The IRS sends collection notices when taxpayers neglect to address or resolve their tax matters promptly. These notices serve as formal notifications that, if left unresolved, can lead authorities to take collection measures to satisfy tax debts.
So, how to stop IRS collection calls? Continue reading to learn more about preventing IRS collection letters, how to respond if you receive one, and how to understand the collection process.
Why the IRS Sends Collection Calls and Letters
Common Reasons You May Hear From the IRS
The IRS typically resorts to collection calls and letters when taxes remain unpaid. These include:
Unpaid tax balance: Failure to pay the full amount owed after filing your returns. In this instance, it can trigger a balance-due notice.
Accrued interest and penalties: Notices can also be initiated when interest and penalties accrue on the original tax debt.
Failure to pay after assessment: If the tax is assessed but payment isn’t made, it can lead to IRS letters.
Ignoring notices: Ignoring IRS letters will prompt more serious notices and carry more severe consequences.
Why You Should Never Ignore IRS Notices
Ignoring IRS notices can create bigger problems, including mounting debt and legal action. In the worst-case scenario, it can ultimately lead to enforced collection actions, such as levies on wages, bank accounts, or other property. Encountering collection actions is a tax problem that taxpayers ideally want to avoid.
Understanding the IRS Collection Process Before It Escalates
Typical Early Stages of IRS Collections
The IRS has a step-by-step system before actually engaging in collection measures. These procedures are designed to keep taxpayers informed and provide time and opportunity to settle debts.
In the initial phases, the IRS will send a notice reminding you of the debt and encouraging you to make a payment, without immediate collection action. This first communication provides all the information you need to understand the issue, including the balance, due date, and available payment options.
The Point Where the Situation Becomes More Urgent
If a taxpayer continues to ignore the initial letters, the IRS will send subsequent notices with greater urgency. In this instance, the IRS will notify of possible enforcement actions if tax debts remain unpaid. Ignoring this stage will result in collection actions, such as levies and liens, to satisfy the debt.
Common IRS Letters and What They May Mean
Balance Due Notices
This first notice is typically the CP14, which includes information such as the balance due, payment options, and the deadline. If the debts remain unpaid, the IRS will send another letter, called the CP501/503, which serves as a second reminder and is more serious.
Final Notice of Intent to Levy
The Final Notice of Intent to Levy, also known as the Letter 11/LT11, is sent after the CP504 notification letter of the intent to levy. These notices essentially provide the last chance to settle debts before the IRS can legally continue with enforcement.
Notice of Federal Tax Lien
A Notice of Federal Tax Lien is a document filed by the IRS that informs creditors that the government has a legal claim to the taxpayer’s property due to an outstanding tax debt. The lien affects all current and future property and rights to personal and financial assets.
Collection Due Process Notice
A Collection Due Process Notice is a formal notification from the IRS (such as Letter 1058/LT11 and Letter 3172) of its intent to seize assets, and it grants taxpayers the right to a hearing to dispute the actions or discuss a resolution. There’s a general 30-day deadline for the taxpayer to request a hearing to pause collection action.
What to Do Immediately After Receiving an IRS Collection Letter
Open the Letter and Confirm What It Says
As soon as the letter is received, open it and confirm the information. Look at the details, such as the tax year, the amount owed, the reason for the balance due, payment deadlines, and next steps. Understanding this information provides a clearer picture as you prepare a suitable response.
Compare the Notice to Your Tax Records
For every tax-related piece of information that is provided, compare it against your own records. Use your tax returns and any prior IRS correspondence to verify. This is to ensure accuracy and prevent error, which in itself can be an issue.
Do Not Miss the Deadline
Deadlines are crucial in preventing escalation. Missing a deadline will result in penalties and other serious consequences. If meeting the deadline isn’t possible, request an extension from the IRS (though keep in mind extensions are not always granted).
Avoid Saying the Wrong Thing or Making the Wrong Move
How you correspond with the IRS is critical to your success, especially when dealing with IRS collection letters. Saying the wrong thing or deciding on the wrong move can make or break your desired result. For example, do not call the IRS unprepared. Have the correct documents for reference ready. Moreover, do not make statements you cannot support or agree to a payment plan you do not understand or cannot afford. Whenever unsure, seek professional help for accurate and effective communication.
When You Should Contact a Tax Attorney
The most effective ways to stop IRS collection calls are to pay in full or enter into an available agreement, such as an Installment Agreement or an Offer in Compromise. If you require assistance with applying for an agreement, are facing complex problems such as collection actions, or are just unsure how to proceed with the tax issue you are encountering, consulting with a tax attorney is a good option to consider. They are experts in the field and have experience navigating these matters, so you can get the best result for your specific situation while avoiding escalation and further complications.
How Greenberg Law Group P.A. Helps Florida Taxpayers Deal With IRS Collections
How to stop IRS collection calls? Dealing with delicate tax issues involving collection actions, such as liens and levies, requires experienced legal representation that can make a significant difference in achieving the best possible outcome. This is where Greenberg Law Group comes in.
Led by Ross M. Greenberg, with extensive experience representing individuals and businesses throughout Florida, we help our clients intervene early to stop collection actions. We provide representation in responding to collection calls, negotiating installment agreements and other payment plans, and working diligently to resolve tax debts using the most favorable options for your specific case.
The best way to stop IRS collection calls is to act immediately. If you have received IRS notices, call Greenberg Law Group today to resolve the matter effectively.