If you owe back taxes to the Franchise Tax Board or IRS, immediate action is crucial to prevent your income and assets from being garnished or seized. The taxing authorities have several ways to collect the federal and state taxes that are due, but not yet paid. A few means of collecting your tax liability can include filing of tax liens, issuing a bank levy, garnishing your wages or other income, and seizing your vehicle, home, or other assets.
Whether your tax liability is a result of past due income tax or payroll tax, there are several options available to settle your back taxes. Taxpayers with delinquent taxes may qualify for an installment agreement (monthly payment plan) that will allow the back taxes to be paid in full over many years. Payment plans allow for a taxpayer to make monthly payments based on their ability to pay while ensuring they remain in compliance with all current tax requirements. Some taxpayers may also qualify for a tax settlement, or Offer-in-compromise, whereby the IRS agrees to a settle a tax debt for less than the amount owed. For taxpayers that owe back taxes but do not qualify for a payment plan or debt settlement, the IRS may agree to temporarily close your case as uncollectible in financial hardship situations. If your case is placed in currently-not-collectible (CNC) status, the IRS can follow up anytime and resume collection of your back taxes.
In general, the IRS has ten (10) years from the date of assessment to collect the unpaid tax debt. The last day the IRS has to collect your tax liability is officially known as the Collection Statute Expiration Date, or CSED. Every tax period with a balance due has its own CSED. The expiration date can be extended under certain situations such as an IRS appeal or submission of an offer-in-compromise.
Regardless of where your case is in the IRS collection system, it’s important to address your back taxes right away by taking actions necessary to protect your income and property.