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IRS Collections: An Overview of the Process

Posted by Brandon Keim | Jan 09, 2023 | 0 Comments

You may have heard the sort of dire warnings that the Internal Revenue Service (IRS) always gets the money owed for unpaid taxes. If it's true, how does it happen? The reality is that you can't simply refuse to pay the IRS and expect that nothing will happen to you. An IRS debt is more important than your average unpaid bill. But there's still a process that the IRS must take before it begins collections. So let's briefly discuss how IRS collections work.   

You've Got Mail

The important—and good thing to know—is that the IRS isn't going to surprise you. The agency doesn't secretly initiate collection proceedings against you.

First, the agency will send you letters (what in IRS parlance are called “notices”) that explain how much the IRS believes you owe. You can then challenge the debt, work out a repayment plan, or pursue other options before the IRS takes any action. You can also request the IRS delay collection efforts.

Notice of Lien

If you haven't paid the debt or worked out any alternate arrangements, the IRS will file a “Notice of Federal Tax Lien” in the public record. When this happens, the IRS informs creditors that it is entitled to take your property to pay a debt you owe to the federal government.

With a few exceptions, federal law requires that the lien remains in place until a taxpayer has paid the debt. (The IRS must remove the lien within 30 days of receiving the money.)

Levying (i.e., Seizing) Assets

Once the notice has been in place, then the IRS may levy your liquid assets. It can garnish your salary and seize bank accounts and federal benefits. The IRS can keep future state and federal tax refunds and apply them to your existing debt. And it can also take—and sell—your physical property (e.g., real estate and cars) to satisfy the debt.

While the IRS agents can act independently, the IRS also hires private collection agencies to track debtors who owe older debts.

If you're facing IRS collections efforts or think they are on the horizon, don't wait. There's still time. But legal representation can make all the difference. If you need help, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.

About the Author

Brandon Keim

A Certified Tax Law Specialist, CPA, partner at Frazer Ryan Goldberg & Arnold LLP, and former Senior IRS Trial Attorney, Brandon Keim holds an LL.M. in Taxation from Georgetown University Law Center.


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