If you have been convicted of tax evasion or tax avoidance, it is possible that the IRS will start a collection process to ensure your tax debt is paid. This process is also started when you do not pay your taxes in full when you file. If the taxpayer does not pay the tax that they owe, the IRS will send the taxpayer a bill. This begins the collection process. Along with the bill, the IRS will send the taxpayer a Publication of Taxpayer Rights, and Publication 594. These publications explain the various options and rights the taxpayers have when dealing with the IRS.
How Do I Know If the IRS Has Started Collection?
Initially, the IRS will send you a bill that will inform you that you have a outstanding tax balance and explain why. This bill will also include any additional penalties and interest that are calculated from the date your taxes were due. You can pay this bill in full with a check or money order payable to the United States Treasury or by credit card.
What Happens If I Cannot Pay In Full?
If you do not pay the entire tax bill, the unpaid balance will be subject to interest, which is compounded daily. You will also be charged a monthly late payment penalty. Therefore, you should try to pay as much of the balance as possible.
It may be in your best interest to take out a bank loan or a cash advance on your credit card to help you pay the whole tax bill. The interest rate that your bank or credit card charges may be lower than the interest rate charged by the IRS. This may also help to avoid having your tax debt destroy your credit rating.
If you cannot pay the entire tax bill at once or procure a loan to cover the bill, you may be able to negotiate a monthly installment plan with the IRS. You may also be able to negotiate an offer in compromise with the IRS.
Can the IRS Take My Property?
Yes, the IRS can place a tax lien on your property to satisfy your tax debt. The IRS can also serve you and/or your employer with a Notice of Levy, which allows the IRS to legally take and sell your property to satisfy your tax debt. Here, your “property” includes Social Security benefits, wages, bank accounts, as well as your real estate, car, or boat.
Do I Need a Tax Attorney?
If the IRS has started its collection process to satisfy your tax debts, you should contact a tax lawyer immediately. Tax law can be very complicated, but a tax attorney will be able to asses your debts, communicate with the IRS on your behalf and present your case to the court to protect your assets.