IRS Collection Methods

When you owe past due taxes to the United States Internal Revenue Service, your account is assigned to the IRS Collection Division. Collection action can be taken by the Automated Collections Service or by an IRS Revenue Officer. In this article, I'll list a few of their "enforced collection" methods.

The first thing you need to know about IRS collections is their chief operating philosophy: to collect as much money (from you) as possible as quickly as possible. Their methods used in doing so are as follows...

The IRS can levy your bank accounts. According to the IRS, a "levy" is a "legal seizure of your property to satisfy a tax debt." In this action, the IRS, after you have refused to pay your taxes, will contact your bank and then seize your funds.

If the IRS chooses to levy your bank account, your bank must hold funds you have on deposit, up to the amount you owe, for 21 days. This holding period allows time to resolve any issues about account ownership. After 21 days, the bank must send the money plus interest, if it applies, to the IRS.

The levy will end when the levy is released, you pay your tax debt, or the time expires for legally collecting the tax.

If you own a business, your business assets can be levied by the IRS. Such assets include bank accounts, accounts receivables, and any equipment the business owns.

If you are an employee, the IRS may choose to send an order to your employer requiring them to take out part of your wages and send it to them. The IRS can also garnish your social security income and even retirement funds.

Finally, the IRS can choose to seize any property you may own, including vehicles like cars, trucks, boat or motorcycles.

The IRS can also place a lien on any real estate in your name. This is accomplished by filing a "tax lien" with your local county recorder, which will make it difficult for you to sell the property or obtain financing. If your tax debt goes unpaid long enough, the IRS will eventually foreclose and take it.

Although the situation seems dire, these actions can be stopped in their tracks by an enrolled agent or other tax professional who has experience dealing with the IRS. If you are facing action by the IRS to collect taxes you owe, contact a tax resolution specialist today.