The IRS expects taxes to be paid and to be paid timely. But according to the latest estimate $400 billion goes unpaid each year. As a result, the IRS has enhanced its collections process and has even offered various programs to help taxpayers pay their tax debts.
The IRS is often referred to as a super-creditor, as it has collection tools at its disposal that no other creditor has. For example, when a tax is due but unpaid, a lien arises by operation of law and it attaches to all of the taxpayer’s property. This is automatic. The IRS does not have to do anything to obtain this lien. What this means is that the IRS then has an ownership interest in all of the taxpayer’s property. And the IRS may act to collect this property. This can include taking the taxpayer’s money or other property, garnishing the taxpayer’s wages or other periodic payments, and/or withholding income tax refunds to satisfy the unpaid tax debt.
Worse yet, tax penalties and interest accrue on unpaid tax debts. These amounts are added to the underlying tax liability and are fair game for IRS collections.
The IRS’s collections efforts are not unlimited, however. The IRS generally only has ten years to collect unpaid tax debts. During this time, it has mechanisms to evaluate the taxpayer and the taxpayer’s assets to determine whether and how it can collect the unpaid tax debt. Once the IRS starts the collection process, it is up to the taxpayer to figure out how to stop or manage the collection process. This may include persuading the IRS to simply halt its collection activities, negotiating a settlement to pay lesser amount, entering into an installment payment agreement, or even discharging the tax debts in bankruptcy.
The IRS often fails to adequately explain these programs and options to taxpayers. As a result, taxpayers live in fear of the IRS and their unpaid tax liabilities. We can help you with this. We help advise clients of their rights and options and help them resolve their unpaid tax debts.
Please contact us immediately if you have an unpaid tax debt or received an IRS collection notice.