b). The IRS may garnish your wages, bank accounts, retirement income, or Social Security benefits. You have the opportunity to request a due process hearing prior to the IRS seizing your assets.
- Offsetting tax refunds – Finally, the IRS will apply current and future federal and state refunds until you have paid down the balance on your unpaid tax liabilities.
Contact an Experienced Ohio Tax Attorney
IRS Collection Process Representation | Columbus Tax Lawyer
Porter Law Office, LLC will help put a stop to the increasingly threatening IRS notices you received as part of the enforced collection process. If you have received a bill from the IRS demanding payment, or a notice of intent to levy, do not hesitate to contact the experienced tax lawyer at Columbus, Ohio-based Porter Law Office, LLC to review your options. Columbus tax attorney Matthew R. Porter, Esq. LL.M. has in depth experience assisting taxpayers with resolving IRS collection matters prior to any levies of income or assets. Contact the experienced IRS and Ohio tax lawyer today for a free consultation to discuss your case.
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