The IRS Tax Debt Collection Process
The arm of the IRS is comprised of various types of tax collectors, and Revenue Officers (ROs) represent one of the most powerful, efficient groups. Staffing a large number of local offices across the country with these individuals allows the IRS to disseminate personnel directly to taxpayers who have accumulated tax debt, and their presence should be taken seriously.
A tax levy is a legal procedure in which a home or other asset is seized in order to pay a tax debt. This is not usually the first step in recovering back taxes, but something that you need to be aware of if you are falling further behind as each month goes by. Many people believe that a tax levy and a tax lien are one in the same; this is not the case. Simply put, a lien is placed on the home for security for the debt. With a tax levy the property is actually taken from the owner.
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, we 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.
Revenue Officers are authorized to collect tax debt by any legal means necessary. To that end, they can look into any and all relevant financial aspects of your life, business or personal. Furthermore, they can contact anyone who may have that information, whether they be co-worker, spouse, or family friend. Often, they will visit the individual’s home or site of employment. In order to collect, they can garnish wages, levy accounts, add tax liens, and seize assets.
As you can see, a tax levy is serious business. If the IRS decides to move forward with a levy you could end up losing your home, or having money taken from your wages, bank account, etc. As always, with the IRS and the complex code and procedures, it is best to work with a tax professional to get the best outcome.
In the taxpayer’s interest, complaints regarding abuse of power or harassment may be directed to either the RO’s collection manager, the individual’s local congressional representative, or the Office of the Taxpayer Advocate. The best advice is to understand your rights and cooperate with the revenue officers as required.