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IRS collection options new 8/30/07 updated 1/9/16

If you owe the IRS it is likely you also owe state tax. see Missouri Department of Revenue collection.

News and updates

IRS web page lets you find out how much you owe new 1/9/17

IRS testing expanded criteria for streamlined installment agreements processing through September 30, 2017 new 9/28/16

Under existing criteria, approximately 90% of individual taxpayers with a balance due qualify to use the IRS's Online Payment Agreement application.

During the test, expanded criteria for streamlined processing will be applied to installment agreement requests submitted to SB/SE Campus Collection Operations, including the Automated Collection System (ACS).

Expanded criteria will NOT be applied to installment agreement requests submitted to W&I Accounts Management, SB/SE Field Collection, or through the Online Payment Agreement application.

One expanded criterion being tested immediately is individual taxpayers with an assessed balance of tax, penalty and interest between $50,000 and $100,000 may experience accelerated processing of their installment agreement request if the taxpayers' proposed monthly payment is the greater of their total assessed balance divided by 84 or the amount necessary to fully satisfy the liability by the Collection Statute Expiration Date.

IRS video series "Owe Taxes ? Understanding IRS Collection Efforts" new 9/14/11

Make an Online Payment Agreement. new 4/17/14

If you owe $50,000 or less, you can apply for an installment agreement on line. You may choose to make convenient monthly direct debit payments for up to 72 months. With this option, there are no checks to write or send. And you won't miss a payment or pay late. The best way to apply is to use the IRS Online Payment Agreement tool on IRS.gov. If you don't have access to the Internet, you can apply by filing Form 9465, Installment Agreement Request.

The IRS can also help if your tax debt is more than $50,000 or you need more than six years to pay. In these cases, the IRS will ask for more financial information. See Form 433-A or Form 433-F, Collection Information Statement.

The IRS has also increased the amount that taxpayers owe before the IRS normally files a Notice of Federal Tax Lien. Find more information on liens on IRS.gov.

Determining How to Respond to IRS Collection

There are four steps in deciding how best to deal wi1h your tax problem:

Determining the extent of your tax problem.

This involves reviewing your tax returns, or preparing and filing returns if not yet filed, reviewing IRS audit reports, collection notices, transcripts and correspondence, and related items such as bankruptcy filings, to determine the amount of unpaid tax, penalties and interest.

Determining the "procedural posture" of your matter.

Has the IRS:

Do you agree that the correct amount of tax was assessed ? If not, can you contest and correct the amount due, and do you have the documentation to do so ?

Do you have reasonable cause to request abatement of penalties ?

Is any immediate action is required, e.g., terminating a wage garnishment, or requesting subordination of a tax lien allow you to refinance your residence loan to achieve a lower interest rate or lower your monthly payments ? Or a discharge of property from the lien to allow you to sell your residence ?

When were the taxes assessed to determine when the statute of limitations on collections expires (taking into account any voluntary extension, or offer in compromise or bankruptcy), and whether you can discharge some all of your taxes in bankruptcy ?

Reviewing your financial information (form 433-A, and if applicable, 433-B) and other considerations.

What is your ability to pay your tax, make payments or qualify for currently not collectible status, file an offer in compromise, etc.

Developing a plan to deal with your tax matter based on the above and available collection options, including:

Extension of time

Extension of time to pay taxes in full for up to 120 days [it appears the IRS has reduced the period to 60 days updated 8/28/12].

Currently not collectible (hardship) status

If your "reasonable and necessary living expenses" (as determined by the IRS) exceeds your cash flow, you will be placed in "uncollectible" status. Currently not collectible status does NOT resolve your tax problem, and only delays collection until your financial condition improves, or the statute of limitations on collections, below) expires.

Installment payments

Installment payments payable monthly equal to the amount by which your money available to live on in exceeds your "reasonable and necessary" living expenses. This may pay the taxes in full or the IRS may enter into a partial payment agreement.

Bankruptcy

Bankruptcy may discharge certain income taxes (not employment, trust fund or sales tax) where the return was filed, and the due date (typically April 15 of the following year) is more than 3 years before the filing of the bankruptcy petition.

Expiration of Statute of limitations

The expiration of Statute of limitations results in the taxes becoming uncollectible.

Offer in compromise

The IRS may accept an offer in compromise and settle for less than full payment.

See also: