The dreaded 500 series the IRS mails out to taxpayers with outstanding balances is back after a COVID-related hiatus. Taxpayers whose IRS debts fall under the purview of the agency’s Automated Collection Service will typically receive three CP500 letters before the IRS gets aggressive. The first letter in the series, CP501, is a completely benign letter. The CP501 lets taxpayers know they have unpaid federal taxes Read More
Worried About the Collection Statute Expiration Date Coming Up?
Plenty of U.S. taxpayers are unaware that it is possible to run out the clock on the IRS. In most cases where a taxpayer has an unpaid debt to the IRS, the slate will be wiped clean in 10 years. The date after which the IRS will no longer be able to collect a tax debt is the Collection Statute Expiration Date (CSED) for that liability. The clock starts ticking on the CSED when an action has been taken to assess the Read More
Private Debt Collection Agencies
In April of last year, the Internal Revenue Service revived its private debt collection program. Under this program, authorized by 26 U.S.C. § 6306, the IRS can give certain taxpayer accounts to private contractors for collection and can pay them commissions of up to 25% of the amount collected. Taxpayers can be sent to private contractors to collect the tax debt when their accounts are in collections but Read More
Limiting Tax Liabilities with the IRS Collection Statute of Limitations
Our Firm works with each of our clients to get the best possible resolution of their tax problem. One of the tax resolution tools we evaluate in each case is the Collection Statute of Limitations. Collection Statute of Limitations The Internal Revenue Service does not have an unlimited amount of time to collect a tax debt. The Internal Revenue Code provides that in general the IRS only has ten years from the time Read More
3 Reasons You May Be Eligible for the Currently-Not-Collectible Program
If you owe a tax debt that you can’t afford to pay, you can apply for Status 53, which is the IRS’ “Currently Not Collectible” designation. In addition to giving you breathing room on back taxes, becoming a Status 53 taxpayer stops all collection activities in progress, such as garnishments or levies. Currently, Not Collectible status is intended to relieve taxpayers who are struggling financially and have no money Read More
Collections Due Process Explained
The Fourth Amendment guarantees you due process in situations where your life, liberty, or property are at risk. When you owe money to the IRS, they have the power to garnish your wages, file liens and levies on your property, and sue you, but the IRS Restructuring and Reform Act of 1998 gives you statutory rights in this situation, including the right to a hearing. A Collections Due Process Hearing gives you the Read More
Advantages and Disadvantages of Using a Tax Resolution Professional to Solve IRS Taxes
Nothing can strike fear into the heart of a small business owner or other citizen like being contacted by the Internal Revenue Service. This tax agency enjoys powers not granted to many other parts of the government. Unlike those other government agencies, the IRS can garnish your wages, freeze your bank accounts and seize your property. So, you cannot simply do nothing if the IRS contacts you or your business about Read More
Credit Agencies No Longer Report IRS Tax Liens
Last year the three credit reporting agencies (Experian, TransUnion and Equifax) announced that they will no longer report IRS tax liens on people’s credit reports. See https://www.experian.com/blogs/ask-experian/tax-liens-are-no-longer-a-part-of-credit-reports/. Prior to this, you had to wait seven years after you paid the tax liabilities the IRS lien covered to remove it from your credit report. The wait was ten Read More
Understanding Your Options if You’re in Debt to the IRS
Every year, there are a large number of people who can’t afford to pay the IRS all the tax debts that they owe. Even though the quickest solution for your overdue taxes is to pay the full amount right away, sometimes circumstances prevent that from happening. The unfortunate truth about IRS debts is that the interest will continue to accrue on what you owe, even as you pay it down, and the penalties don’t go away. Read More
The Pros and Cons of IRS Installment Plans
If you are an individual or business owner with significant tax debt that you are financially unable to pay, you may be eligible to enroll in an installment agreement with the Internal Revenue Service. An installment agreement is essentially a payment plan that enables you to pay off your taxes over time. To qualify, you must file all required tax returns and disclose all of your assets and cash to the IRS. This is Read More
