The IRS has broad administrative powers to collect tax. The IRS has superior rights as opposed to other creditors as they can garnish wages, levy bank accounts, seize property, attach receivables and government payments, and attach Social Security payments without seeking approval from any court. Levies can often be avoided by keeping a constant chain of communication open between the taxpayer and the IRS and by setting deadlines to provide requested information.
After a tax assessment is made, the IRS issues a series of notices asking the taxpayer to pay the tax. Taxpayers have 30 days from the date of the Final Notice of Intent to Levy (Letter 1058 or Form CP 90) to either pay the tax in full or to request a hearing with the Appeals Office of the IRS. Ignoring this notice, may make your case much worse. Once the 30 days has passed, the IRS does not have to give any further notice before taking enforcement action.
When taxpayers cannot pay the amount of tax owed in full they can request a collection alternative. Generally, if a significant balance is owed they will request the taxpayer to complete either Form 433-A, Form 433-B, or Form 433-F. The following collection alternatives are available to taxpayers who qualify:
- Currently-Not-Collectible Status
- Offer In Compromise
- Installment Agreement
- Extension of Time to Pay
As a general rule, requesting an appeal with the IRS, filing an Offer In Compromise, or proposing an Installment Agreement will prohibit the IRS from taking levy action against a taxpayer.
Unfortunately, IRS problems do not go away by themselves. With the accrual of penalties and interest, IRS problems tend to get worse over time. Interest on tax and penalties compounds daily and therefore even a manageable IRS problem can get out of hand quickly. It is important to get IRS help as soon as possible. Luckily, even the most serious IRS tax problems have a solution.
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