How to Resolve Your Tax Debt

Most people don’t want to be behind on taxes, but if you do fail to pay the Internal Revenue Service, it’s important to know what happens. Here’s a look at the collections process and how you can resolve tax debt.

By Craig Smalley

Tax assessment and collections

When the IRS determines that you owe the government money, it assesses you a tax. It can assess taxes when you file a return or when you don’t pay your full balance. It might also assess taxes after an audit in which the IRS doesn’t agree with a position on your tax return, perhaps because you miscalculated the amount you owed.

The IRS has 10 years from the date of assessment to collect the taxes owed, though you may be able to extend the statute of limitations.

When you owe money, you’ll receive a notice of assessment that asks you to pay your tax bill. If you don’t pay within 30 days, you’ll receive another notice. Unless you pay, you’ll continue to receive notices or certified letters from the IRS until it sends you a Final Intent to Levy notice.

If you don’t act within 30 days of receiving this letter, either by paying your bill or appealing the amount of taxes that you owe, the IRS will file a lien against you. This means it can legally seize your property to satisfy your debt, perhaps by garnishing your wages, levying your bank accounts or taking other measures.

Resolving your debt

Fortunately, there are several ways to resolve a tax debt.

 

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