Tax Debt Help - IRS Collection Process

Notice and Demand

If the IRS examines a taxpayer’s return and finds an error which results in additional tax due, they will send a bill (including tax, interest, and penalties), which is a notice of tax due and demand for payment. This letter is called a CP2000 or L1058. In most cases, the IRS give the taxpayer 10 days from the date of the notice of tax due before they may take enforcedcollection actions. The taxpayer will receive Publication 1 with the initial notice and demand for payment.

Notice Of Federal Tax Lien

Once a notice and demand for payment is sent to a taxpayer and they neglect or refuse to fully pay the tax within 10 days, the IRS files a notice of federal tax lien. This is a public notice to the taxpayer’s creditors that the Government has a claim against the taxpayer’s property.
The IRS will issue a Release of the Notice of Federal Tax Lien for the following reasons:

· Within 30 days after the taxpayer pays the tax due in full (including interest and other additions) or by having it adjusted, or
· Within 30 days after the IRS accepts a bond that the taxpayer submits, guaranteeing payment of the debt.

Notice of Intent to Levy

Once this notice is sent to a taxpayer, they have 30 days to pay the tax, or face collection by levy. This notice may be given to the taxpayer in person, left at his/her residence or place of business, or sent by certified or registered mail to the taxpayer’s last known address.
Levy

A levy is the taking of property to satisfy a tax liability. Once served, a levy on salary or wages continues in effect until it is released, or the tax liability is satisfied or becomes unenforceable due to lapse of time. The IRS may levy up to 85% of salary or wages until the debt is satisfied.

Taxpayer’s should also know that they must be compliant in filing delinquent tax returns before a levy can be released.

There are certain properties that are exempt from being levied. The following are a list of those properties:

· School books and certain clothing
· Fuel, provisions, furniture, and personal effects for a household, totaling $7,720
· Books and tools used in trade, business or profession totaling $3,860
· Unemployment benefits and certain annuity and pension benefits
· Workmen’s compensation and certain public assistance payments
· Certain service-connected disability payments
· Salary, wages, or income included in a judgment for court-ordered child support
· Principal residence, unless prior written approval of the District Director or Assistant District Director is secured, or jeopardy exists
· A minimum weekly exemption for wages, salary, and other income based on the standard deduction plus the number of allowable personal exemptions divided by 52.

Statute of Limitations

Statute of limitations for assessing tax. Statutes of limitations generally limit the time the IRS has to make tax assessments to within three years after a return is due or filed, whichever is later.

Statute of limitations for collecting tax. Statute of limitations generally limit the time the IRS has to collect taxes to within 10 years after the taxes have been assessed.