Once the time to appeal a Notice of Deficiency in Tax Court has expired, the collections process begins. The IRS will send a Notice and Demand for payment. If the taxpayer doesn’t respond, the IRS will consider the account delinquent and generally will refer the account to the Automated Collections System. If the outstanding tax due exceeds a certain threshold, the case will be referred to a Revenue Officer, instead. If a resolution isn’t reached with the IRS, they will proceed to collections enforcement actions. These enforcement actions can include tax liens, levies, garnishment, and even the denial or revocation of passports.
If you need a professional to represent you before the IRS and directly deal with the IRS Collections functions on your behalf, feel free to contact us at (720) 507-1829to set up a consultation to go over your tax matter.
Automated Collections System
The Automated Collections System is a computerized inventory system that coordinates the sending of collection notices with the filing of tax liens and issuance of levies. The goal of this collection function is to secure payment from the taxpayer, whether through full payment or installment agreements. Dealing with ACS often means that you will not speak to the same person twice, as the IRS routes calls to one of several different call centers.
Revenue Officers are essentially debt collectors of the IRS Collection Field function (CFf) who deal with cases the IRS considers important. Essentially, a Revenue Officer is a one-person collections process with a wide variety of tools at their disposal. For example, they have the ability to send notices, file tax liens, levy bank accounts and garnish wages, among others. Of particular note, a Revenue Officer has the ability to contact taxpayers at their home or place of business and even issue summons. They will often want to work on a much faster timetable than ACS and will set deadlines that, if missed, could result in collection enforcement actions.
As mentioned, there are several different kinds of enforcement actions available to the IRS. Some of the most common include tax liens and tax levies.
A federal tax lien is a legal claim the IRS makes against all of the taxpayer’s property, both current and future. With an outstanding balance, technically the IRS can file liens at any point to “protect the government’s interest.” Tax liens often affect taxpayers’ credit scores as well as their ability to borrow money. There are several methods to deal with tax liens, including release, discharge, subordination, and withdrawal. However, these methods generally require payment of the tax in some form.
- A lien release happens where the tax debt is fully satisfied or becomes unenforceable.
- A lien discharge is where the lien is removed from specific property. There are several different statutory sections that deal with a taxpayer’s or property’s eligibility to receive a discharge.
- A lien subordination is where the IRS allows other creditors to “get ahead” of the IRS claim. This may make it easier to get a loan or mortgage. Again, there are rules that determine the taxpayer’s eligibility to do this.
- A lien withdrawal is where the IRS removes the public Notice of Federal Tax Lien. This does not affect the underlying tax liability – a lien withdrawal doesn’t mean the outstanding tax is gone. This also has rules governing eligibility.
A levy is a seizure of property – the IRS is actively taking something. They can take physical property, such as money in bank accounts, investment accounts, and retirement accounts, or they can take rights to property, such as wages or Social Security payments. Though rarer in present years, through a levy the IRS can seize property such as cars and houses.
If you need a professional to represent you before the IRS and directly deal with the IRS Collections functions on your behalf, feel free to contact us at (720) 507-1829 to set up a consultation to go over your tax matter.