How to Stop IRS Collection Efforts
By Steven A Leahy
IRS Collections can be maddening! The IRS Collection Department can levy your bank accounts, garnish your wages, take your assets, visit your home or workplace in order to collect back taxes. Here is the key to Stopping the IRS Collection efforts – compliance. That means filing your tax returns and paying your taxes in the future on time. It also means setting up a remedy for your past due tax obligations.
There are only 6 things you can do if you owe the IRS money – I talk about these six things over and over again. First, you can pay the IRS everything you owe them. Second, you can set up an installment agreement with the IRS. Pay them over time. Third, you can submit an Offer-in-Compromise, to pay a lump sum to settle the debt. Fourth, you can be declared currently not collectible – prove to the IRS you don’t have any disposable income after you pay all your monthly bills. Fifth, you can file for protection under one of the Chapters of the Bankruptcy laws. And, finally, you can continue to do nothing and let the IRS have their way with you.
Most people who come to see me are just plain scared of the IRS, and believe there isn’t a remedy that will work for them. So, they choose number six – they do nothing. It may take some time for the IRS to focus on your tax problem, but they will get around to it. Do not interpret the delay as proof the IRS has forgotten about you and you are “under the radar.”
One of the most common remedies for IRS problems is the second option, installment agreements. Now, there are different kinds of installment agreements. Most of my clients that enter into an installment agreement with the IRS enter in to a partial installment agreement. That means, the installment agreement will not pay the IRS obligation in full. This is the part most don’t understand. Even if I owe the IRS way more than I could ever repay, I can set up a partial installment agreement and pay the IRS what I can, even if the amount I can pay is $100.00 and I owe $200,000.00.
Now, most taxpayers think, “that means I will be paying the IRS forever.” But, here is a secret about IRS problems: The IRS has a set amount of time to collect an IRS debt. This date is referred to as the Collection Statute Expiration Date (CSED). Once that date is reached, the IRS must end all collection efforts, including releasing any liens that had been filed.
The best partial installment agreements leave you room to pay all your monthly obligations. We do this by collecting your financial information on an IRS Form 433. On this form, you list all your assets, your liabilities, your income and your expenses. Calculating your disposable income is a simple equation – all of your income, from whatever source, less your “allowed” expenses. The IRS scrutinizes the taxpayers expenses and disallows many of them. By disallowing reasonable expenses, the IRS is inflating your disposable income.
The real negotiations revolve around what expenses are allowed before your disposable income is calculated. That’s why taxpayers need help. The IRS will calculate a disposable income that will not allow you to pay all your other obligations. That guarantees the taxpayer will default some time in the future.
If you owe the IRS, a partial installment agreement may be your best remedy. Let’s find out. If you contact my office and mention this article, we will complete an IRS Analysis Report, that will tell you exactly where you stand with the IRS, for FREE. Call me, attorney Steven A. Leahy at 312-664-6649. Tell Bonnie, my scheduler, you want a FREE report.