The IRS Collection Process
The IRS collection process is a series of actions that the IRS can take against you to collect the taxes you owe if you don’t voluntarily pay them. The collection process will begin if you don’t make your required payments in full and on time after receiving your bill.
The tax bill starts the IRS collection process, which continues until your account is satisfied or until the IRS may no longer legally collect the tax; for example, when the time period for collection, known as the statute of limitations, has expired.
You’re required to pay this, so if you avoid payment, the IRS can and will take collection actions to recover your debt. Our goal at Tax Samaritan is to help you resolve your case with the IRS before it has escalated to the point of where you assets have already been seized by the IRS.
The first notice you receive will be a letter that explains the balance due and demands payment in full. It will include the amount of the tax, plus any penalties and interest added to your unpaid balance from the date the tax was due. You may pay the amount due by sending the IRS a check or money order, payable to the United States Treasury, with a copy of the notice.
The initial step in the IRS collection process is to “assess” the taxpayer for the tax liability due. This assessment is integral for the IRS collection process as the IRS cannot collect on your IRS tax debt until they have made a formal demand for payment via an assessment. If any portion of the assessed tax is unpaid, the IRS has a number of collection enforcement actions that they can choose from.
However, in many situations there is a standard IRS collection process. If you don’t pay your first bill, the IRS will send you at least one more bill. Remember, interest and penalties continue to accrue until you’ve paid your full amount due.
If you still don’t pay after you receive your final bill, the IRS collection process will begin. Collection actions can range from applying your previous tax year’s refund to tax due to seizing your property and assets.
The IRS collection process will begin initially with the IRS mailing a series of computer-generated notices from what the IRS calls the Automated Collection System. In the event, there is no resolution of the tax debt, such as payment or an installment agreement plan (a payment plan), the collections case can be forwarded to a Revenue Officer who will contact the delinquent taxpayer personally to make arrangements for resolution of the unpaid taxes.
The Automated Collection System (ACS)
The Automated Collection System (ACS) is a computerized database of delinquent taxpayers. The objective of the Automated Collection System is to resolve the collection of past due taxes as quickly as possible with a centralized and automated IRS collection process.
Dealing with Automated Collection System can be a very frustrating process for taxpayers as there is no single point of contact; rather you deal with whoever answers the phone. The next time you call, it will always be someone else…
Thus, you may have to repeat the same things over and over, before reaching any type of tax resolution on your collections matter. Working with ACS can unfortunately be a trial and test of patience.
The IRS Revenue Officers are essentially the IRS’s senior bill collectors. They are generally very knowledgeable and can have significant authority when dealing with your tax delinquency. Typically, revenue officers can:
- Approve an installment agreement
- Review an Offer in Compromise and forward it to processing
- Place your collection on hold and flag your account as “not currently collectible”
- Issue a tax levy or levies to seize your wages, bank accounts and other assets
- Abate penalties
- Refer your case to the IRS Criminal Investigation Unite
When a Revenue Officer contacts you, they often will take one or more of the following actions:
- Verify your compliance with all filing and payment requirements
- Demand full payment of all delinquent accounts
- Demand filing of all delinquent returns with full payment
- Determine the reason for the delinquency
Form 433-A – The Collection Information Statement
If you, as a taxpayer, do not qualify for the streamlined or automatic approval of an installment agreement request or would like to explore other options regarding the collection of your IRS debt, the IRS will require you to complete a Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals as part of the IRS collection process. The IRS uses the Form 433-A to determine your ability to pay and how to proceed with its collection activity. It will provide the basis to determine your options available under an installment agreement, having your tax account declared “not currently collectible”, or potential qualification of an Understanding Tax Return Preparer Credentials Offer in Compromise.
Most of the information requested on the Form 433-A can be potentially harmful to you. For example, you are disclosing assets that can be used by the IRS as s source of levy, such as your bank accounts, cars and more. The IRS certainly won’t tell you that the primary purpose of the Collection Information Statement is to identify levy sources. But, nevertheless, full and truthful disclosure must be made.
Our goal at Tax Samaritan is to provide the best counsel, advocacy and personal service for our clients when faced with the IRS collection process. We are not only tax preparation and representation experts, but strive to become valued business partners. Tax Samaritan is committed to understanding our client’s unique needs; every tax situation is different and requires a personal approach in providing realistic and effective solutions.
If you’ve received an IRS letter stating that your tax account is in the midst of the IRS Collection Process, please click on the button below for help today.
Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on US tax preparation and representation. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate US taxpayers on their tax responsibilities and the selection of a tax professional. Our articles are also designed to help taxpayers looking to self prepare, providing specific tips and pitfalls to avoid.
When looking for a tax professional, choose carefully. We recommend that you hire a credentialed tax professional such as Tax Samaritan that is an Enrolled Agent (America’s Tax Experts). If you are a US taxpayer overseas, we further recommend that you seek a professional who is experienced in expat tax preparation, like Tax Samaritan (most tax professionals have limited to no experience with the unique tax issues of expat taxpayers).
Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.