How
does "collection" operate?
Your case goes to the Internal Revenue Services "Collection"
department whenever the IRS determines that you owe back taxes.
This will happen if you file a tax return and don't pay the
tax owed, or if the Internal Revenue Service wins at an audit
of the tax return you filed. They have many tools to collect
the tax.
Once
your case is in Collection, you will receive notices asking
for payment of the tax. If that does not bring about payment,
then the IRS automated system will begin seizing assets they
know exist (such as your bank accounts).
If
the amount you owe is high enough, an IRS Revenue Officer will
be assigned to your case. The officer will call you and will
either ask you to come in to an IRS office or come out to see
you personally.
Find
a Tax Attorney Now
Should
I use a tax professional in dealing with IRS collection efforts?
A
"tax professional" is a person with special training in dealing
with tax issues and representing taxpayers before the IRS. Usually,
these people are lawyers or certified public accountants.
Often,
a tax professional can save you a lot of money. The expert is
familiar with tax problems and with the ways to deal with the
IRS. You can spend many hours trying to find an answer that
an expert already knows. Also, many people simply find it too
stressful to deal with the Internal Revenue Service and would
rather have someone speak for them.
The
tax professional will cost you some money in fees. If your tax
problem is small and if you don't mind dealing directly with
the IRS, you can probably handle your own case. But if your
case is complex or technical, you are probably best off seeking
help.
I
don't think I owe the tax. Can I fight collection on this basis?
During
an audit, you may dispute an IRS claim that you owe more taxes.
But generally you cannot do this as a way of fighting collection.
You must pay the tax and then file a claim for refund.
There
are a few special situations where you can dispute an IRS claim
that you owe more taxes. If you think you don't owe the tax,
you might want to talk to a tax expert about your situation.
Is
there a limit on how long the IRS can try to collect?
Yes.
In most cases, the IRS has ten years (the "statute of limitations")
to collect back taxes - from the time they "assess" the taxes.
Assessment is the point where the IRS stops saying, "We think
you might owe some taxes," and says simply, "you owe the taxes."
This happens if you file your tax return but don't pay all the
taxes or if the IRS has been successful in an audit.
In
most cases, waiting out the ten years will not work. However,
if for some reason, eight or nine years have passed since the
taxes were assessed, waiting out the rest of the ten years could
work. Be careful to count the years properly. There are a number
of processes that will extend the ten years. For instance, a
bankruptcy or filing an Offer in Compromise will extend the
ten years.
The IRS collection demand is the first time they said I owe
anything.
Sometimes
the Internal Revenue Service makes a mistake, but usually one
of two things has happened.
Often
the taxpayer has moved and not told the IRS his or her new address.
If the IRS sends notices to the last known address, it has satisfied
the law.
The
other thing that happens is that the IRS sends letters, but
they are either ignored or thrown away.
When
either of these things happens, the whole audit is completed
without the taxpayer even knowing about it. Then when it goes
to Collection, the Internal Revenue Service sometimes finds
the taxpayer - who is now in for a big surprise.
