If the Internal Revenue Service (IRS) believes you owe them money, they will send a bill. This bill will contain all sorts of information, from how much is owed to the potential penalties and additional charges that can apply if you fail to pay by the due date. Taxpayers who ignore these notices often face escalating enforcement actions, making it critical to understand how IRS collection efforts work.
What legal tools can the IRS use to collect payment?
The IRS can use various tools to collect payment, even if you do not voluntarily pay the debt. Some of the more common include:
- Levy. This is a legal seizure of property. The IRS will send you a notice and generally provide 30 days before they take the property.
- Garnishment. The IRS can use a wage levy to garnish your wages, meaning they take money directly from your paycheck. Your employer sends a portion of your paycheck directly to the IRS.
- Lien. This is a legal tool that alerts other creditors that if an asset is sold or collected against, the IRS is likely first in line for payment.
These enforcement mechanisms are often confusing and intimidating for taxpayers. For a broader overview of how liens and levies fit into the collection process, see how the IRS uses liens, levies, and repayment plans.
In serious cases, the IRS can also use a jeopardy assessment.
What is a jeopardy assessment?
A jeopardy assessment is available when the IRS believes it is in danger of losing the ability to collect on an outstanding tax debt. Tax law generally allows taxpayers opportunities to resolve a tax controversy with the IRS before it moves forward with aggressive collection efforts. However, in certain situations, the IRS can bypass these requirements and confiscate assets immediately to protect government interests.
Circumstances that may qualify for this type of action include situations where the government believes the taxpayer plans to flee the country, hide property, or transfer assets to put them beyond the IRS’s reach. In extreme cases, unresolved tax debt can even affect travel, as discussed in how tax debt may impact international travel.
How will I know if I am the subject of a jeopardy assessment?
The IRS will generally send a notice informing you of the action. You then have 10 days to either pay the bill or fight back. You may contest the action by filing a bond to temporarily halt the agency’s collection efforts. However, if the IRS believes sending notice would jeopardize its ability to collect, it may move forward without advance warning.
Examples of situations that could lead to this action include suspected illegal activity or a history of concealing assets. Taxpayers who receive sudden or unexpected IRS correspondence should act quickly and understand how to respond to IRS notices to avoid losing critical rights.
It is important to note that the government does not need to prove it will lose the ability to collect — only that the taxpayer’s actions appear to put collection efforts at risk.
How can I protect my interests if the IRS is trying to collect on a tax debt?
There are various legal remedies available, and the best option depends on the facts of your situation. These may include contesting penalties, negotiating payment arrangements, or seeking to settle the debt for less than the full amount owed. For example, some taxpayers may qualify for tax debt settlement options or other relief programs if payment in full is not realistic.
The attorneys at Goldburd McCone are familiar with IRS collection actions and taxpayer defense strategies. They can review the details of your case, explain your options, and provide guidance tailored to your financial and legal circumstances.