IRS Collections Methods Revealed

When you owe past due taxes to the United States Internal Revenue Service, your account is assigned to the IRS Collection Division. Collections are done by IRS Revenue Officers as well as the Automated Collections Service. Being the subject of an IRS collection action can be scary and intimidating. In this article, I’ll list a few of their “enforced collection” methods.

The main thing to know is that the chief goal of the IRS is to collect as much of your money they can as quickly as possible. Here are some of the methods they use to do that…

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. The holding period allows the IRS time to resolve any questions about who owns the account. 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. So that’s the basics of an IRS levy.

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

The IRS may choose to require your employer to take out part of your paycheck and send it in. Social security and retirement funds can also be garnished by the IRS.

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.

These methods can seem scary, but an experienced tax professional, such as an enrolled agent, can freeze these actions and help you settle your tax debt. If you owe back taxes and are facing action by the IRS, contact a tax resolution specialist as soon as possible.