The IRS Collection Notice Process (Tax Bill Notices )
If you do not pay in full your taxes when you file your tax return, IRS will send you a written collection notice of the amount you owe, a tax bill. This tax bill or collection notice starts the collection process which continues until your account notice is satisfied or until the IRS may no longer legally collect the tax. The IRS collection statute runs for 10 years.
Generally, IRS will send out a series of 4 tax bills or collection notices.
You must not ignore the last notice, the 1058 notice, if you do, the trouble begins. It is your right to a hearing and a simple appeal can stop the IRS in their tracks.
Call us to find out more. Free tax consults.
The last tax bill or IRS collection notice you will receive is the 1058 or LT11 and action must be taken by the end of the 30 day period or the IRS will send out a Notice of Wage Garnishment, Notice of Bank Levy or a Federal Tax Lien.
Before a tax levy or tax lien may be filed the taxpayer must receive required tax notices.
Before the property can be levied, the taxpayer must be given a:
1. Notice and demand,
2. Notice of intent to levy,
3. Notice of a right to a Collection Due Process (CDP) hearing.
How the IRS will process your case.
IRS is looking to close your case off of their CADE Computer system. The CADE computer system is their account receivables systems.
IRS will require a fully documented form 433-F if the case is in ASC or a 433-A if the case is in the field with an assigned Revenue Officer. After the IRS completes the review of the financial statement and makes sure all tax returns ( unfiled or back tax returns ) are filed, the IRS will generally close your case or settle in the following manner:
IRS Case Closures or Tax Settlement Agreements can be in different forms:
a. Hardship Settlements. Cases usually go into a 3 year suspended status because of an inability to pay. This is also called currently noncollectable.
Your case will go into a hardship status because you do not have the income coming in to meet your current expenses. The IRS will use the National Standards Program to assess hardship.
b. Payment Agreements. Cases can be closed with agreed upon monthly installment payments to the IRS. We will review the different programs the IRS uses for the lowest possible amount required.
c. Offer in Compromise. There are three types of OICs:
The IRS may accept an Offer in Compromise based on three grounds:
1. Doubt as to Collectibility – Doubt exists that the taxpayer could ever pay the full amount of tax liability owed within the remainder of the statutory period for collection.
2. Doubt as to Liability – A legitimate doubt exists that the assessed tax liability is correct. Possible reasons to submit a doubt as to liability offer include:
(1) the examiner made a mistake interpreting the law,
(2) the examiner failed to consider the taxpayer’s evidence or
(3) the taxpayer has new evidence.
3. Effective Tax Administration/ Exceptional Circumstances. – There is no doubt that the tax is correct and there is potential to collect the full amount of the tax owed, but an exceptional circumstance exists that would allow the IRS to consider an OIC. To be eligible for compromise on this basis, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.
Call us for a no cost professional tax consult and speak directly to tax attorneys, CPA’s or Former IRS agents.
We can file all your back or unfiled tax returns even if your tax records are lost.