Tuesday, July 22, 2008

When Are You Considered in Collection Status With The IRS?

Many of our clients are all consumed with having liens/levies filed. Once this happens, consider yourself in collections status. However to get here, one would have to be a perpetual late filer or have debt liability, causing them to react (to important notices)later than than they should have. It's always important to take care of the issue at hand versus waiting to the last minute which in turn will cause undo stress and increased penalties and interest that are extremely difficult to get removed. Keep in mind that
There are several notices (about 4 to be exact) the Internal Revenue Service will send you before you get assigned to the collection department. Unfortunately, some taxpayers are naturally procrastinators which inevitably will continue to get them in deeper and deeper debt with the IRS if not addressed as soon as the notice is received. I don't think that taxpayers take the IRS serious when these notices are sent. But after the following notices are subsequently sent, the IRS will not be so lenient with a taxpayer after they have tried to worn them time after time.

Here are the notices the IRS will send to a delinquent taxpayer before sending them to the collections department:


After you have been sent the CP-504, the IRS considers you in "collections". Immediate action to levy your bank account or wage will take place in about 30 days from the time you are sent the CP-504. This notice is called the Intent To Levy Notice. About 10 days from when the 504 is sent , the taxpayer will be issued an L1058. This is the final notice that confirms the levy implementation on ones bank or wage. If a taxpayer tries to call and rectify their tax debt, they will be unsuccessful due to the requirement of a Power Of Attorney. POA's are the only individuals with enough authority to have a Stay On Collection granted.
It is imperative that you take care of your tax debt and file your returns on time. Once entering in the collection process, there is no turning back. The IRS will continue this daunting process with hopes the client will pay their debt owed in full.
There are reputable companies out there than can help with the filing of your taxes and your tax liability where you don't have to pay your debt in full. If you find yourself currently in the collection department, don't wait. Its better to be proactive instead of trying to catch up.

No comments: