The IRS is considered a super-creditor, as the law includes provisions that enable the IRS to collect unpaid tax debts where other non-IRS creditors would not be able to collect their debts.
IRS collection efforts typically involve the IRS forcing the taxpayer to turn over records; issuing IRS liens; and/or seizing, garnishing or levying on paychecks and bank accounts, vehicles and other personal or business property, and real estate.
The IRS gets its power from its ability to obtain an IRS lien. This lien arises by operation of law when a tax debt is not paid and attaches to all of the taxpayer’s property. The lien may not be an issue until the IRS actually files the lien. This can have serious implications for the taxpayer, including a negative impact on credit scores and damaged relationships with creditors and business contacts.
The tax levy is the method by which the IRS takes or seizes a taxpayer’s property. The IRS may levy on just about any asset it can locate. This includes levying on bank accounts, garnishing wages, or seizing residences and business property. The IRS can often exercise this power administratively without first seeking court approval. This power can lead to significant hardships.
There are a number of ways to halt these IRS collection efforts. For example, the IRS may have to remove IRS tax liens and or lift a wage garnishment or other levy if the underlying tax debt is not owed or if the period for collecting the tax debt has expired.
Similarly, the IRS generally has to halt all collections activity if the taxpayer makes a timely collection due process hearing relief request, if the taxpayer secures a Taxpayer Advocate order, if the taxpayer is successful in negotiating with the collection manager or revenue officer, or if the taxpayer files for bankruptcy protection.
There are a number of other avenues for pursuing these negotiations, such as the collection appeals program, the offer-in-compromise program, and installment agreements.
An experienced tax attorney can help you determine if you qualify for these programs and which program is most beneficial given your circumstances. If you have an unpaid tax debt that is in collections, we would like to hear from you.