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Posted by Pat Raskob

IRS Collection Process: How Does It Work?

IRS Collection Process: How Does It Work?

Getting a notice from Uncle Sam that you have outstanding debt can be devastating, especially if you believe there is some mistake. 

Sadly, owing Uncle Sam and ignoring him will not make the debt go away, and the more you ignore it, the more aggressive the collection process gets. It can get so bad that a collection agent will come to your home or business address to collect your debt.

This article explores the collection process of Uncle Sam

Step 1: You File Your Return: 

Generally, Uncle Sam needs four weeks to process a return for the current year and eight weeks for returns of older years. There are cases, however, that your return might be delayed due to many factors. For instance, missing information, wrong social security number, and handwritten return might cause some delay. 

Returns are picked for added scrutiny due to the information present or a need to verify some tendered information. In addition, there might be delays during the tax months, so your return might be delayed if submitted during these periods.

Step 2: You get a Notice of Balance Due. 

When your return is processed, you might have a balance due; there might be notices from Uncle Sam. You will get such Notice roughly a month after the processing of your return. Typically, you will get computer-generated letters informing you of the balance with no iota of threat. 

Every four weeks, you will get urgent letters, and Uncle Sam might commence collection action. With this, it is safe to say that a taxpayer will be transformed to the collections roughly two months after getting the first Notice of balance due. 

Step 3: Notice of Intent to levy 

Your account will get to Uncle Sam’s collection after 16 weeks. This will be characterized by letters of threat notifying you that the government will confiscate your properties unless you pay the balance due or come forward for a payment arrangement. 

Uncle Sam will not notify you of the balance due if your debt is huge but go straight to their intent to levy. This step is essential as the government is required by law to notify you. Uncle Sam cannot use a tax lien or levy against you until it tells you. 

However, there are cases in which an administrative defect caused the levy issue. People who believe their Notice to Levy was issued wrongly might have a tax professional run a compliance check for you to ensure you follow all protocol. 

However, this is the real time to get into action as Uncle Sam is preparing to come at you with full force.


Step 4: Notice of a Federal Tax Lien

At this stage, your case will likely be transferred to the Automated Collection Systems. You should also brace up for the harsh collection method. At times, you might get a Notice of Federal Tax Lien that follows the initial Notice of intent to Levy.

A tax lien might not occur at this stage of the process and is not automatic. If you have any property, the purpose of a lien is for Uncle Sam to secure its interest. 

As a result, when the taxpayer sells such property, payment of the lien will be prioritized before the seller gets the fund. A lien can dent your credit score, affect your ability to borrow money, and is public knowledge. One should note that a lien affects all taxpayer properties, including the ones acquired after the filing of the lien. 

Step 5: Your Case is Transferred to the IRS Automated Collection System 

After 16 weeks and Uncle Sam realizes that its collection effort is yet to yield any result, it will transfer your case to either the Automated Collection System  (ACS)or the Collection Field Office. 

There are three essential functions of ACS.

  1. IRS Collection Contact Function: telephone contact with non-filing taxpayers advising them to make things right. 

  2. IRS Collection Investigatory Function: this part attempts to locate the taxpayer’s exact location via a search of assets, calls to third parties, public records, etc. 

  3. IRS Collection Research Function: this part handles all incoming correspondence from the taxpayer to adjust their accounts. 



Pat Raskob
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