Content Overview
- Summary
- Alternatives For Handling Tax Debt
- Alternatives To Consider If You Cannot Reach An Agreement With The IRS
- What To Do If You Have Not Filed A Tax Return That You Were Supposed To File
- What To Do If You Receive A Notice From The IRS That You Owe Money
- How To Ask For A Waiver Of IRS Penalties
- How To Speak With The IRS Effectively
What To Do When You Owe Money For Back Taxes To The IRS (Whether The IRS Knows It Or Not)
What To Do If You Receive A Notice From The IRS That You Owe Money
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The IRS starts its collection process with a computerized bill no matter whether it believes money is due from returns recently filed, old returns not filed, or an error in your return. Ignoring these bills is a big mistake.
If you can pay the bill: If you can pay the bill right away without undue hardship, do so. Be sure to contact the IRS as soon as possible.
If you cannot pay your bill right away:
- Contact the IRS as soon as possible. Before calling the IRS, it is suggested that you know your options. Read the rest of this article and IRS Publication 594, "What You Should Know About the IRS Collection Process." The publication is usually sent with your invoice. The publication is also available at: www.irs.gov/pub/irs-pdf/p594.pdf .
- Read about the alternatives for paying by reading Alternatives For Handling Tax Debt
If you think your bill is wrong: Call the IRS number on your bill before the due date indicated, or visit your local IRS office. Bring the bill, copies of any records, other tax returns, canceled checks, etc., that will help explain why your bill is wrong. If you still disagree with the IRS' position, you can appeal. Read our section on appealing an examiner's decision in Audits For Everyone.
If you ignore the bill: If you don't pay your bill or contact the IRS to explain, the IRS can ask you to sell or mortgage your assets or get a loan. If you still don't do anything, the IRS can seize your bank account, levy your wages, put a lien on your assets or seize other income or assets.
A levy is a legal seizure of your property. The government actually takes it away.
By filing a lien, the IRS takes a security interest in your property much like the bank takes a security interest in your house when it gives you a mortgage. You can't sell or transfer the property without first satisfying the debt.
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