Most taxpayers file tax returns and pay what they owe on time. If a taxpayer does not pay, the IRS sends the taxpayer a bill. This begins the collection process. Along with the bill, which is called a notice, the IRS automatically sends Publication 1, “Your Rights as a Taxpayer,” and Publication 594, “Understanding the Collection Process.” These publications explain the various options and rights taxpayers have in dealing with IRS collections. The Utah tax lawyers at Pearson Butler can guide you through your options and can prevent unnecessary and unwanted collection action by the IRS.
During the collection process, even if you work out a payment solution with the IRS, they may file a Notice of Federal Tax Lien to secure the government’s interest. The lien is required by law to establish priority as a creditor in competition with other creditors in certain situations, such as bankruptcy proceedings or sales of real estate. Once a lien is filed, it may appear on your credit report and it may harm your credit rating. Therefore, it is important that you work to resolve a tax liability as quickly as possible, before lien filing becomes necessary. Once a lien is filed, the IRS generally cannot issue a Certificate of Release of Federal Tax Lien until the taxes, penalties, interest, and recording fees are paid in full.
To learn more about tax liens and your rights, call the Utah tax lawyers at Pearson Butler at (800) 265-2314.
What Are My Payment Options if I Owe Back Taxes?
There are several payment solutions available if you owe back taxes:
- Extension of time to pay: You may be eligible for a short extension of time to pay of up to 120 days. This might be a desirable option for you if are able to pay the taxes in full within the extended timeframe.
- Installment agreement: Paid by direct deposit from a bank account or payroll deduction from wages, installment agreements can help avoid agreement default by ensuring timely payments and will reduce the burden of mailing payments and save postage costs.
- Delaying collection: If you are unable to pay, collection may be delayed until your financial condition improves.
- Offer in compromise (OIC): Some taxpayers can settle their tax bill for less than the amount they owe by submitting an OIC. The criteria for accepting an OIC are strict and it is critical that you have an experienced attorney to ensure that your offer has the best possible chance of being accepted by the IRS.
What If I Don’t Pay the Taxes the IRS Says I Owe?
When the IRS sends you a bill, if you do not respond to the first notice or subsequent notices, the account becomes delinquent. Delinquent accounts may be turned over to the Automated Collection System (ACS) or to the collection field function. With IRS collections, the ACS personnel will contact you by telephone to attempt to work out an agreeable payment solution. If the delinquent account requires field contact, a revenue officer will try to resolve the account with you.
If the IRS pursues enforcement action, you still have options. After the IRS files a Notice of Federal Tax Lien, and prior to the IRS initiating levy action, you will be given the opportunity to request a hearing with the Office of Appeals. You also have a right to appeal certain other collection actions. For example, if your request for an installment agreement is denied, you have a right to appeal that determination.
At any time before or during collection action, a taxpayer who believes a pending collection action will create a significant hardship may apply for relief by submitting Form 911, Application for Taxpayer Assistance Order (ATAO). The Office of the Taxpayer Advocate will review the application, and if appropriate, take steps to resolve your problem with the IRS to relieve the hardship.
Where Can I Get Tax Help?
Pearson Butler can counsel you regarding the tax relief you need. The firm’s tax resolution attorneys are skilled and experienced in safeguarding clients’ property and rights and in achieving the best possible solution for complex tax problems.
The firm offers IRS and state tax assistant in a variety of areas:
- Tax court litigation
- IRS appeals
- IRS audits
- Criminal tax defense
- Payroll taxes
- Trust account taxes
- Offers in compromise
- IRS collections
- Installment agreements
- Innocent Spouse Relief
- Offshore voluntary disclosure and foreign bank accounts
- State sales tax audits
- Tax planning
- Nonprofit taxation and compliance
Contact a Tax Resolution Attorney Today
If you or a loved one is facing IRS collections, contact a tax attorney at Pearson Butler now. Call (800) 265-2314 for an initial consultation.