The IRS Collection Process

If you do not pay in full when you file, you will receive a bill. This bill begins the collection process, which continues until your account is satisfied or until the IRS may no longer legally collect the tax, for example if the collection period has expired.

The first notice you receive will be a bill explaining the balance due and requiring payment in full. It will include the tax plus penalties and interest added to your unpaid balance from the date the tax was due. If you cannot pay in full, you should contact Jackson Law Group. The unpaid balance is subject to interest compounded daily and a monthly late payment penalty.

If you are unable to pay your balance in full, we may be able to offer you a monthly installment agreement. Direct debit installment agreements provide you with the ability to make timely payments automatically and reduce the possibility of your defaulting the agreement. Some installment agreements can be established over the telephone, or you can contact a tax attorney to handle the matter for you. If you are experiencing a financial hardship and are unable to pay anything, we may temporarily suspend collection action. Interest and late payment penalties will continue to accrue while you make installment payments or while collection is suspended. If you are a member of the Armed Forces, you may be able to defer payment.

Once all payment options have been considered and it is determined that you do not qualify for an installment agreement, we may choose to propose an Offer in Compromise (OIC). It is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax liability by payment of a reduced amount.

Some of the actions the IRS may take to collect taxes include:

  1. Filing a Notice of Federal Tax Lien,
  2. Serving a Notice of Levy; or
  3. Offsetting a refund to which you are entitled.

An explanation of this process is as follows:

The federal tax lien is a claim against your property, including property that you acquire after the lien arises. The lien arises when you fail to pay the taxes you owe within 10 days after we send our first bill. By filing a Notice of Federal Tax Lien, the government establishes its interest in your property as a creditor in competition with other creditors in certain situations, such as bankruptcy proceedings or sales of real estate. The filing of a Notice of Federal Tax Lien may appear on your credit report and may harm your credit rating. Once a lien arises, the IRS generally cannot issue a “Certificate of Release of Federal Tax Lien” until the taxes, penalties, interest, and recording fees are paid in full or the IRS may no longer legally collect the tax.

A Notice of Levy is another method the IRS may use to collect taxes. Levying means that we can confiscate and sell property to satisfy a tax debt. This property could include your car, boat, or real estate. The IRS may also levy assets such as your wages, bank accounts, Social Security benefits, and retirement income. In addition, the IRS will apply future federal tax refunds that you are due, to offset the amount you owe. Any state income tax refunds you are owed may also be applied to your liability.

The above information is from the Internal Revenue Service and represents general legal advice. Since the law is continually changing, some provisions may be out of date. It is always best to consult an attorney about your legal rights and responsibilities regarding your particular case. Please Contact Us by using the Quick Contact form, calling us at (904) 823-3333 or by email at