Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert, Get an Answer ASAP!

IRS Tax Collection Help

Every year, millions of Americans learn that they owe money to the Internal Revenue Service (IRS). Many become overwhelmed and allow back taxes to accumulate. Unfortunately, ignoring the problem subjects them to tax collection.

What is Tax Collection?

Tax collection is the process the IRS uses to collect back taxes. It can include everything from communication with taxpayers who are in arrears to garnishing wages, levying bank accounts, or placing a lien on their property.

Wage garnishing allows the government to seize a portion of your paycheck. When levying a bank account, the IRS can seize any and all funds, up to the amount owed. A lien is a claim staked on a taxpayer’s property until the debt is settled.

What is the Statute of Limitations on Tax Collection?

Under normal circumstances, the IRS has only 10 years to collect unpaid taxes from the date your return is accepted. Once a decade has passed, the government must stop any collection efforts. If you don’t pay your taxes in full when filing, you will receive a bill from the IRS. It will give the date the statute of limitations will run out for repayment of your tax debt.

In some cases, the statute of limitations can be extended. If you file for bankruptcy, the IRS can’t take action until six months after the case is finalized. However, the deadline is also extended by that same amount of time. The collection period is also put on hold while the agency reviews your request for an offer in compromise, installment agreement, or innocent spouse relief. Leaving the country for more than six months will also extend the statute of limitations.

Voluntary Extension of the Statute of Limitations

You can voluntarily extend the statute of limitations on tax collection. Most installment agreements require signing a voluntary extension. However, it can only be extended up to six years. Be careful about signing installment agreements if you are near the end of the 10-year period.

How to Reduce Back Taxes

While there isn’t a magic pill for making tax debt disappear, you can take steps to reduce it.

Double Check Previous Returns

Make sure there aren’t any errors on the returns on which you owe. File an amended return if you find unclaimed credits or deductions, or other mistakes. Drastic changes from year to year on your tax bill are an indication that a thorough review is needed.

Ask for a Penalty Abatement

Write a letter explaining your situation, and make sure to include the phrase, “penalty abatement.” The IRS frequently reduces penalties and the interest on them for extenuating circumstances. Honest mistakes, serious illness, and unusual tax events are all good reasons to ask for an abatement.

Negotiate an Installment Plan

The IRS collector’s job is to get you to pay as much as you can. You are held accountable for what you agree to pay. It is in your best interests to agree to pay a lower amount, then voluntarily pay extra each month.

If you owe $25,000 or less, can show that you are unable to pay the amount you currently owe, or can pay off your debt in three years or less, the IRS must allow you to make payments on back taxes. You must also abide by all tax laws and can’t have had a previous installment agreement for at least five years.

Offer in Compromise

Much like bankruptcy, an Offer in Compromise (OIC) is the last resort. Your offer must be, at a minimum, your net worth. Calculate your net worth by taking the value of all of your assets, minus your debts. Documenting your net worth also serves as proof that you can’t pay your overdue taxes in full.

Keep Communicating, and Be Honest

The worst thing you can do is bury your head and hope it all goes away. Keep open lines of communication between you and the IRS collection officer. Most will work with you to resolve your tax bill.

Ask an Expert on JustAnswer for solutions to your tax collection problems. Lawyers and Accountants are available around the clock to answer your questions.

Please type your question in the field below

3 verified Tax Professionals are online now

Tax Professionals on JustAnswer are verified through an extensive 8-step process including screening of licenses, certifications, education and/or employment. Learn more

Online
Wallstreet Esq.

Tax Attorney

Doctoral Degree

★★★★★
586 positive reviews
Online
Mark D

Enrolled Agent

Master's Degree

★★★★★
1300 positive reviews
Online
Richard

Tax Attorney

Doctoral Degree

★★★★★
4329 positive reviews
See all Tax Professionals
JustAnswer in the news:
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
Web sites like justanswer.com/legal
...leave nothing to chance.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.