Owe money to the IRS?  Did you make a mistake in your income tax calculation and now, the IRS wants to collect? Is the IRS threatening a tax lien or levy?

Here is a list of the things you need to know in order to deal with IRS Collections:

Gather all your tax documents and letters from the IRS
Gather every IRS letter you have. Gather all documents that have anything to do with the tax liability you owe.  This might even include agendas or daily planners, if your tax liability has anything to do with business meetings and lunches.
  1. Look at the most recent IRS letter
    What is the title of that letter? Is it a Notice of Deficiency or is it a notice from Collections?  Statutory Notice of Deficiency–you have 90 days from when that letter is issued to file a petition in Tax Court.  Notice of Levy– You should see your tax attorney. You are allowed a  CDP hearing: Collection Due Process. Here, you can raise certain defenses and you can also propose certain collection options.
  2. Figure out what you have to pay the IRS
    Take inventory of all your assets.  Remember, the IRS could levy your bank accounts, put liens on your property or sometimes even put you in jail.  But they are always open to payment plans or compromise, if you do it right. Check with your tax attorney if you should try to propose an installment plan or if you should do an Offer in Compromise.  If you have a large lump sum available, sometimes an Offer in Compromise might be smart. .
  3. Pay up now and sue the IRS later. 
    This could be costly so you need to have a lot of cash handy.  And you’re not guaranteed a win.  This is the rich-man’s remedy, usually.

CIRCULAR 230 DISCLAIMER
Tax Advice Disclaimer: Any federal tax advice contained in this communication was not intended to be used, and it cannot be used, by you for the purpose of (1) avoiding any penalty that may be imposed by the Internal Revenue Service or (2) promoting, marketing or recommending to another party any transaction or matter addressed herein.

 
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