What is the IRS Collection Process Like? - 2013-10-27
If you don't pay the tax debt in full when you file a tax return, you will get a written notice in the mail detailing you the amount you owe. It will be an itemized bill with taxes, interest, and penalties assessed. The bill will begin the collection process, and it will continue on until the account is paid in full or at such a point that the IRS no longer has a legal right to collect the tax. For instance, if the statute of limitations has run out, then the IRS cannot continue to collect the tax debt.
The initial notice you get will be a mailed letter that details the overdue balance and asks for payment in full. It will list everything you owe - the tax debt, in addition to penalties and interest that is tacked on to your overdue balance from the time the tax was meant to be paid. You can pay the full amount by sending the IRS a money order or check, and you will have instructions in the mailed letter on where to send it back to.
If you are unable to pay the full amount, you should merely send in as much as you can, along with the notice. The unpaid balance will be subject to interest, and it will compound each day. It is the best option to pay your tax debt in full as soon as you can to minimize the added interest that you're going to have to pay. You could also look into and think about other options for your taxes' full payment, like getting a cash advance on a credit card or a loan from the bank since the interest rate on the loan from your bank or your credit card fees may be less than what you would pay in additional interest to the IRS.
If you can't pay the balance in full immediately, then consider an installment agreement to help you pay off the agreement over a period of time. A lot of people just cannot afford to pay the tax amount in full. An installment agreement is a great solution, and there are even four kinds of installment agreements that you would be best advised to choose well from. Talk with a tax advisor, IRS agent, or expert tax resolution specialist to help you work out the kinks of an installment agreement. Give Nicholas A. Trishin, CPA a call at 404-585-1040. In many cases we can assess your situation right over the phone and give you available options.
If you are unable to pay out under an installment agreement, then you can think about an Offer in Compromise.
The IRS can take a number of actions to collect the tax amount that is due:
1. Filing a federal tax lien
2. Serving a levy notice
3. Withholding your refund and putting it toward your tax debt
It is the best not to wait until you long in collection and adverse actions are being taken against you. Start on weighing your options early and be responsive to IRS requests and notices and you will be in much better position.
rt on weighing your options early and be responsive to IRS requests and notices and you will be in much better position.