The Tools of the Tax Trade
What You Need to Know About the IRS
Any interaction with the IRS can leave you with a pit in your stomach, especially in the new year when you’re trying to start fresh. Some of their collecting techniques include garnishing your wages, filing a lien against your property, seizing your assets, and levying your bank accounts. If the IRS comes knocking, here are some more things you need to know about their processes.
First and foremost, your tax liability is an IRS priority. Your case is assigned to either the IRS Service Center or a local IRS collections office, and if you can’t be reached in a timely manner, they’ll begin enforcement actions. Enforcement actions may include filing a tax lien and levying or seizing assets to resolve your debt.
If you’re a business owner, a “notice of federal tax lien” may be filed under your business name, which attaches to any and all assets your business owns. The IRS uses these types of liens to protect the government’s interest by claiming a rights to your property. However, there are ways out of a lien. For example, the IRS Fresh Start program offers qualified taxpayers an opportunity to remove the lien.
If the IRS takes action or is posing a debt you disagree with, you have a right to speak with a manager or exercise your appeal rights. You can appeal most IRS collection actions before and after actions have taken place, but there are strict deadlines you need to meet. When you get your first IRS notice, you have a limit of 30 days to appeal the amount owed.
To qualify for collection alternatives like a payment plan or an offer-in-compromise, you need to be in filing compliance with the IRS. If you’re a business owner, you must be in compliance with filing and federal tax deposits for the IRS to consider such collection alternatives.
Depending on the situation, your case may be open anywhere from months to years. If you’re facing a financial hardship, you may qualify for “uncollectable” status. This is a status the IRS recognizes when individuals don’t have the ability to pay at the moment.
Taxpayers also have the right to tax representation when resolving their IRS debt. A qualified tax professional, like an IRS-licensed Enrolled Agent (EA), can guide you through the entire process as well as advocate for you and protect your best interests when working with the IRS. Regardless of the extent of involvement with the IRS, you have a right to representation when addressing your tax issues.
~ Michael Raanan MBA, EA, Former IRS Agent