Enrolled Agent Reveals IRS Collection Methods
Posted by Tax Man - 01/07/10 at 07:07 pmWhen you owe past due taxes to the United States Internal Revenue Service, your account is assigned to the IRS Collection Division. Collection action can be taken by the Automated Collections Service or by an IRS Revenue Officer. Being the subject of an IRS collection action can be scary and intimidating. Below are listed a few methods of “enforced collection”.
The first thing you need to know about IRS collections is their chief operating philosophy: to collect as much money (from you) as possible as quickly as possible. Here are some of the methods they use to do that…
The IRS may choose to “levy” any bank accounts in your name. According to the IRS, a “levy” is a “legal seizure of your property to satisfy a tax debt.” The IRS may contact your bank and seize your funds after you have refused to pay your back tax debt.
If the IRS chooses to levy your bank account, your bank must hold funds you have on deposit, up to the amount you owe, for 21 days. The holding period allows the IRS time to resolve any questions about who owns the account. After 21 days, the bank must send the money plus interest, if it applies, to the IRS.
There are three ways the levy can be released: when the IRS chooses to release it, when you pay your back taxes, or when the time runs out for legal collections. So that’s the basics of an IRS levy.
If you own a business, your business assets can be levied by the IRS. Such assets include bank accounts, accounts receivables, and any equipment the business owns.
The IRS may choose to require your employer to take out part of your paycheck and send it in. Social security and retirement funds can also be garnished by the IRS.
And last, the IRS can take your property and vehicles - including cars, boats, and even motorcycles.
The IRS can also place a lien on any real estate in your name. The IRS flies a “tax lien” at the office of your county recorder, and it will be much more difficult for you to obtain financing or sell the property. The IRS will eventually foreclose if your tax debt goes unpaid long enough.
These methods can seem scary, but an experienced tax professional, such as an enrolled agent, can freeze these actions and help you settle your tax debt. If you owe back taxes and are facing action by the IRS, contact a tax resolution specialist as soon as possible.
