When Will IRS Collection Actions Be Taken Against You?

Back taxes are serious business. If you’re in debt to the IRS, you can be absolutely sure that one day or the other, they’re going to come after you to recover everything you owe them. You might be able to go a few months or years without action from them, but rest assured, you won’t be let go scot free. So are you wondering when the IRS will come after you? Or are you concerned about your tax problems and wondering if the IRS is going to come down on you hard? Here’s how and when the IRS will initiate collection tactics against you.

Failure to comply with the IRS rules and regulations, ignoring paying your tax debts or committing tax fraud are sure shot ways to get in the bad books of the IRS. A lot of the collection methods used by the IRS can be very damaging to your financial stability, and they get progressively worse depending on the severity of your infraction. Their collection methods include:

• Wage garnishments

• Levies

• Liens

• Property seizure

• Cancellation of business license

• Closure of business

But if you’re worried about harsh collection tactics being used against you for a minor tax offence, you can rest easy. The IRS won’t just start off with these methods without any prior intimation. It will send you a couple of notices that get sterner as time passes, so if you’ve received any of these notices, it’s time for urgent action. The notices are in the following order:

• CP-14: The first notice, which begins the IRS collection process, and is a bill of unpaid taxes.

• CP-501: The second notice that usually arrives after 5 weeks of inaction on your part.

• CP-503: The third notice that arrives in another 5 weeks to remind you about your tax debts.

• CP-504: The fourth notice that says ‘Intent to Levy’, which threatens to seize your state income tax refunds.

• Letter 1058: Finally, there comes the ‘Notice of Intent to Levy and Notice of Your Right to a Hearing’, 30 days after which the IRS is at liberty to take serious action like bank levies.

Even if collection tactics have been initiated against you, it’s not endgame. You can still appeal against the IRS if you feel that you have been unfairly targeted. Although rare, it is possible that you have been targeted because of misinformation, so if you notice something off about your supposed offences, there’s always the Freedom of Information Request and appeals at your disposal.

Furthermore, it is also possible that you haven’t paid off your taxes because of genuine financial hardship, in which case it’s perfectly fine to appeal to the IRS as well. Contrary to popular belief, the IRS is not the evil organization they think it is, and exceptions are definitely made for genuine cases. You can apply for the ‘Currently Not Collectible’ status during hard times, but make sure you really can’t pay taxes before you do so. The IRS will check the following information before considering your request:

• Your gross monthly income
• Your allowable monthly expenses
• Your liquefiable assets
• Your total IRS backtax liability

The bottom line is, if you skip paying taxes or anything of that sort that goes against the IRS, they will come after you, after letting you know that they are going to. Avoiding these collection tactics is simple and can be summed up in a phrase – pay your taxes on time. If you’re not able to do so, at least let the IRS know by asking for exemptions or identify as ‘currently not collectible’. Not providing the right information or not providing any information at all can be just as dangerous. And finally, if you’re under the IRS radar and receiving notices, do something about it as soon as possible. The best way is to hire a certified tax professional who really knows how to deal with the IRS, because it’s folly to take on a giant alone!