If you need help with tax relief, don’t you worry! Here we explain what the IRS tax collection process looks like and what to do to get your debt relief right now.
How does the IRS collection process work?
When a taxpayer incurs tax debt, then the IRS follows a series of steps to collect back tax debt.
First of all, the IRS automated system proceeds to send a series of notices to the taxpayer. The first notice is a CP 14 Notice which means that you owe money on taxes. This notice will show how much money you owe and the due date, as well as the instructions you must follow to pay the balance.
After this first notice, the IRS will continue to send notices every five weeks. In this way you will receive a CP 501 Notice, followed by a CP 503 Notice and finally a CP 504 Notice.
If after receiving all these notices you have not paid your taxes, the case will go to the Automated Collection System (ACS) or to a revenue officer. In the event you owe payroll taxes or more than $ 250,000, a revenue officer will handle the case. Otherwise, the case will be transferred to the ACS.
If your case is transferred to the ACS, the system will send a final Notice of Intent to Levy. This notice is very important because it is the final step required by the IRS to legally levy assets.
In the event you receive this final notice, you or your representative should contact the IRS within 30 days to make arrangements or request a collection due process hearing.
After the 30 days have passed, the IRS can collect your wages, self-employment income, and bank accounts. This is the reason why it is so important not to ignore this warning.
As we have said before, taxpayers who owe payroll taxes or owe over $ 250,000 will have to deal with a revenue officer.
Revenue officers are responsible for collecting taxes and duties owed, and some of their functions include interviewing taxpayers and garnishing wages. These IRS employees will visit taxpayers at home or place of work.
Usually, home or work visits are not announced in advance because doing so would be inconsistent with the proactive and urgent nature of tax matters.
If a revenue officer visits you, you must verify that they really are who they say they are. All ROs carry two forms of government-issued picture IDs, including the HSPD-12 card. Also you can call your local IRS office to confirm their identity.
IRS Tax Debt Relief Programs
To get help with tax relief, you need to be up to date with your taxes. According to IRS, you can qualify for a collection alternative if you meet the following:
1. You have filed all your tax returns that are due.
2. If you must make estimated tax payments, you have made them for the current period.
If you meet these conditions, then you can apply for a collection alternative. These are the options available:
If it is not possible to pay all of the tax debt at once, the IRS allows taxpayers to pay tax debt through an installment agreement. Currently, the IRS offers four different types of installment agreements
- Guaranteed Installment Agreement: 36-month payment terms for taxpayers who owe less than $10,000 (not including interest and penalties).
- Streamlined Installment Agreements: 72-month payment terms for taxpayers whose tax liability, interest, and penalties do not exceed $ 50,000.
- Partial Payment Installment Agreement: it is available to taxpayers who cannot pay their tax debt in full before the 10-year collections statute expires.
- Non-Streamlined Installment Agreement: for balances over $100,000 or for taxpayers who owe less than $100,000 and are not able to make the monthly streamlined payments but have some ability to pay.
Currently not Collectible
In the event that you are unable to make any payments, the Internal Revenue Service will consider placing your account in a currently uncollectible (CNC) status. However, you can only qualify for this tax debt relief program when your allowable monthly living expenses exceed your monthly income. This is a very common alternative when a taxpayer is unemployed.
It is important to clarify that a CNC status is not permanent. Therefore, if your financial situation changes, the IRS will contact you to assign you a payment plan.
Offer in Compromise
An Offer in Compromise (OIC) is a payment agreement with the IRS that allows the taxpayer to settle their tax obligations for less than the total amount owed.
Generally, taxpayers who can fully pay their liabilities through an installment agreement or other means, do not qualify for an OIC in most cases.
Innocent Spouse Relief
If your spouse or former spouse did not report income, reported incorrect income or claimed improper deductions or credits, this collection alternative provides you relief from additional tax you owe.
Currently, the IRS offers three types of relief for such taxpayers:
1. Innocent Spouse Relief.
2. Separation of Liability Relief.
3. Equitable Relief.
Should I hire someone to get help on tax relief?
Many taxpayers have tried setting up an IRS debt forgiveness program on their own. The problem here is that most people don’t know the details of IRS tax debt relief programs and do not have the necessary experience to reduce or eliminate a tax balance.That’s why you should always consult with a tax professional in order to set up the best debt forgiveness program for you and get IRS approval quickly and efficiently.