If you are one of the millions of Americans in debt to the IRS, the experts at Optima Tax Relief review what you can expect from the IRS’s collection process

Coming off the heels of the largest tax reform legislation in over 30 years, many Americans may have unexpectedly found themselves in the undesirable position of owing money to the IRS. And while it can be daunting to be in debt to the IRS, the experts at Optima Tax Relief walk through what the collection process actually looks like, and highlights what taxpayers can expect.

Receiving IRS bills

What’s the Collection Process Like?

The collection process with the IRS is initiated after you file your return. If you end up owing a balance after filing your tax return, you will receive a bill directly from the IRS via the United States Postal Service. This bill is to notify the taxpayer of the balance that is due and that the collection process has begun. A taxpayer will remain in collections with the IRS until the debt is satisfied, or the IRS is no longer legally able to collect that tax. Along with this bill, the IRS will send a detailed first notice, that includes the amount of taxes due, and itemizes any penalties or interest accrued.

Because a taxpayer’s outstanding debt to the IRS is subject to compounding interest and late payment penalties, it is in the taxpayer’s best interest to pay the debt as quickly as possible. If that isn’t feasible, the IRS may offer an installment plan that allows the taxpayer to pay monthly payments until the debt is collected in full. The IRS does offer incentives for direct payment account deductions, and can reduce the fees associated with these installment plans for those under certain income level thresholds.

If the IRS determines that you aren’t capable of making payments against your outstanding tax debt due to a financial hardship, they may provide some relief until your financial hardships cease. During these potential periods of non-collection, the debt isn’t eliminated – but the IRS will work with the taxpayer to assess when these payments must resume.

Doing taxes

What Should a Taxpayer Do?

The most important action a taxpayer can take regarding their tax debt is to not ignore the issue and work directly with a tax resolution company, like Optima Tax Relief, or with the IRS. This can avoid more permanent pitfalls down the road, such a liens and/or levies placed on assets to satisfy the outstanding debt. This can avoid more permanent pitfalls down the road, such a liens and/or levies placed on assets to satisfy the outstanding debt.