Actions the IRS May Take in Collecting Delinquent Tax Debts

Posted on in IRS Issues

IRS issues, Tinley Park tax lawyers, debt collection, delinquent tax debts, tax lienIf you owe money as the result of IRS issues such as failing to pay your taxes, having past tax debts, or having years of un-filed tax returns, it is vitally important to pay close attention to any notices you receive. The IRS will generally warn you before taking collection actions, providing you the opportunity to address the situation, either by paying your debt or making payment arrangements, and to dispute the amount owed.

IRS Debt Collection Actions

The IRS is required by law to provide written notice of any collection actions they intend to take, and to allow you time to settle the debt. Failing to respond to these notices, which are an important part of the IRS collection process, could result in the following actions.

Federal Tax Lien

This is a legal claim against any property you currently own, and applies to additional property titled under your name that you may acquire in the future, such as homes or cars. This prevents you from selling or gifting the property to others prior to settling the tax debt. Along with a federal tax lien, notice of the lien will generally be sent to your creditors. This is filed with local and state agencies, and informs creditors that the IRS has a priority claim against you, which can do significant damage to your credit rating.

Tax Levy

While a tax lien allows the IRS to lay a claim on your property, a tax levy allows them to seize your property or assets to satisfy a tax debt. Items which may be seized include property such as your home or car, as well as assets—bank accounts, IRS tax refunds, retirement funds, and Social Security benefits.

There are limits to what the IRS can seize, and certain personal effects, tools of your trade, a primary residence, pension benefits, and unemployment benefits may all be exempt.

Steps You Can Take To Prevent IRS Levies and Liens

If you receive notice of an IRS levy or lien, the following steps can help to avoid further actions:

  • Make full payment on the debt, either in cash or by credit card, or by taking out a loan through your bank;
  • Make an offer in compromise, which allows you to settle your tax debt for less than what you actually owe. This may be unavailable if you lack the financial resources to pay your tax debt, or if doing so would create a hardship for you or your family;
  • Make a payment agreement, which you may be eligible if your tax debt is less than $50,000. Under IRS guidelines, even if you are ineligible for a payment agreement, you may still be able to make installment payments to avoid further IRS collection actions; or
  • File an appeal. Depending the type and amount of your past tax debts, certain time limits and other requirements apply.

Talk to an Experienced Cook County Tax Lawyer Today 

To discuss your situation and the options which may be available to help avoid further collection actions, contact the Law Offices of Eric G. Zelazny today. We can arrange a free consultation with one of our experienced Tinley Park tax lawyers, during which we can advise you on the best course of action in your case.



20 North Clark Street, Suite 800
Chicago, Illinois 60602
18400 Maple Creek Drive, Suite 500
Tinley Park, Illinois 60477