The IRS has the power to take your bank accounts and pay checks and it can file notices of tax lien. These things can create chaos in your life and ruin your credit. If you owe money to the IRS, it is important to find debt collection help before said collection is enforced.
Many of my clients owe more to the Internal Revenue Service than they can ever pay. I start my collection cases with a review of filed returns for accuracy and with the preparation of any unfiled returns. I then prepare a detailed financial statement to understand the client’s financial condition, to develop a plan that best represents the client’s interests (not that of the IRS), and to be sure that only complete and accurate information goes to the IRS. Remedies available to the client include payment agreements, utilization of statutes of limitation, bankruptcy and offers in compromise.
Even the most difficult cases have solutions; most of the solutions require long-term planning.
Law schools and business schools do not put much emphasis on IRS collections. It is an area mostly learned by on-the-job training. I learned about IRS collections by spending 7 years working for IRS Chief Counsel in an area that advised IRS on the day-to-day legal problems that arise in the collection of taxes and by years of working collection cases in a practice limited to tax controversy matters. Additionally I focus on the continuing legal education required to maintain my Texas law license on tax controversy areas.
Liens and Levies
Let’s review some basic concepts and definitions. A lien is a charge on property created by law. Examples of liens are mortgages, uniform commercial code security interests, court judgments, and mechanics liens. In the tax area, when a taxpayer files a tax return and the IRS records the amount of the tax, the tax is said to have been “assessed”. Assessment coupled with an unsatisfied demand for payment creates a lien that attaches to all property and rights to property owned by the taxpayer. The lien created by assessment is a secret lien: it is not a matter of public record. Tax liens gain priority over other creditors only when a notice of the lien is recorded.
A “levy” is the seizure of property by the IRS to collect taxes. IRS can send a notice of levy to your bank and clean out your account. It can send a levy to your employer and take a portion of your pay check until the debt is paid.