The IRS has broad and potent powers to collect on overdue tax debt. There is a myriad of tax resolution options for taxpayers to resolve their collections issues, temporarily or permanently, such that they can avoid IRS enforced collection activity like bank or wage levies, garnishments, liens, or worse. Some of these resolution options can include currently not collectible status (CNC), penalty abatements, installment agreements (payment plans), and offer in compromises (OIC). But those traditional resolutions are not necessarily your only options, depending on the facts of your situation. Sometimes the underlying liability can be challenged, or we can lower a tax bill by filing an original or amended return or by going through an audit reconsideration.
Orlando IRS collections lawyers at Orlando Tax Law help individuals and businesses facing overdue tax bills. A trustworthy tax lawyer could work with you to interpret communications from the IRS, identify a strategy to limit financial damage, and negotiate with the IRS to implement plans on your behalf. It is important to speak to a knowledgeable tax attorney regarding your unique circumstances and goals, as there is no “one fit” solution for all taxpayers. What may be an excellent resolution plan for one taxpayer could be disastrous for another taxpayer.
Why Accounts Go into Collections
The IRS uses a system of aggressive collection practices and assessed penalties to ensure that taxes are paid and that taxpayers are in compliance with their obligations. The IRS is one of the toughest creditors to deal with because it can directly garnish your wages, bank accounts, and seize your assets. Tax accounts go into collections when a tax has been assessed and not paid. Tax is usually assessed when someone files a return but does not make the payment with the return. Tax can also be assessed:
- As part of a Tax Court settlement or judgement
- Through Substitute for Return procedures when a taxpayer does not file a return
- As a settlement in Appeals
- By automatic tax or penalty assessments (also known as assessable penalties)
As soon as there is a delinquent IRS tax or penalty, the IRS will initiate a collections case and send the taxpayer a letter or notice outlining the overdue amount, along with any interest or penalties that apply. The IRS sends multiple notices for each period of tax owed and it is important for a tax attorney to decipher the notice, as some notices have special time-sensitive procedural or collection due process rights associated with them. Sometimes these procedural rights have the power to stop collection action when requested and thus provide time to strategize a case plan. The IRS has the power to file a Notice of Federal Tax Lien or levy your wages, retirement accounts, bank accounts, or social security funds.
An Orlando IRS collections attorney can help you by interpreting these letters, which can sometimes be complicated to fully understand. This includes identifying whether the tax dispute is genuine and assisting taxpayers in understanding why a tax or penalty has been assessed.
What is the Interest for a Missed Payment?
Even if it was the result of an agency error, an IRS collection case should be taken seriously. A single missed payment will result in the accrual of interest at a rate between 3% and 6% depending on the federal published rate at the time. In most cases, interest cannot be abated or negotiated down unless it is part of an Offer in Compromise settlement or it was an improper calculation.
Reach Out to an Orlando IRS Collections Attorney Today for Representation During an IRS Collections Matter
Tax controversies can affect individuals and businesses alike. If a taxpayer fails to pay the tax they owe when submitting a return, the IRS has the ability to refer the account to collections. This results in the receipt of a letter outlining the supposed amount of taxes that are overdue.
When this happens, you have a variety of options. An Orlando IRS collection lawyer could guide you down the right path. Your options may include disputing the underlying amount, submitting a lump-sum payment, entering into a payment plan, or submitting an Offer in Compromise settlement, among others. Contact us today to learn what your best options are.