STOPPING IRS COLLECTION EFFORTS
Liens, Levies, Summons, etc.
Once the IRS Collection Division has you in their cross-hairs, they are unrelenting. No other collection agency in the U.S. has anything compared to the resources and tools at the disposal of the IRS. Many state governments are as or more aggressive in their collection efforts.
The first contact from the IRS will almost always be a letter. This might be a simple statement of amounts owed with instructions on how to proceed. Depending on your response or lack of a response, the matter will either be handled in the automated system or be turned over to a Revenue Officer. This is your last chance for a resolution to your tax problems because Revenue Officers are the final people to resolve tax problems and are authorized to take whatever enforcement necessary to bring a taxpayer into "compliance."
If you owe $20,000 or more, you should not call the IRS on your own unless you are prepared to make full payment within the next 90 days or full financial disclosure, banks, employer, etc. Many taxpayers who call the IRS at this point feel pressured to enter into a payment plan that they cannot actually afford. This is the absolute worst thing you can do. Then there is the potential to be in default for not filing future tax returns, failure to make the payments, for bouncing a payment or for not fully paying future tax liabilites. The absolute best thing you can do is propose to the IRS a monthly payment plan that you know you can afford. But, you probably need the help of an experienced Enrolled Agent that knows (1) How the IRS computes monthly income and expenses and (2) How to present your payment plan to the IRS.
If you fail to respond to the collection letters or fail to provide documents or return promised phone calls or default on a payment plan, you are likely to receive a Notice of Intent to Levy your property or bank accounts. Or your employer may receive a Notice of Levy to begin deducting money from your paycheck. If you do not respond promptly and correctly you could be subjected to IRS collection enforcement such as levies, liens and/or a Summons to appear. You want to avoid liens, levies and summonses. If you call us at the very beginning, we can almost always make sure none of these collection efforts happen to you. But, just in case...
What is a lien?
Tax liens can be filed on any tax liability, but are usually filed on liabilities over $25,000. A tax lien is filed with the local County Recorder (becomes public record and goes on your credit report), and attaches to any and all property belonging to the taxpayer, most commonly real property. The tax lien is filed to "protect the government's interest," acts like a judgment and prevents the sale or refinance of property. Once tax liens are filed they can only be released when the tax is paid, discharged/eliminated by bankruptcy, resolved by an Offer in Compromise or expire due to the expiration of the ten year statute of limitations.
What is a levy?
The IRS can levy your bank account, wages or Accounts Receivable. A bank levy is a single enforcement action that attaches only to funds currently in the account, NOT future deposits. You can literally make a deposit the day after the levy to cover outstanding checks and continue to use the account. DM&A may be able to get a bank levy released, depending on the circumstances.
A wage levy is continuous and attaches a portion of each subsequent paycheck. The IRS will take about 80% of take home pay, the State about 25%. DM&A can get a wage levy released or reduced and negotiate a resolution to your unpaid tax liability that you can live with.
Levies on Accounts Receivable are usually single enforcement actions that attach to current receivables, not future receivables, but under some circumstances can be continuous.
What is a summons?
Have you thought of just not providing the IRS with whatever they request or require? That may be an option, but the IRS could levy as above and/or serve a summons on you. A summons can be issued and served by a IRS Revenue Officer and requires you to appear before the Revenue Officer with the documents summoned. A summons can be very technical and complicated and should definitely be handled by someone who used to actually issue summons. That would be former Revenue Officers just like Jim Demetriou and Mike Montano.
These are the common tools used by IRS tax collectors. Do you know how to handle them? The professionals at Demetriou, Montano & Associates used these tools when they were at the IRS and know how to handle each of them for their clients. Call 888-987-1040 to talk to an Enrolled Agent.
