The Internal Revenue Service is among the most relentless and feared debt collectors in the country. IRS collection agents have a multitude of resources at their disposal, including placing liens on property, garnishing wages, levying bank accounts, seizing assets and property, and even criminal prosecution and jail time. However, the IRS is also generally willing to work with delinquent taxpayers who negotiate in good faith. Additionally, there are a number of appeal processes and safeguards in place to protect taxpayers during the collection process.
Review the IRS documents, together with your recent tax returns, W-2 and 1099 information. Determine if the IRS tax estimate is accurate.
Locate the number and address of the nearest IRS office on your collection letter or notice. If you believe the IRS to be in error, write a letter explaining why you believe this to be the case. Include all available documentation, including W-2s, 1099s, prior year tax returns, canceled checks and receipts.
Get professional help. Consult with an experienced accountant, tax attorney or enrolled agent. If you want to appoint someone to represent you before the IRS, download and file a Form 2848, Power of Attorney and Declaration of Representative.
Seek low-income taxpayer assistance. The IRS provides a special avenue for taxpayers of limited means to get help for free or at a reduced cost. To find a low-income taxpayer assistance office near you, download Form Publication 4134, Low Income Taxpayer Clinic.
Contact the Taxpayer Advocate Service at 877-777-4778. This is an independent agency within the IRS tasked with helping taxpayers undergoing significant harm as a result of the collections process, or whose concerns have not been addressed adequately through normal IRS channels in a reasonable period of time. The Taxpayer Advocate Service is frequently able to arrange a halt in collection proceedings if they feel the taxpayer is making a good faith effort to come to a successful resolution. You must download and complete a Form 911, Request for Taxpayer Advocate Assistance, available in the Resources section.
Download and fill out a Collections Information Statement from the IRS and submit it to the area office handling your case. There are three versions of this form: Form 433-F, Form 433-A, for wage earners and self-employed individuals, and Form 433-B, for businesses. This form helps the IRS determine what may be a reasonable payment solution based on your individual circumstances.
Request an installment agreement. You can do this by downloading and completing Form 9469, Installment Agreement Request, or Form 2159, Payroll Deduction Agreement. If you and the IRS reach a payment agreement, further collections action will stop, provided you adhere to the terms of the agreement. There is a $52 fee to arrange direct transfers from your bank, and a $105 fee for other arrangements.
The IRS generally only approves a delay in the collections process if they believe you cannot pay your tax debt, or if you have reached an agreeable payment arrangement or they have accepted an offer in compromise. If you receive a stay in the collections process because of financial hardship, the IRS will continue to levy fees and interest on your overdue taxes.